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

By Howard Smith – Jun 18, 2020 at 10:15AM

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Parts suppliers and maintenance firms plan for a 75% decline in 2020 business, with no turnaround in sight.

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 (DAL -1.34%) 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 (AAL -1.71%), for example, has announced that it is permanently retiring some models and is parking its fleet of Airbus (EADSY -0.51%) 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 (GE -1.31%) and systems firms like Honeywell (HON -1.82%) and Raytheon Technologies (RTX -0.58%)

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. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
$28.06 (-1.34%) $0.38
General Electric Company Stock Quote
General Electric Company
$61.91 (-1.31%) $0.82
Raytheon Technologies Corporation Stock Quote
Raytheon Technologies Corporation
$81.86 (-0.58%) $0.48
Honeywell International Inc. Stock Quote
Honeywell International Inc.
$166.97 (-1.82%) $-3.10
Airbus Stock Quote
$21.47 (-0.51%) $0.11
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$12.04 (-1.71%) $0.21

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