the supply chain will experience more and varied strains and disruptions.” The reason we are mentioning this here in an aviation

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article is that most avionics incorporate some degree of electronics, which may be imported in from China, creating a ripple effect upon many industries that rely on such components. More directly, Airbus was forced to temporarily close its final assembly line (FAL) in Tianjin, China, in mid- February, with reports weeks later that it would be restarting sometime soon. This facility is also the location of the Completion and Delivery Centre for the A330 wide-body jet, as well as the most recently (November 2019) adding new capabilities to the facility of accepting deliveries of the Airbus A350. It is “too early to say,” if the planned first A350 delivery in 2021 will be impacted according to an Airbus spokesperson. Boeing stated that the outbreak has an effect upon Q1 jet deliveries and air traffic, amid widespread travel restrictions and airlines suspending China travel. No other details were provided. But the Boeing factory in Shanghai was focused on installing 737 Max interiors primarily, so this was already affected by the earlier 737 Max issues. French aeronautics and defense contractor Safran had also shuttered its 20 plants with 2,500 employees across China in February, with reports that these were already re-opening. Chinese MROs were impacted initially, but are reportedly back up and running to a significant degree.

MASS RIPPLE EFFECT UPON THE AIRLINE INDUSTRY Approximately two-thirds of the passenger aircraft in China have been grounded at the peak (?) of the epidemic. Chinese airlines ferried 70% fewer passengers from the end of the Lunar New Year break from January 27 to February 12 in comparison to a year ago, according to the Civil Aviation Administration of China. Airlines there have dramatically reduced operations, put pilots on leave, and asking lessors to refinance their fleets to preserve cash. How all of this affects the smaller Chinese airlines is

unknown, especially the HNA Group since it has a high debt load and may need a bailout from the Chinese government.

Experience. Unlike any other.

Airlines and travel in neighboring countries airlines are also affected, with Vietnamese airlines having collectively lost approximately $430M in revenue, as per the most recent reports. Asiana Airlines, Thai AirAsia, and Air Asia X each have ~30% of their business tied to China. Korean Air and All Nippon Airways (ANA) are around 20%. Delta Air Lines and United Airlines are the top two





U.S. carriers to China, and each has less than 5% of their capacity going there.

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