Aerospace Pulse Check Q1/2024

Current sentiment 

At the beginning of 2024, sentiment recovered significantly after the slight downturn at the end of 2023. 65% of respondents assess the mood as positive or very positive, while the number of those who describe the mood as negative or very negative has halved from 16% to 8% compared to the last survey. The good capacity utilisation and the benefits of Airbus' dominance in the civil aviation segment are contributing to this positive mood (especially in the European supply industry). The industry is also fundamentally affected by different issues than the rest of the German economy. The signs are still clearly pointing to growth and recruitment, which are clearly the main topics, well ahead of cost-cutting measures or even job cuts.

The increasing importance of military aviation is also contributing to the positive mood, although so far both companies have received few orders in this area. Hopes are still pinned on the possibility of participating in US programmes (F35, STH) and on the timely award of the Eurofighter Tranche 5 by the German government. In this regard, Chancellor Scholz's visit to Airbus in Manching a few days ago is already being seen as a clear signal.

Airbus' dominance in the commercial aircraft segment and the growing importance of military aviation are the dominant industry

Further setbacks in Boeing's quality system have further strengthened Airbus' position in the civil aviation segment. Airbus dominates this market, and the European and German aviation supply industry in particular benefits from this. Consistently high capacity utilisation, further growth due to rising rates and a fundamentally positive outlook in the field of military aviation characterise the situation and are of the highest relevance to the companies surveyed.

However, the increasing industrial maturity and the start of series production in the field of eVTOL solutions are also relevant for the companies. By contrast, the relevance of programmes for climate-neutral flying is somewhat neglected. Although this is generally regarded as highly relevant to the industry, the integration of suppliers in particular is still lagging somewhat behind. This topic is currently dominated by research projects in the field of hydrogen-based solutions.

Beyond these industry drivers, however, the ‘homework topics’ are also mentioned again and again in our discussions and interviews. The entire supply chain is still quite fragile and fragmented and is not well supported by tool solutions with an end-to-end view. The human factor still plays a more important role in planning, managing missing parts and balancing capacities than in other industries. This also slows down a possible faster ramp-up of production.

The signs point to growth – Contrary to the general economic trend

Increasing and securing profitability, recruiting personnel and growth are the main topics of the companies surveyed in 2024. And thus the aviation industry is moving clearly against the general economic trend, which today is rather characterised by topics such as staff reductions and restructuring.

However, cost management issues will not be neglected either. In particular, cost-cutting initiatives that go beyond staff reductions (cost reduction in purchasing and internal value creation) are key topics for the companies surveyed in 2024.

Despite all this euphoria, the companies are still trying to grow outside the aviation industry. As pleasant as the strong growth from Airbus is, most of the respondents are aware that a strategy that relies solely on Airbus is very risky in the medium term.

The desire to become more independent in this regard, or at least to establish a second mainstay, has existed for many years. Only a few companies have already started implementing this.

Boeing's quality situation is a concern for the survey participants, even if only a few German suppliers are directly affected

Selected statements on strengthening the quality systems of the OEMs:

• ‘Courage to see quality as a strategic issue’
• ‘Boeing must put quality before profit, it owes it to aviation’
• ‘Integrate the supply chain more deeply and create standards together’
• ‘Reflection on long-term partnerships within Europe in the supply chain’
• ‘Expansion, training and qualification of own personnel’
• ‘Strengthen employee qualifications’