Editor’s comment: Ripple effect

Inflight editor Alexander Preston summarises the latest happenings across IFEC and cabin technology.

While much of the economic headlines surrounding the grounding of the 737 MAX has focused upon the impact to Boeing and/or to its airline customers, the collateral damage suffered by suppliers has largely flown under the radar.

This week, Astronics released its Q2 2019 results, revealing its AeroSat division was responsible for a massive 70% of its US$7.7 million operating loss from its three challenged aerospace businesses.

According to Astronics’ president and CEO, Peter Gundermnann, the lower demand in the quarter for in-flight entertainment and connectivity products is the result of two high profile events: Firstly, the failure and subsequent loss of a critical satellite in April, has led to the pausing of the company’s planned tail-mount connectivity system for large business jets, and, secondly, concerns around the 737 MAX.

As Gundermann admits, the situation “negatively affects our volume for the 737 MAX production line, but also complicates fleet management plans for airlines, which in some cases may delay certain upgrade initiatives until resolution is apparent.” And upgrades drive the majority of Astronics’ sales in IFE and IFEC.

“We are watching the situation closely and will be deciding an appropriate action as the situation becomes clearer.”

Just when this clarity reveals itself is unknown. This summer it’s predicted that there will be 40 million fewer plane seats available. Southwest Airlines, United and Air Canada are just a few of the airlines to have extended the removal of MAX flights from their schedules.

Air Canada’s president and CEO, Cain Rovinescu, has said: “At present, we have no visibility on reliable timing for the return to service of the Boeing 737 MAX as we await regulatory approvals.”

So, it seems a wait-and-see approach is the order of the day, along with constant communication with customers. Looks like accountants will be busy for some time.


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