The world has changed remarkably in 2020. The new decade began with a sense of optimism and historically strong economies in both the commercial aerospace and defense sectors. Both sectors had seen a decade or more of continued growth. Healthy backlogs and strong demand looked unlikely to end in the foreseeable future.
Unfortunately, by March, we all realized that we were in the middle of a true “Black Swan” event. In a matter of days, the market went from continued optimism to an unprecedented decline in demand. At that point, most of the economy was put into an induced coma by governments around the world. Within weeks, 60 percent of the global commercial airline fleet was parked, and air traffic globally was down over 80 percent. This resulted in the announcement of tens of thousands of layoffs in the sector as demand for new aircraft has nearly disappeared for the time being.
The story of the decline and the impacts has been widely covered. The level of significance of the downturn has forced the industry to deal with immediate concerns facing the business, namely right-sizing staffing levels and protecting cash. While these are critical considerations, it is still important to not lose sight of the future and how to best reorient the business today to take advantage of the new market reality, and subsequent return to growth. No matter how well you handle the current problems, if you don’t position and align the business to what’s next, it may all be for naught. To get the balance right, there are six main issues the A&D sector needs to consider and address over the next six to 12 months.
1. Uncertainty Abounds
The A&D market has no shortage of analysts plotting upside and downside scenarios. While that may assist with understanding how many