2021 was a turbulent year for aerospace companies. However, the coming months and years promise gradual improvement, as governments around the world ease restrictions and air travel becomes more accessible. Accelerated vaccination rollout and the easing of government restrictions have boosted consumer confidence in air travel. Airline passenger traffic is expected to increase by 18% in 2021, after a dramatic 66% decline in 2020.
Aerospace executives are cautiously optimistic about the future, though they recognize that there are still significant challenges to overcome. Of the executives surveyed by Accenture, 24% view the next 6 months as ‘challenging’, but nearly half anticipate growth in 2022.
Our report suggests a 13% growth YoY in 2022 for commercial aerospace globally, which represents a significant improvement on 2021, but still 4% below 2019 levels.
of executives expect airline industry revenues to take between 24 and 36 months to recover.
of executives anticipate a recovery period of between 12 and 24 months.
Though the situation is improving, airlines are still experiencing a liquidity crisis, with most continuing to rely on financial support – predominantly from governments – to stay afloat. Aircraft delivery deferrals and cancellations have, however, slowed down, and narrow-body deliveries could even reach 2018 levels by 2022.
What keeps aerospace executives awake at night?
The uncertainty created by the pandemic, worsening economic conditions and interest rate changes are the areas of greatest concern for aerospace executives planning for the next 6 months. Geopolitical factors such as terrorism, political stability and regional conflict are not, however, a major concern.
Reviving revenues and regenerating fleets
Original equipment manufacturers (OEMs) are recovering from a devastating 2020. Nearly 50% of executives expect revenues to increase over the next 12 months, while 79% believe that commercial aerospace product unit deliveries will either continue or even increase.
of executives expect revenues to increase in the next 18 months.
Several major airlines have signaled their intentions to renew their fleets in the coming years. Some have already begun the process of phasing out older aircraft and focusing on fuel usage to reduce carbon emissions and operating costs. This should provide a welcome boost to customer deliveries.
Global MRO aftermarket revenue declined by between 50% and 60% in 2020. Demand for passenger to freight aircraft conversion, short-term aircraft storage services, out-of-storage checks and return-to-service maintenance continues to drive an incremental 2021 aftermarket recovery.
of executives expect technology architecture to become essential to the overall success of their organizations.
Digital drives recovery
Digital adoption – if not full-blown transformation – will help to drive recovery. MROs and airlines are seeking to invest in digital collaboration tools and cloud-enabled technologies that will support their recovery plans.
Supply chain challenges
The pandemic severely disrupted supply chains. And although there are signs of recovery, the disruption looks set to continue, as smaller suppliers continue to deal with depleted inventories and cash flow issues.
Of the executives surveyed by Accenture, 55% expressed reduced confidence in their supply chain timeliness and quality for the next 6 months. However, 91% are hopeful of suppliers meeting or exceeding delivery expectations in the next 12 to 18 months.
Sustainability will become an increasingly prominent issue over the next 5 years, with 70% of executives seeing it as a critical focus. The growth of ecosystem partnerships, as well as the rise of digital adoption, will help to drive greater sustainability across a complex supply chain.
Of the executives surveyed by Accenture, 58% believe that environmentally sustainable products and services will be essential for delivering differentiated offerings to their customers over the next 5 years.
Aerospace in the ascendancy
The pandemic changed the travel economy forever. But the shoots of recovery are clear to see. As vaccination roll-outs continue and travelers regain confidence, the aviation industry will be ready to meet the surge in demand.
About the Accenture commercial aerospace market insight report
Combining sophisticated econometric modeling methodologies to drive quantitative quarterly forecasts on the health of the commercial aviation market, with insights from leading aerospace executives worldwide, the Accenture Commercial Aerospace Insight Report provides a unique perspective on short- and medium-term trends and drivers in this market, covering a wide range of activities, from suppliers to MROs. Our poll was conducted in September 2021 and views are subject to considerable change as conditions can rapidly evolve.
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