Commercial aviation

themes
Demand and Supply

Oct 2023

An EY Knowledge report

Page 1
Our Perspective
Commercial aviation demand boosted by a recovery in passenger traffic and airline industry
profitability amid lagging business travel and tough macroeconomic conditions
Demand
Passenger traffic recovery Airlines profitability
Domestic traffic to reach 2019 levels in 2023 Macroeconomic conditions
The airline industry is forecast to return to a net profit position
while International traffic to reach 2019 Rising interest rates pushing up borrowing
in 2023 with a focused approach to reduce debt
levels by 2025 costs as well as purchasing costs
American Airlines plans to reduce total debt by US$15 billion by the
Recovery era i 8,000
82.6%
65.2% 66.9%
78.7% 80.9% 100.0%
end of 2025, net profit US$ 9.8 billion (forecasted) in 2023 Cost pressure on airlines
n aviation 4,000 8,688 7,633 50.0% Rising fuel and labor costs coupled with a
2,974 3,623
5,948 Growth in passenger traffic will keep strong yield to continue for
- 0.0% plausible pullback in domestic traffic demand
2019 2020 2021 2022e 2023f the airline industry in the near term but it will normalize starting
RPK (US$b) Passenger load factor (% ASK) could hamper airlines' profitability
FY24-25

Premium air traffic recovery Business travel still recovering Blended travel
The premium traffic has recovered faster than total Corporate travellers are still not back in full force Leisure travellers willing to spend more on
passenger traffic 2.8 Business flight per person per year premium seats
Passenger traffic (% share of Feb 2019) 2.0
86% -31% 1.6
Structural cha 81% 1.3 -19% Structural changes
46% 46%
nges in busine There is a growing sense that lower levels of
ss travel Short Haul Long business flying are here to stay with corporate
2019 2022Haul
Total2022 2023
Passengers Premium Passengers*
flying reduction targets

Airline industry is seeing fewer entrants Innovative strategies adopted by new entrants
Regulatory constraints, lease rates, labor shortage and
decarbonization efforts will continue to deter new airlines’ High density (new Serving new routes Focus on sustainability
business models)
Innovation in 100entering the market
airlines 64 54 54 47 44 46 52
50 20
35
19
37
25 23 28 24
35
8 13
Entering Bring long range capability to the Targets unconventional domestic Promote sustainability by using SAF and
Exiting singe-aisle market with the routes(underserved market) over big most fuel efficient aircraft to attract new
0 2014 2015 2016 2017 2018 2019 2020 2021 2022 A321XLR city routes customers

AAM market Increasing investments by financial (primarily VCs) and strategic

AAM market is projected to grow rapidly towards commercialization by 2028-30, driven by technology investors in eVTOL start-ups has been a fundamental driver
5,812.8
Advanced Air advancements, strategic investments and partnerships 14,764
17,270 Value ($M)

Mobility (AAM 9,233

10,791
12,622
1037.7
16 1947.2
7
Strategic
7,905
) 4,263 4,972 5,802 6,771
142.5 16 9
13
24 20 VC
volume
3.5 4 27.6 9 7 7
commercializ- 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2017 2018 2019 2020 2021 2022
Others

ation Page 2
Positive Sentiment Negative Sentiment
Our Perspective
Commercial aviation facing covid-induced supply chain challenges (parts and material shortage)
along with workforce shortage across the value chain
Supply
Shortage of technical talent Attrition and retention
Continues to be a challenge for A&D companies amid recovery in air travel A&D companies are facing competition not only from each other but also from
rebounding post-pandemic multiple other sectors in the race to recruit employees with strong technical skills
ATCs
Shortage of sk AMTs
The Transportation Department in May 2023 A&D Attrition, 2017-22 7.10% A&D industry’s attrition
illed and techn Through 2041… the industry sought $117 million to hire 1,800 air traffic 5.90% 5.40% 5.80%
ical talent 4.30%
5.00% rate rose to 7.1% in 2022
predicts a need for 610,000 new controllers next year, in addition to 1,500 from 5% in 2020 and 4.3%
maintenance technicians being hired this year in 2017
2017 2018 2019 2020 2021 2022

Ageing workforce Is there a shortage of pilots?

