
GC Online
Veteran GC Wolf Von Kumberg (Former Assistant General Counsel at Northrop Grumman Corporation) discusses how the aviation and aerospace industries are being impacted by COVID-19, and shares practical steps for making supply chains more resilient.
The industries most directly and immediately affected by COVID- 19 are aviation and aerospace, as borders were shut and lockdowns across the world ensued. Lufthansa announced that it is burning through €1 Million an hour and flying just 1 per cent of its usual passenger numbers. It has also furloughed 90,000 of its 135,000 employees. This is but one of the world’s estimated 800 commercial airlines globally; the trade body Iata predicted a 48 per cent fall in traffic this year and if it proves correct, at least seven years of airline passenger traffic growth would be wiped out in 2020, according to consultancy Cirium. Airlines are looking to cancel or postpone aircraft orders on a massive scale.
What is the effect of this on manufacturers such as Boeing, Airbus, Bae, Lockheed – to name but a few – whether we are speaking of commercial or defence products? The answer is that these companies are struggling with the uncertainty of future demand. In fact, Airbus chief executive Guillaume Faury has told the 133,000 employees of the company that Airbus has lost a third of its business in a matter of weeks. He stated: “We’re bleeding cash at an unprecedented speed, which may threaten the very existence of our company.” Meanwhile, Boeing has announced “that it plans to cut its workforce by 10 per cent, as the coronavirus pandemic slashed global demand for jets and forced the manufacturer to lower production rates for nearly its entire portfolio of commercial planes.”