The June transaction numbers (see page 2) are at very low points.  Given the state of the industry, this is no surprise.

Selecting each of the OEMs listed allows you a deeper peek into what has been happening this year – a year unlike anyone in commercial aviation has ever seen before.  The industry’s transaction flow is down to a trickle.

Airbus has seen some trades in the A320 family, primarily neos. But, for example, for A320neos it’s down 43% Y/Y and there’s no air show bump this summer.  Even the popular A321neo is down 52% Y/Y.  At Boeing, the 737-800 remains the most traded model and that is down 72% Y/Y.  The military and freighter business that has been dependable support for Boeing hasn’t helped in 2020. These numbers don’t speak to anything either OEM has done poorly between December 2019 and June 2020.  The market has seized, with transactions at 44% Y/Y.

The vulnerability of commercial aviation is clearly displayed.  We all understand the miracle of flight.  Now we also appreciate the miracle that is commercial aviation and how easily it can be disrupted.  The economic destruction taking place will take years, perhaps more than a decade, to recover.  As airlines go broke aircraft lessors and banks have to find new homes for their fleets.  New deliveries are disrupted,  Aircraft values have plummeted. Thousands of skilled and talented people are out of work.  Near zero economic activity means hardly any traffic.  Pandemic lock-downs further restrict movement.  The commercial aviation infrastructure cannot afford the low traffic flow.

This is a domino effect playing out.  The dominoes are easy to topple; setting them up again will be very hard work. And, worst of all, the time required for the resetting the dominoes is being pushed out to the right.  Airlines adding schedules for late summer are taking a huge bet.  In the US, spiking virus numbers are likely to fan more fear of flying.  Subscribers can view a more detailed model.

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