A third of the current pilot base will be forced to retire before 2035-37 The scenario (historical and forecast) for the North America region
Age distribution for US airline pilots (2022)
does indicate a relative consistent pattern between passenger traffic
Average age of Air transport pilot
16% 17% 16% and ATP growth numbers
Pilots shortag 51 yrs 12% 13% 14%
North America Air Traffic vs pilot (ATP*) growth
e 7%
2.8%
2.3%
46 yrs 4% 1.3%
0.9%
1%
01 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 20 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 2010-2022
Passenger Traffic 2023-2040
Pilots

Quality issues Raw material and parts availability

Regular quality issues from OEMs (aircraft and engine) have COVID -19 and Ukraine conflict have continued to hinder the flow of material (titanium, nickel, cobalt) to
disrupted production and held up deliveries OEMs, creating part shortages and production delays

Supply chain 737 and 787 GTF and LEAP

constraints Pressure on small supplier
It requires inspections and Engine issues increase the
likely repairs to Increased working capital requirements influenced by surged inventory levels amid expected industry
maintenance costs, reduces the
undelivered aircraft ramp-up forcing supplier to look for more financing option amid higher interest rates
availability of aircraft

Positive Sentiment Negative Sentiment Note: AMT = Aviation maintenance technician , ATC = Air Traffic Controllers, ATP = Air Transport Pilot Page 3
Demand
Air traffic: Domestic traffic to reach 2019 levels in 2023 while International traffic to reach 2019
levels by 2025. The demand for air travel is expected to double by 2040
Airline industry passenger demand Recovery and outlook

10,000
82.6% 80.9%
90.0%
• Passenger traffic demand in terms of RPKs
78.7%
80.0%
• Industry-wide RPKs reached 96.1% of pre-
8,000 65.2% 66.9% 70.0%
pandemic levels (39.1% year-on-year) in May
60.0%
6,000
2023
50.0%

8,688 40.0%
4,000 7,633
30.0%
• Capacity in terms of ASK
5,948
2,000 20.0% • Overall available seat capacity recovered to 95
3,623
2,974
10.0% % of pre-crisis levels while global passenger
- 0.0%
load factor was fully restored to 2019 levels
2019 2020 2021 2022e 2023f

RPK (US$b) Passenger load factor (% ASK)

• Passenger Load Factor
Passenger Traffic Growth Forecast • At 81.8%, May marked the first month that the
global passenger load factor was fully restored
CAGR Additional Passengers by 2040,
Region Recovery year
(2019-2040) millions to 2019
World 2024 3.4% 394,080
Europe 2024 2.1% 66,581 • Demand Outlook
N America 2023 2.2% 56,498
• Origin-destination passengers are projected to
Asia Pacific 2024 4.6% 255,441
increase from around 4 billion in 2019 to just
Middle East 2024 3.7% 27,603
over 8 billion at the end of the forecast horizon
L America & Caribbean 2023 2.9% 31,347 (2040)
Africa 2024 3.4% 15,572

Page 4
Source: IATA, Aviation Week, EYK
Demand
Airline debt: Airlines are continuously reducing their debt to better navigate the cyclical nature of
the airline business and improve credit ratings, particularly in the post-COVID
Major US Airlines - Net Debt 2019-1Q23 (US$ billion) Debt Situation
34.2 33.7 34.7
29.3 29.6 30.5 American Airlines plans to
24.5 25.2 reduce total debt by US$15
22.6 22.6
18.0
20.0
15.5 22.2
20.9 billion by the end of 2025,
15.8 22.7 16.7
14.3 while Delta airlines aims to
10.6 15.1
6.6
7.3 8.0 reduce its net debt by ~US$7
5.1 4.5
1
0.2 0.4
billion by the end of 2024
0.1 (0.3) (0.1) (1.1)
(3.2) (2.9) (2.9)
2015 2016 2017 2018 2019 2020 2021 2022 1H23

