How A Recession Could Impact the Aftermarket Supply Chain

Credit: Lufthansa Technik

In a recent interview with Bloomberg TV, Boeing president and CEO Dave Calhoun was asked whether the aircraft manufacturer might welcome a recession as a possible balm for supply chain worries.

He was hesitant to agree, but did note that a “softening of demand” or “slowdown” in other industries would benefit Boeing’s retention and attraction of staff in key areas such as software development and data analytics.

Such benefits would likely accrue also to the many aftermarket companies that shrunk during the pandemic and are now fighting to rebuild their skilled labor pools.

“Skilled staff often turned to other industries outside aviation and the required qualified staff are rare and hard to re-recruit,” said Niels Dose, product sales and key account manager, base maintenance services at Lufthansa Technik, in a recent interview with Inside MRO.

Of course, recession also risks destroying the ultimate basis for adding such staff, namely the resurgent demand that airlines are now experiencing. This will especially be the case if inflation persists and airlines struggle to pass on higher costs by raising ticket prices.

Furthermore, supply chain shortages in other areas, such as materials, may persist for some time, as Calhoun also noted in the Bloomberg interview.

“It’s not clear to me when [the supply chain] gets fixed, but the planning horizon we have to attend to would suggest it doesn’t get fixed until the end of next year,” he said.

SR Technics Malta’s vice-president operations, Daniel Galea, noted in a recent interview with Inside MRO how such problems are affecting his company. “We are also observing massively long lead times in general, and with that we receive constant notifications that pricing had to increase due to the lack of supply,” says Galea. 

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.