COVID-19’s impact on the aerospace and defense sector
Guidance for aerospace and defense executives
As the COVID-19 pandemic continues around the world, many global aerospace and defense industry companies are feeling the impact during this uncertain time. This article discusses the concerns of the short, mid and long-term disruption COVID-19 will have on the industry including aircraft manufacturing and defense and the next steps that can be taken to respond, recover, and thrive.
In commercial aviation, companies are experiencing disruption in production and slowing demand as workers go home, passengers stop traveling, and customers defer delivery of new aircraft. Demand for spare parts is also down since less maintenance is currently required. Aircraft manufacturers are capital intensive by nature, thus raising short-term concerns about cash flow and liquidity. On the defense side, contractors are better positioned, since they will not feel the impact of COVID-19 in the short- to mid-term. While production may slow for the same reasons as in aircraft manufacturing, demand over the next two years is unlikely to be affected since budgets for these projects had been allocated prior to the pandemic and the projects are critical to national defense.
Topics covered in this article:
- Potential long-term impact on companies
- Key questions executives and boards should be asking
- Practical next steps