Rising fuel prices increase

American Airlines Delta Air Lines United Airlines Southwest Airlines pressure on airlines to invest in
fuel-efficient aircraft, however,
with interest rates and borrowing
Major European Airlines - Net Debt 2019-1Q23 (US$ billion)
costs rising, many airlines are
still burdened with debt incurred
12.9
13.3 11.5 during the Covid crisis
10.9 10.0
10.8 9.9 8.1
8.2 8.2 8.4 8.4
7.8 7.6 7.6
6.2
7.3
6.1 6.5 6.8 Lufthansa reduced its net debt
5.0 6.5
3.13.6 3.8 4.1 by 24% y-o-y in 2022 and sees
2.9
2.4 1.0 3.2 1.7 2.4 2.5
0.7 1.1 0.8 1.4 1.6 increased cash flow to de-
0.3 0.4 0.5 0.5
-0.4 -0.3 -0.6 lever as a key pillar of its
2015 2016 2017 2018 2019 2020 2021 2022 1H23
financial strategy
Lufthansa IAG Turkish Airlines Air France-KLM Ryanair

Page 5
Source: IATA, Aviation Week, Bloomberg, Flight Global, CAPA, EYK
Demand
Airlines profitability: The airline industry is forecast to return to a net profit position in 2023, at
US$ 9.8 billion
IATA airline profitability estimate: Initial vs revised
IATA’s airline global airline
11.4 11.5
9.8
profit estimate for 2023
has doubled to $10b,
5.1 4.7 mainly on higher expected
2
0.3 0.8 1.4 0.6 European profits

-0.2 -0.5
Global airlines’ profits
-6.6 -6.9
ranged from $26-38b in 2017-
Africa Asia-Pacific Middle East Latin America North America Europe Global 19, prior to the pandemic
Dec-22 Forecast Jun-23 Forecast

Net profit per passenger (US$)

Asian carriers are still
6 6.4 10.1 9 9.2 6.2 5.8
expected to show
2.2 2.9 3.1 3.4 4.1 2.2
significant losses in 2023
-4.2 -2.8 -1.9 -1.9 -1.1
-10.5
-19.2
Total airline revenue is
expected to recover to
around 93% of the 2019
figure, with operating profits
-76.2 reaching USD 22.4 billion

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023F
Page 6
Source: EY
Demand
Rising fuel and labor costs coupled with a plausible pullback in domestic traffic demand (due to
high inflation and rising interest rates) could hamper airlines' profitability
Labor and fuel costs account for more than 50% of an Airlines’ aggregate costs
• The global airline industry’s fuel bill is estimated to reach USD 215 billion in 2023 Most US airlines have
• Major airlines have either signed a billon dollar agreement (American and United) with pilots union or under negotiations cut the profit forecast
for the upcoming
Crude Oil and Kerosene-type Jet Fuel Spot Prices
(US$ per barrel), May 2023- Sep 2023
Industry labour metrics quarters
195 3.0
2.9
125 140 190
40% 185
2.9
The magnitude of costs
115 120 180 2.8 2.8 which can be transferred
105 175
2.7 2.7 to customers will depend
100
95
170
189
2.6 of the price-elasticity of
165 2.6 2.6

85
80
177
demand amidst high
160 2.5
60 169 inflation and even higher
75 155
150
160 160 2.4 air fares
65 40
145 2.3
May 2023 Jun 2023 Sep 2023 2019 2020 2021 2022e 2023f
Labour costs (US$b) Employment (m) Persistent high inflation
Crude Oil Kerosene-type Jet Fuel
and rising interest rates
might impact air travel
Aggregate labor expense for the eight US demand that had been
The spread between crude oil prices and Jet fuel
airlines is expected to increase by 19% in relatively unphased by
prices have increased by nearly 3 times as jet
2023 and another 8% in 2024, will constraint the slowdown in
fuel prices surged 40% from May 2023 to
growth in operating margins discretionary spending
September 2023

