2020 to be another year of strong performance for global aviation industry, says PwC forecast

20 January, 2020

PwC's new 2020 global aviation industry forecast, 'The End of the Innocence?', was launched on January 20 in advance of two major airline conferences in Dublin this week: Airline Economics Growth Frontiers at the Shelbourne Hotel, and the Airfinance Journal conference in the CCD.

The new industry forecast for global aviation, providing a review of the global aviation industry for 2019 and offering some insights and predictions for the industry in 2020 is written by leading aviation finance expert and consultant to PwC Ireland, Dick Forsberg.

An airplane flies directly overhead: a worm's-eye view from the atrium of a high-rise building.

The key forecasts for 2020 are:

  • The 737 MAX will return to service in Q2, but unevenly around the world and less than half of the undelivered backlog will have been cleared by year-end
  • New orders will remain below recent peaks, with an aggregate book to bill below 1:1
  • Turboprop sales will get a boost from climate change concerns, with regional airlines increasingly replacing older jet fleets with environmentally friendlier propeller-driven alternatives
  • The EU will open discussions on further ways to cap, and ultimately reduce, aviation emissions
  • Climate concerns will put more pressure on European domestic and regional growth prospects. Most other parts of the world will remain only marginally affected

Speaking ahead of the launch of the report Dick Forsberg said, "Global commercial aviation has been in a positive, expansive and profitable state for a decade, experiencing a longer bull run than in almost every previous industry cycle. Uniquely, the airline industry was profitable in every one of those ten years. Whilst still comfortably profitable, 2019 was a bumpy year in many respects, raising existing challenges on a scale rarely encountered in the aviation industry. Now, at the start of a new decade, a sense of change is in the air. New uncertainties and risk factors are increasingly coming to the fore."

"The challenges faced by Boeing are unprecedented and have raised issues that go far beyond the confines of the 737 MAX and its customers. Aviation's regulatory regime is under the microscope and must undergo some fundamental changes in the months and years ahead, with consequences for the Original Equipment Manufacturers (OEMs) and their existing and future aircraft models and variants."

Forsberg continued: "The issue of climate change and sustainability also took centre stage in 2019, with airlines and aircraft squarely in the crosshairs. The global aviation industry must keep control of the narrative and speak up for what it has been doing and is continuing to do to improve its impact on the planet. Continuing to rely on past performance is no longer enough to convince the court of public opinion or government policy makers that further intervention is not required."

"On balance, however, despite the many uncertainties, 2020 should see another strong performance from the global aviation industry, with growth and profitability broadly on a par with 2019."

Commenting on the Irish aviation industry, Yvonne Thompson leader of PwC Ireland's Aviation Finance Practice said, "The global aviation industry has enjoyed an unprecedented positive cycle over the past 10 years but recent challenges have resulted in an element of "taking stock". Taking action towards a sustainable outcome will be the 'challenge of the century'. This will require the entire breadth of industry players to think beyond the normal and ensure they deliver inclusive, responsible and lasting success. We look forward to continuing the conversation in Dublin this week as the industry descends on the global capital for aviation finance."

ENDS

Note to editors

About Dick Forsberg

Dick Forsberg is a leading aviation finance expert and consultant to PwC Ireland. He has over 48 years of aviation industry experience, working with airlines, operating lessors, arrangers and capital providers in a variety of roles spanning business strategy, industry analysis and forecasting, asset valuation, portfolio risk management and airline credit assessment.


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