Airbus and Boeing in the coronavirus turmoil

Audio 03:53

By: Dominique Baillard Follow

Airbus accuses a loss of 480 million in the first quarter, its turnover fell by 15% according to the financial results of the first quarter which have just been published this Wednesday morning. The pandemic is a heavy blow for the European giant as for its American rival Boeing. Will the freeze on air transport bring down the aeronautical industry?

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In this powerful industry hitherto overwhelmed by orders, the landing was brutal: customers canceled in bursts, in March 9 orders were deleted from the order book for the European A320 (but this is not linked to the Covid-19 says the boss of Airbus Guillaume Faury) and 160 for the American 737 Max, the aircraft that has plummeted Boeing's accounts for more than a year. With the traffic paralysis, the airlines are trying by all means to save money to preserve a little cash, enough to hold on until the sky opens again. Aeronautics, which was counting on tens of thousands of aircraft to be delivered for the next 20 years, has started to reduce the airfoil. During the first three months of the year Airbus produced 60 fewer aircraft than in 2019. Its production will drop by a third according to its president Guillaume Faury. And probable dismissals are to be feared. But no question for the moment of asking for state aid. Same picture for Boeing. There will be no dividend this year warned Dave Calhoun the boss of the group, but massive debt to save the furniture, amounting to close to $ 10 billion.

Behind the two large companies which share the world aeronautics market, there are also hundreds of other companies in default.

Very large ones that manufacture engines for example like Rolls Royce, or General Electric. These are doubly penalized, by the brutal freezing of the market and by that of thefts. Because they often generate profits not on the sale of equipment but on maintenance programs. There is also a myriad of companies, of intermediate size or very small SMEs, totally dependent on these principals. Not easy for them to retrain, they have invested everything in aeronautics to obtain the confidence of the manufacturers and the precious certifications. Some are in danger of life or death, Airbus as Boeing could buy some to help them but also because they provide a piece of the puzzle of the plane not found elsewhere. The equipment manufacturers installed in Tunisia and Morocco fear the worst, as in France the Occitanie region whose economy depends largely on this activity. This crisis is also a setback for the foreign trade of the countries of origin of these export champions. Boeing is the leading exporting company in the United States, just like Airbus in France.

How long will these companies be constrained by the lack of orders?

At best for two to three years, according to the boss of Boeing. Once the airlines have resumed traffic and they have found a certain financial ease to plan new purchases. But difficult today to make predictions on the size and configuration of the future market: in recent years, manufacturers have fallen under the orders of low-cost companies, these private companies could be the first to disappear in the current crisis. The size of the planes and their layout will also have to be thoroughly reviewed in the light of new health requirements. The only consolation for Airbus: it is one step ahead of the Boeing sealed by the 737 Max. But this turmoil will also give the Chinese Comac some time to develop its devices. And it may be this newcomer who will be privileged to supply the Chinese market, a prospect that has something to shake the two aeronautical giants.

►In short

In the United States, President Trump orders the reopening of factories producing meat.

name of a decree dating back to the Korean War. Slaughterhouses and factories have closed due to the coronavirus, which has spread like wildfire in this industry, killing at least 20 people and killing 5,000 workers. The White House chief’s decision has been criticized by industry officials and unions alike.

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• Coronavirus
• Confinement
• Transport
• Aeronautics

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