1- Delta, American, United, Southwest, JetBlue, Spirit, Hawaiian, Allegiant

Page 7
Source: IATA, Aviation Week, WSJ, EYK
 Demand
Passenger Yield: Growth in passenger traffic will keep strong yield to continue for the airline
industry in the near term but it will normalize starting FY24-25
Passenger Yield % change (y-o-y) Summary
15
Series 1 Pent-up demand is released with • The high demand for travel in many
the easing of travel restrictions markets is keeping yields strong with a
10.4 modest 1.1% decline expected in 2023
9.8
10 compared to 2022 levels (following increases
8.5
7.5 of 9.8% in 2022 and 3.7% in 2021
5.9 When fuel costs fell from 32% of
airline revenue in 2013 to just 19% • While individual events, such as financial
5 in 2016, passenger yields also fell 3.7 crises and the COVID-19 pandemic, may
2.6 temporarily push up yields, the overall trend
0.9 1.3 has been a significant decline in real
0 passenger yields over the past two decades
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20222023F
-1.1
-1.3
-1.4 • Despite falling yields, higher passenger
-3
numbers mean that overall revenue for
-5 -3.9 -3.7 airlines continues to rise. Many carriers
-5.4 Passenger yields are have experienced a significant rebound
expected to soften as following the pandemic – a trend that looks
-7 somewhat lower energy set to continue for some time yet
costs are passed
-10 -9.1 Forecast through to the
-10.3 consumer, despite • The downward trend in airline yields is
passenger demand closely tied to the downturn in real unit
Passenger yield then COVID Pandemic growing more quickly
continued to weaken
costs, which has been fueled by technological
than passenger
-15 while fuel costs stabilised capacity innovation and significant regulatory changes
-14.8 and rose modestly as a in the industry
percentage of revenue
(2017-19)
Global Financial Crisis
-20
Page 8
Source: IATA, Aviation Week, CAPA, EYK
Demand
Business travel: A plausible positive trajectory for premium-class air travel despite pandemic
unclear effect on consumer preferences and business travel patterns

Recovery in premium class air travel* Business Travel shifts Growth Drivers

Business Travel**
• Strong premium leisure demand: Leisure
Global
travellers willing to spend more on premium
Passenger traffic (% share of Feb 2019) Flight per person per year
seats (blended travel represent more share in
2.8 total sales volume for major US airlines )
-31%
81% 86% 2.0
1.6
1.3 -19% Structural changes (challenges)
46% 46%

• There is a growing sense that lower levels of

2022 2023
Total Passengers Premium Passengers*
• The number of short-haul business flights per
• In February 2023, the total number of air
passengers continued to approach pre-
pandemic levels
• It is interesting to note that at the global
• International business travel budgets have
scale, premium traffic has recovered
faster than total passenger traffic
*The data refers to the premium cabin class, encompassing first
and business class, but does not enlighten us as to the purpose of
travel, and might thus include leisure travelers who choose to
travel in greater comfort
business flying are here to stay, with many still
Short Haul Long Haul expecting top executives to set corporate flying
reduction targets, driven by cost savings,
2019 2022
changing travel habits and sustainability needs
• Many airlines are targeting higher-yield leisure
person per year was down 31% in 2022 travelers with upgraded products such as
compared with 2019, and the number of long- premium economy
haul leisure flights was 19% lower
• While current pricing power is strong, it is quite
difficult that more premium economy travelers to
recovered to 58% of pre-pandemic levels; for offset reduced business travel revenue.
domestic business travel, it is 68%. Carriers might thus downgauge to smaller
aircraft for international flights or simply reduce
the number of long-haul aircraft
*By frequent travelers in the U.S., France, Germany and the UK
(UBS Evidence Lab)

Page 9
Source: IATA, Aviation Week, Bloomberg, Flight Global, CAPA, EYK
 Demand
New airlines: The Airline industry is seeing fewer entrants than ever before (except for COVID-
19 period) but with new innovative business models/strategies
Strategies being adopted by new entrants Strategies being adopted by new entrants

70 64 • Bring long range capability to the singe-aisle market

60 54 54 52 with the A321XLR, enabling airlines to extend
50 47 44 46 High density their networks at the lowest possible cost by
40 35 37 35 (new business following its standard business model of offering
28 models) seats for a low price (e.g. VietJet, Wizz Air
30 25 23 24 announced international flights with an upcoming
20 19
20 13 fleet of A321XLR)
8
10
0
2014 2015 2016 2017 2018 2019 2020 2021 2022
• New upcoming airlines (e.g. Avelo, Breeze Airways)
targets unconventional domestic routes over big city
Entering Exiting routes. Finding underserved markets (cities) with a
Serving new/ large enough population to support services but not
unconventional large enough to attract big carriers
Pre COVID-19: New airlines entering the market has significantly
declined with the exception during COVID-19 routes • Use alternative airports and offer aa la carte pricing,
so passengers pay only for what they need

