4 months ago

The Aerospace Industry Sets Course for Supply Chain Recovery

Supply chains for leading aircraft manufacturers Boeing $BA and Airbus $AIR.PA are showing signs of moderate improvement after facing significant challenges in recent years. The COVID-19 pandemic and production halts have reshaped the dynamics of the global aviation industry. With these challenges in mind, the question arises whether the market can stabilize and fully restore the supply of necessary parts. This perspective has been echoed with optimism by Tony Douglas, CEO of the Saudi airline Riyadh Air.

Supply Chain Problems Contemporary Challenges in Aviation

1. Pandemic and Its Aftermath

COVID-19 emerged as a key disruptor for the supply chains of aerospace manufacturers:

- International transport restrictions slowed the delivery of components.

- Factory closures worldwide led to product shortages.

- Post-pandemic recovery proved complex due to a sharp increase in demand for air travel.

2. Boeing Strike

In 2022, Boeing's aircraft production encountered a seven-week halt due to employee strikes, adding further strain to an already stressed logistics system.

Improvement in the Situation

Despite ongoing tension, signs of improvement are becoming more evident. During an event at the FII Institute in Miami, Tony Douglas stated:

“Are there serious problems — yes, definitely. Is the supply chain stretched to its limits — yes, absolutely. But do I see signs of moderate improvement — frankly, yes, I do.”

Particular focus is given to tier-two suppliers serving both Boeing and Airbus, currently a significant bottleneck.

A New Player in the Airline Market Riyadh Air

Backed by Saudi Arabia’s Public Investment Fund, Riyadh Air is actively carving out a role in the aviation industry:

1. Aircraft Supply Contracts:

- Ordered 60 narrow-body A321 aircraft from Airbus.

- Additionally, an agreement for up to 72 Boeing 787 Dreamliner has been secured.

2. Addressing Challenges:

The company has made efforts to minimize supply chain difficulties but thus far remains discreet about specific strategies.

Conclusion

The aviation sector is slowly yet steadily adapting to new realities. Despite prevailing challenges, moderate improvements in supply chains foster optimism for major manufacturers and their partners. As a new player in the market, Saudi Riyadh Air exhibits a determination to overcome obstacles and establish itself in this strategically vital sphere. The industry's recovery process is a lengthy journey, but preliminary steps in the right direction are already evident.