Insight Wednesday 25 March 2020 – A rocky road back to normalcy

News:

The hopeful news that the quarantine in Wuhan is ending, combined with the fact the continued reduction in seats in Northeast Asia has reached a nadir, is good news for both the crisis and our industry.  If we assume that the two-month quarantine process in Wuhan will work similarly in the rest of the world, we could see an end to the crisis by the middle of May in Europe and as early as late April some parts of the United States. But there are, of course, no guarantees.

Even if the crisis ends by Mayday, that doesn’t translate into an immediate restart of building aircraft at normal production rates, as the timing of the global supply chain

will vary by location and the impacts that the work stoppage has had on each company in the supply chain. With nearly a million parts on an aircraft, all it takes is one not being available to stop a production line cold.

Analysis:

The crisis began in China, which while not a major source for aviation subsystems, is a source for both raw materials and some electronic components. The shortfalls from China began to manifest themselves in January and February as facilities were shut down. Today, those facilities are reopening but will need to ramp up to their prior production levels before parts can be made. Assuming a two to three-month process to return to normal for their local supply chains, we are looking at May or June for the resumption of normal business levels in China.