COVID-19: Pent-up demand, lower aircraft prices (with most fleets being
grounded), pilots and crew availability in the short period after the pandemic and
availability of airport landing and take-off slots as well as attractive lease rates in
2021 led to an uptick in new player entering • Airlines have established long partnership
agreements with SAF providers (Canada Jetlines
and ClearySky Global)
Focus on
Post Covid-19: Regulatory constraints, lease rates, labor shortage and sustainability • Brand new fleet of most fuel efficient aircraft
immediately positions new airlines among leaders in
decarbonization efforts and airport slot availability will continue to deter new environmental efficiency (Arajet operating its fleet of
airlines’ entering the market latest 737-8 aircraft)

Page 10
Source: BBC, TNMT, CAPA, IATA, Aviation Week, EYK
Demand
AAM market is projected to grow rapidly towards commercialization by 2028-30, driven by
technology advancements, strategic investments and partnerships
Advanced Air Mobility Market (AAM) Revenue Outlook ($,m) Growth Drivers

Near term Mid term Long term • Rising investments and collaborations by start-ups,
government bodies & aerospace players
17,270 • Advancement towards commercialisation through
accelerated R&D efforts and testing
14,764 • Traffic congestions due to urbanization and
+16.9% environmental concerns with exponential rise in vehicle
12,622 emissions
10,791
9,233
7,905 Restraints
+16.7% 6,771
5,802
4,972
+18.9% 3,654
4,263 • Evolving regulatory framework with significant
2,669 3,133 complexity and differences between countries
2,175
• Concerns for safety among consumers
• Lack of infrastructure to enable commercialization
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

eVTOL start-ups strategic benchmarking

Ranked by Investments, $m
Joby Eve
1 Volocopter Beta Lilium Vertical Archer
Aviation Mobility

2 Launch year 2025 2024 2024 2026 2026 2024 2025

4 3 5 6 7
$3,298 Order book - 260 410 603 2,770 1,450 300

$1,672
All-round Multiple In-house 2nd Highest Highest orders, 2nd highest Well funded,
$801 $856 $761 $629 $619 partnerships, Air collaboration infrastructure, Air funded, Backed by orders, Air Air worthiness
Strengths worthiness with infra worthiness Multiple use Embraer’s worthiness approval
Approval providers, approval, cases, expertise Approval,
Production Multiple use case Air worthiness Multiple use
approval approval cases

Source: Aviation Week, Reuters, Pitchbook, Frost & Sullivan, Mordor Intelligence, EYK Page 11
Demand
Increasing investments by financial (primarily VCs) and strategic investors in eVTOL start-ups
has been a fundamental driver in advancement of the AAM ecosystem
eVTOL Deal investments Technology roadmap
5,812.8

e1
Value ($M) 2021 Phas
Strategic
Testing of manned
VC volume electric flights
Others
16
Phas
7 e2
2025
16 9 24
20
Electric air taxi enter
operation for urban
13 mobility
e3
142.5 9

Phas
4 7 7

3.5 27.6 2030-35 Small hybrid-electric

2017 2018 2019 2020 2021 2022
aircraft and business
jets enter into service
− VC investments in the advanced air mobility industry increased multi- Phas
fold over the last two years, with various air mobility start-ups raising e4
funds to the tune of ~3.8 B from these financial investors in 2021 2035-40
Commercial airlines
offering regional
− Strategic funding by aerospace giants such as Boeing and Airbus has flights based on
also helped foster a favorable environment for the AAM sector, as these hybrid-driven aircraft
e5
companies are investing toward developing prototypes for evaluation
2045-50 Phas
Large commercial
− eVTOL ecosystem, globally, also attracted funding via SPAC route, led
electrical aircrafts enter
by some of the early movers in this space such as Joby Aviation, Archer into service for regional
Aviation and Lilium and inter continental
operations

Source: Aviation Week, Reuters, Pitchbook, Frost & Sullivan, Mordor Intelligence, EYK Page 12
Supply
Shortage of skilled and technical talent continues to be a challenge for A&D companies amid
recovery in air travel rebounding post-pandemic
Shortage of technical/skilled talent Attrition and retention

Aviation maintenance Air Traffic Controllers (ATCs) A&D Attrition, 2017-22

7.10%
5.90% 5.80%
technician (AMT) • The FAA had 10,578 certified 4.30%
5.40% 5.00%

