Supply chain strains set to weigh on aviation industry bounce-back

By Xinghui Kok, Lisa Barrington and Brenda Goh

SINGAPORE (Reuters) - Parts shortages and delivery delays plaguing the global aviation industry are easing, but could take up to two years to resolve, firms at the Singapore Airshow said, adding to the pressures clouding a post-pandemic recovery in travel demand.

European planemaker Airbus said it was sending "dozens and dozens" of engineers deep into supply chains to unlock bottlenecks, and aircraft maintenance firms such as Lufthansa Technik said they were stocking more spare parts to mitigate delays. But all said the sector was in a tight spot.

Post-pandemic travel demand has rebounded globally, prompting airlines to order new, more efficient planes to expand networks and cut costs, particularly in Asia Pacific.

Giants Airbus and Boeing are struggling to meet demand.

"Next year's deliveries will be nine months late from the contracted time," Michael Szucs, chief executive of Philippine budget airline Cebu Pacific, told Reuters on the sidelines of Asia's largest aviation summit, referring to new Airbus aircraft.

Lead times to procure items such as metals and windshields can be 2 to 5 times longer compared with pre-2020, firms told Reuters, because of reduced production of aerospace materials, loss of skilled manpower during the pandemic, and reduced supply sources caused by the war in Ukraine.

"The aerospace-grade titanium shortage started with the Ukraine war," said Roberto Tonna, chief executive of aerospace supply chain firm ALA. There are also shortages of materials such as inconel and steel, and skilled labour, he added.

"We got quoted 72 weeks for a product that usually we would get in 36-40 weeks ... I think it would take 18-24 months to go back to the way it was before," Tonna said.

Prices for some parts have surged, said Paul Bolton, chief operations officer of maintenance firm First Aviation Services, saying he had seen increases of 20%-30% on some compared with more typical 3%-6% annual increases.

Some metals are difficult and expensive to source because of increased demand from countries beefing up their defence capabilities, said Joseph Yun of Bibus Metals, which supplies high-performance metals.

Since late 2023 hundreds of planes with GTF engines by RTX subsidiary Pratt & Whitney have been subject to temporary groundings for engine inspections, which can take up to a year and look set to continue for years.

Maintenance firm Lufthansa Technik, part of German aviation group Lufthansa said it is hiring more staff, bulk buying more parts and developing its own repair solutions to fulfil customer agreements on time.

"The previous supply concept was probably 'just in time'; I order when I need it. This is over," said Dennis Kohr, head of Asia-Pacific corporate sales at Lufthansa Technik.

Cebu Pacific is keeping more spare parts locally, Szucs said.

"We have to carry more resiliency than ever in terms of our operations," including a higher level of standby aircraft and crew, he said. "That's one of the costs of uncertainty."

"It's great to be making money again but, boy - it is challenging," Szucs added.

(Reporting by Xinghui Kok, Lisa Barrington and Brenda Goh. Editing by Gerry Doyle)