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Report: Airline Industry Suppliers Brace for $60 Billion in Lost Sales

Airlines have recently been seeing an uptick in demand off of COVID-19 pandemic lows, but still plan on a significantly reduced schedule through at least the summer. Delta Air Lines (NYSE: DAL) has said that, even after adding more flights back for July, it expects to have a schedule down 70% compared to July 2019. 

With many aircraft moved out of service, maintenance firms and producers of aircraft parts will see a loss of $60 billion in sales this year, according to a Reuters report. The businesses don’t expect an improvement any time soon. American Airlines Group (NASDAQ: AAL), for example, has announced that it is permanently retiring some models and is parking its fleet of Airbus (OTC: EADSY) A330-200’s through at least 2021. 

fleet of airplanes parked out of service

Image source: Getty Images.

Due to lack of demand, airplanes in use for 2021 will be down more than 25% compared to the number in use for 2019, reports Reuters. Less airplanes in use means less need for servicing. As a result, many suppliers will be affected, from a host of small players to big companies like engine maker General Electric (NYSE: GE) and systems firms like Honeywell (NYSE: HON) and Raytheon Technologies (NYSE: RTX)

The report cited industry analyst Richard Aboulafia at aerospace consultancy Teal Group, who estimates a 75% decline in services revenue resulting in $60 billion in lost sales. The International Air Transport Association (IATA) predicted in its latest analysis that airlines will lose $84 billion in 2020. It said that passenger airline revenue would drop by $371 billion in 2020. 

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