Solutions in US aircraft industry to combat adverse effects of coronavirus outbreak

Evgeniy Vladimirovich Gorovoy
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Evgeniy Vladimirovich Gorovoy: Russian Foreign Trade Academy, Moscow, Russia

Russian Foreign Economic Journal, 2020, issue 7, 104-118

Abstract: In the article, the author analyzes economic effects of coronavirus outbreak for the US aircraft industry and measures taken to combat them. These measures can be divided into three groups: 1) relations with customers (air carriers), 2) relations with suppliers, 3) government support. The article describes air carriers’ attempts to amend the provisions of aircraft sales agreements, to reschedule the delivery dates of aircraft and to negotiate additional discounts. Plunged air traffic resulted in lower demand for civil aircraft as well as equipment and parts for civil aircraft. Thus, big companies started to lay off workers while medium and small companies either went bankrupt or were taken over. Apart from credit fecilities, US government support includes signing new defense contracts to prevent production capacities from shrinking and workers with security clearance from being laid off. The U.S. Department of Defense also improves payment terms under existing contracts. The reason why Boeing declined to accept government support underlines the difference in approaches to government support in the US and in EU or Russia. Government support of EU aircraft industry may include export credits that makes it more difficult for Boeing to compete on internal and external markets once coronavirus restrictions are lifted. In conclusion, the author outlines new procedures in the aircraft industry that appeared during the recent pandemic, as well as the prospects for the airline traffic and aircraft industry.

Keywords: Aircraft industry; USA; coronavirus; Boeing; Airbus; General Electric; Spirit AeroSystems; US Department of Defense. (search for similar items in EconPapers)
Date: 2020
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