rescinded the order that grounded the aircraft and published an Airworthiness Directive specifying design changes that must be made before the aircraft returns to service. This not only affected undelivered aircraft but also the 387 in airline inventory prior to the grounding, as changes specified in the Directive must be implemented on all affected aircraft before being put into or returning to service. Even though Boeing expects to fully


resume 737 Max deliveries in 2021, this will not contribute to investment casting sales, as airframe inventory levels must be significantly reduced before the company returns to full production.


Other Factors There were, and still are, a number of factors affecting commercial airframe purchases that existed prior to the pandemic.


Although interest rates


are favorable, airlines are not highly motivated to replace aging aircraft with newer, more efficient models due to low fuel prices. Historically, the combination of low interest rates and high fuel prices were key drivers to purchases. Additionally, the global fleet was in a growing state of surplus capacity.


If


the delivery trend of the past decade were to continue, growth in Available Seat Miles (ASMs) would outpace the anticipated growth in Revenue Passenger


Miles (RPMs), resulting in


declining Load Factors. For this reason, last year’s forecast for the 2020-2021 timeframe was relatively flat, reflecting a market correction. In fact, the correction started in 2019, as emerging market deliveries were halved.


market accounted for 23% of all jet airliner deliveries in 2018.


The COVID Affect Civil aviation suffered a tremendous blow as frequent travelers and vacationers spent most of their time in compliance with Shelter in Place orders. TSA reports that there has been a 72% decline in Traveler Throughput since March 1, 2020 when compared to the prior year. April, the first full month after the March 15th CDC announcement, was the worst


®


hit, down by 95%. Although this does not translate directly to RPMs, which preliminary figures indicate are down by approximately 60% for the year, it is clearly indicative that the airline industry is in a precarious state. Clearly, leisure traveler fear of exposure to the coronavirus, businesses restricting travel due to economic and safety considerations and the versatility of today’s virtual communication platforms have played a significant part in not only creating this situation, but will also be a hindrance to rapid recovery.


Other factors affecting air


traffic include mandatory quarantines and vaccine availability and distribution.


Emerging


Commercial Aerospace IC Sales In 2019, North American Commercial Aerospace investment casting sales hit an all-time high of $2.98 Billion. In 2020, the industry experienced an estimated 35% decline, resulting in $1.93 Billion in North American sourced investment castings. Marginal growth is expected in 2021, and current estimates place the year at $1.97 Billion. Taking the aforementioned factors


into consideration, Commercial Aero- space is not expected to return to 2019 levels until the 2023/2024 timeframe.


Military Aerospace Unlike its commercial counterpart, North American Military Aerospace


sales experienced minor decline due to supply chain interruptions. Key factors affecting the supply chain included temporary plant closures, slow adaptation to socially distant manufacturing and the supply chain for imported direct materials was shut down.


It is important to note that demand


played no part in this decline. In fact, the US currently has the world’s largest military spend, and due to the rapid growth in Chinese military expenditures, it is believed that it will continue to remain strong. However, these are rising concerns that the cost of the CARES Act will ultimately check military spending. In 2020, North American investment casting sales to this subsector totaled $1.09 Billion. Supply chain interruptions resulted in an approximate 12% decline in subsector sales, positioning 2020 at $0.96 Billion. Immediate recovery is anticipated for the Military subsector, and 2021 sales are forecast to be approximately $1.14B.


Aerospace Summary Consolidating North


American


Commercial and Military Aerospace sales, we find that Aerospace sector experienced a 29% decline in sales in 2020, falling from 2019’s all-time high of $4.07 Billion to $2.89 Billion. The


Continued on pg 12 January 2021 ❘ 11


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