TIs absence Steam trails in a clear sky are a clear sign that commercial aviation has been hit hard by the COVID-19 virus. The result for jet engine makers creating those ephemeral lines – fewer aircraft sold, fewer flying hours, and early retirement of older aircraft when fleets are trimmed – is a triple blow to an industry that mostly benefits by keeping them in the air for years after they’ve been sold.
The immediate effect of the business, dominated by a few manufacturers, was fully on display on March 11th. Rolls-Royce, a British company that competes with the aviation division of General Electric of America (Give) To operate wide-body aircraft over long distances, and published grim results for 2020. The blow to commercial aviation, the source of half of its revenue in 2019, resulted in an operating loss of 2 billion pounds ($ 2.8 billion). It sold only 264 large engines, down from 510 the previous year.
Rolls-Royce is likely to recover more slowly, as it only manufactures the engines for the long-haul markets worst affected. But Pratt & Whitney, a division of Raytheon, an aviation and defense group, is competing with a joint venture between Give French company Safran, a manufacturer of engines for short-range aircraft, revealed a 20% drop in revenue in 2020. Give Aviation sales fell by a third to $ 22 billion and shed 13,000 jobs, a quarter of the total.
The recession will have an impact for years. Engine makers operate more like service companies than traditional manufacturers. They sell engines at a cost (or even a loss) to build a “proven base”. about Give, The strongest of the three, this amounts to 37,700 units. In an engine life of 20 years or more, the provision of parts and maintenance brings three to five times the sales price, Bernstein, the middleman, believes. Production cuts by Airbus and Boeing, which build the same aircraft, mean lower demand for engines. Reducing capacity by airlines only makes matters worse. With early retirements and about a third of the fleet in storage, tankers can save planes for expensive parts or even replace entire engines due to an expensive repair for those with fewer miles on the clock.
A merger between GECAS Corporation, The massive aircraft leasing unit, and Ireland’s AerCap, announced on March 10, could also disable engine makers. In recent years, Airbus and Boeing have preferred to offer only one type of engine for new aircraft rather than a choice, thus reducing their development costs. But it leaves less room for airlines to extract discounts from engine makers by threatening to go with a competitor. GECAS CorporationWith a fleet of more than 1000 aircraft Give More power to insist that the two large aircraft makers chose the sole source. Under the new ownership, its strategy may change.
Uncertainty about the next generation of aircraft is another headache. Airbus said last year it aimed to have a zero-emissions plane by 2035, possibly using hydrogen as fuel. Boeing is looking at biofuels. Neither company has firm plans yet. But ads like this worry Rolls-Royce, which has spent £ 500m on UltraFan, a more efficient engine but using current technology. If aircraft makers are serious about going green, they may struggle to find customers. ■
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This article appeared in the business section of the print edition under the headline “Losing Direction.”
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