January airlines & commercial aerospace outlook: what do analysts say?

Global air traffic remains far below pre-pandemic levels even after the worst decline in history. While US traffic has improved, there is still a long way to go before it reaches pre-pandemic levels outside the US.

We have analyzed the airline and commercial aerospace sectors' growth prospects, cycle's distinguishing features and their implications for growth.

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Here are the main points we have highlighted:

Global air traffic remains far below pre-pandemic levels even after the worst decline in history. While US traffic has improved, there is still a long way to go before it reaches pre-pandemic levels outside the US.
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According to the analysts, the commercial aerospace industry and airlines are currently still experiencing a 25% global decline, necessitating a robust recovery in 2023. They say that until at least 2024, it's unlikely that the level will globally reach its levels from 2019.
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In which areas of activity of airlines and commercial aircraft  the benefits and risks of recovery are seen?
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According to experts, the most significant recovery will be seen in the secondary market. There has been a key increase in traffic, which results in a significant increase in the number of repairs.

“We are also witnessing fleet aging as supplies fail to meet people's expectations. Older planes necessitate more maintenance. Because we know that manufacturers can raise their prices, price control is becoming more prevalent. In fact, RTX's prices have risen by about 12% since October. They usually only rise in January and by 5% to 6%, which is a net positive in the long run.”

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Significant risks slowing down the recovery of the industry are:

• Cyclical slowdown in global GDP growth, passenger and cargo air transportation
• A sharp rise in oil prices, reducing the profitability of airlines (and passenger traffic, as ticket prices rise to compensate for this)
• The growth of the airline's capacity due to new deliveries, exceeding the growth rate of air transportation
• The risk of selling new products on the market.
• Competition from new foreign participants
• Threat to suppliers from Boeing's Partner for Success program

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