KBRA releases a report assessing the current state of the aircraft manufacturing market. The report discusses the opportunities and challenges the sector faces, including the current supply-and-demand dynamics, the orderbook of passenger and cargo aircraft, and the near-term headwinds hampering production rates alongside the broader weaker macroeconomic environment. KBRA also examines the medium- and long-term manufacturing trends for the industry, including demand for next-generation aircraft and efforts to reduce carbon emissions.

The report notes that following the weakest two-year period on record for net aircraft orders and sales, the global commercial aircraft manufacturing industry’s operating profits and margins began to recover, albeit slowly, during 2H 2021—with high hopes for further improvement in 2023. The recovery, combined with adequate liquidity levels for most airlines and lessors, makes it more affordable for airlines to purchase or lease new aircraft, which are needed to address solid increases in passenger traffic volumes and the need to modernize their fleets. Moreover, airline focus on updating older, less fuel-efficient aircraft is crucial to the growth of aircraft manufacturing and related industries, and to cutting carbon emissions from air travel.

Overall, despite clear momentum for the return of global travel to pre-pandemic levels, KBRA believes the deteriorating macroeconomic environment coupled with higher jet fuel prices could impede demand growth, especially as inflationary pressures and rising rates constrain disposable income and business travel demand.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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