• Through 2041… the industry controllers in 2022 — virtually

predicts a need for 610,000 the same as 2021 — and down 2017 2018 2019 2020 2021 2022
new maintenance technicians 10% from 2012
• In 2021, the Aviation • The Transportation Department • A&D industry’s attrition rate rose to 7.1% in
Technician Education Council in May 2023 sought $117 2022 from 5% in 2020 and 4.3% in 2017
reported that the average age million to hire 1,800 air traffic • In addition, A&D companies are facing
of an FAA mechanic was 53 controllers next year, in
competition not only from each other but also
years old—11 years older addition to 1,500 being hired
from multiple other sectors in the race to
than the median age for a US this year
recruit employees with strong technical skills
worker

The shortage of MRO workers would not Major airlines have to reduce Many companies are
only imply that the industry would have schedule flights (return considering, or beginning to
to pay higher wages to attract and retain summer slots and flight implement, more comprehensive
talent, but will result in delays as well as timings at congested airports) talent strategies to help their
higher turnaround times for repairs due to ATC shortages workforces meet increasing
demand
Page 13
Source: Aviation Week, Boeing, Flight Global, Reuters, EYK
Supply
With 50% of the current licensed pilots retiring in the next 20 years, the aviation industry needs
to step up their efforts on recruiting trainees as replacements
Age distribution for US airline pilots Average age of Air transport pilot
North America Air Traffic vs pilot (ATP*) growth
(2022) 17%
16% 16%
Average Annual Growth Rate (CAGR) 14%
13% 51 yrs
12%
2.8%
2.3%
7%
1.3% 46 yrs
0.9%
4%

1%
2010-2022 2023-2040 01 03 05 07 09 11 13 15 17 19 21
20 20 20 20 20 20 20 20 20 20 20
Passenger Traffic Pilots 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Ageing workforce population

Is there a shortage of pilots?
• A third of the current pilot base will be forced to retire before 2035-37
The scenario (historical and forecast)
for the North America region does • In July 2023, the US House of Representatives voted to pass legislation that would
indicate a relative consistent pattern raise the mandatory commercial pilot retirement age to 67 from 65
between passenger traffic and ATP • Airlines have set up either their own flight schools or have linked up with independent flight
growth numbers. schools and branded their own programs

Retirements are the most Airline industry needs to Considering post-covid recovery in
significant risk given an rethink (partnering or opening commercial fleet, a record number of
aging workforce which could new flights) how it trains pilots aircraft will coming online over the
lead to net reduction in and recruits the next generation next 10 years and airlines industry
pilots in this decade of aviation labor in the cockpit must be ready with sufficient pilots

Source: Aviation Week, Reuters, Pitchbook, Frost & Sullivan, Mordor Intelligence, EYK *ATP = Air Transport Pilot Page 14
Supply
Supply chain constraints: Near-term supply chain constraints (material & part shortage and higher
cost of capital) exacerbated by quality issues across the A&D value chain
Quality issues Raw material and parts availability Pressure on small supplier

737 and 787 – regular quality Ukraine conflict – It has exposed Higher cost of capital –
issues have disrupted production the reality of the widespread reliance Increased working capital
and held up deliveries as it on Russia for critical minerals, such requirements influenced by
requires inspections and likely as titanium, nickel, cobalt and surged inventory levels
repairs to undelivered aircraft vanadium (inflation, parts shortage)and
increase payment terms amid
Pandemic-induced disruptions – expected industry ramp-up
GTF and LEAP – engine issues forcing supplier to look for
have continued to hinder the flow of
increase the maintenance costs, more financing option amid
materials (steel, semiconductor
reduces the availability of aircraft higher interest rates (US
chips, windshields, castings) to
and requires more frequent regional banking crisis and
OEMs, creating part shortages and
inspections and replacements of government loan guarantees
production delays
the affected parts are ending in Europe

Increased lead Suppliers’ inability to Risk of forged/unapproved Lack of predictive supply

times for suppliers match ramped-up parts making way into the chain solutions make A&D
(especially mid-tier production impacting system amid material companies inadequate to deal
supplier) OEMs long term goals shortage with supply chain crisis

Source: Aviation Week, Reuters, Pitchbook, Frost & Sullivan, Mordor Intelligence, EYK Page 15
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