Economic Outlook n° 1188 | Special Report | Transport: a two-speedworld
Euler Hermes
termsofbothunit sales andas a shareof total annual netorders (less than10%). Thisdownturnis the result ofuncertainties–whichare currentlydissuasive for potentialbuyers–involvingdelivery schedules (B787/A350), technicalproblems (microcracksonthe A380) andwaitingonstrategicdecisions (futureof theB777).Aconfluenceofunfavorable factors also hinderedpurchasesof thesemore expensive aircraft lines in2012: reprisals followingtheCO2emissions quotas systemimposedby the EuropeanUnion (before its suspension) aswell as the sector’sgreater sensitivity totheglobal economy.Nevertheless, the past fewyearsofmediocre salesperformanceshave not causedsignificantdeteriorationintheorderbooks for these aircraft.
▶ Strategic responses tothesestructural risks These risks andothers,whichare inherent tothe aircraftmanufacturers’ activity andmarket, are shapingtheprofileof the aviationindustryof the future.
Risk 1
Thepressures feltby subcontractors following thedecisionsbyaircraftmanufacturers, i.e.end customers, toincreaseproduction. Thepathtofollowfor subcontractors–andone that is openly advocatedby aircraftmanufacturers–consists of industry consolidation,notably tier2andtier3 suppliers.Consolidationwouldgive thema financial basis large enoughtoensure their access tofinancing inorder toinvestor tosecurenet cashduringphases of fluctuatingbusiness activity (eitherupordown).
Risk 2
Theimpactsofdifficulties relatedtonew programsontheprofitabilityandnet cash positionof thetwomanufacturers,whicharea sourceofuncertainty that isdifficult toreconcile withtherequirementsof thefinancial community. Anumberof responses arepossible andtheywillbe deployedover time: • searchfor recurringcashflows tosmoothover changes inactivity/profitability,withthebolstering of maintenance, repair andspareparts activities,which inprinciple are less cyclical. • changeinprogrammanagement, withmore regular “technological iterations” insteadofdecades- longprograms that involvenumerous technological breakthroughs. The ideahere is tominimize the technical/technological risks. • thepossibilityofoccasionalhorizontal collaborationbetweenmanufacturers inorder to spreadtheindustrial risk.
Risk 3
TheAirbus/Boeingduopolyweakenedby the adventofCanadian,ChineseandRussiansingle- aislemodelsonthemarket. Giventhat thisoutlookwill soonbe realized, the two manufacturershave applieda strategyofdryingup anymarketpotential throughmajor sales initiatives.
Analysis of aircraftmanufacturer orders in2012 100