Why Boeing likely won't see mass cancellation of orders following the 737 Max debacle
Airlines, Boeing’s BA, +0.68% main customers, are hungry for fuel-efficient single-aisle aircraft such as the Max, and there’s a long backlog for the jet’s closest competitor, Airbus SE’ AIR, +1.01% A320neo, analysts at Oxford Economics said in a note Thursday.They also predicted a relatively mild ripple effect for the U.S. aerospace industry, with defense orders offsetting a small contraction, and no effect at all on the U.S.’s GDP.
The U.S. aircraft industry “will bear the brunt of the production disruption, with much smaller impacts across the commercial aircraft supply-chain,” it said. Many of the affected aircraft-parts suppliers have longer lead times than Boeing and cannot scale back production overnight. Other industries, such as metals and machinery, have limited direct exposure to aircraft demand, with many other buyers in the wider industry sector.
For the U.S. aerospace products and parts industry, Oxford Economics forecast an output contraction of 0.4%, with the decline partly offset “limited” aircraft parts production disruption and “buoyant” aerospace defense activity.
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