The airline industry will be ravaged for years to come and the effects will be felt throughout the economy, new Moody’s report says

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  • Commercial aviation will be ravaged by the COVID-19 pandemic for years to come, according to a new report from Moody’s.
  • All stakeholders, from airlines and airports to aircraft rental companies, aircraft manufacturers and parts suppliers, will be crushed, with effects spilling over to the entire global economy.
  • In the best-case scenario, Moody’s predicts a recovery by the end of 2023, but said it increasingly seemed likely it would take longer.
  • Visit the Business Insider homepage for more stories.

The commercial aviation industry will continue to be devastated by the coronavirus pandemic for years to come, according to a new report from Moody’s. The ripple effects are likely to be felt throughout the global economy.

According to the report, the effect on aviation industry stakeholders – from airport operators and aircraft rental companies to aircraft manufacturers and their suppliers – will shake up the industry well into 2022, and likely beyond. -of the.

“And the outsourcing by airlines of many services, along with the size of their workforce and the consumption of refined petroleum in normal economic times, supports economic activity in many sectors of the global economy,” said analysts, led by Moody’s senior vice president Jonathan, said. Root, writes in the report.

The main driver of the recovery will be sustained passenger demand, according to the report. As this improves, airlines and airports will start to recover, followed by aircraft lessors as demand continues to rise and airlines need more planes for carry passengers. Aircraft manufacturers will follow, while component suppliers will be the last direct responder to recover, but Moody’s says that won’t happen until 2023, at the earliest.

The forecast is based on the assumption that passenger demand will return to 2019 levels – the benchmark for a recovery – by the end of 2023, subject to the production and distribution of effective COVID-19 vaccines or treatments. .

However, Moody’s has warned that it is also modeling the possibility of a slower recovery – and that such a scenario seems more possible in recent weeks.

“The recent experience of increasing infection rates concomitant with a loosening of social distancing and quarantine protocols indicates that passenger demand will likely align more with our slower recovery case,” says the report, ” because social distancing and quarantine protocols are more likely to be maintained and / or revert to more restrictive mandates as infection rates rise again. ”

The forecast is in line with the delay that analysts and industry experts began to recognize in late April, with most citing a three to five-year recovery timeframe for the airline industry. The expansion of this forecast shows that despite optimism about a brief and modest recovery in May and June, the outlook for the aeronautical industry remains bleak.

The good news for the industry is that Moody’s – along with other analysts – expects it to make a full recovery eventually, as long as it can get through the difficult years ahead.

“Despite the difficult market environment that we envision for the next few years, when passenger demand finally returns to 2019 levels, we believe that the industry will then need almost as many aircraft as those in service in 2019, “said the report.

Even so, not all airlines or industry stakeholders will survive.

“With an effective coronavirus vaccine that is unlikely to be available until 2021 – and will likely take longer to cover potential mutations in the virus and to ensure adequate dosing for the masses – additional government support will be needed for the industry air transport if employment levels are to be kept close to already reduced levels, “says the report,” and potentially to avoid additional airline restructuring and insolvency proceedings (whether preventive or not). ”

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