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Supply Chain Leaders Note Modest Improvements Amid Labor and Sourcing Risks

Supply Chain Leaders Note Modest Improvements Amid Labor and Sourcing Risks
The aviation supply chain is exhibiting tentative signs of recovery following years of significant disruption, yet it remains “very fragile,” according to a panel of senior industry executives. While manufacturers are increasing production levels, persistent labor shortages, sourcing vulnerabilities, and structural weaknesses continue to pose substantial risks to a full and sustained rebound.
Carlos Garcia, Partner at Oliver Wyman and moderator of the discussion, underscored the financial stakes involved. He referenced a recent joint report by Oliver Wyman and the International Air Transport Association (IATA), which estimates the global supply chain impact on airlines in 2024 to be approximately $11 billion.
Recovery Gains Amid Lingering Fragility
Panelists acknowledged that conditions have improved since the height of the pandemic. Wagner Ricardo of Embraer noted that the situation has been steadily improving over the past two to three years, a period during which the company faced widespread supplier challenges. Embraer has increased production of its E-Jet family by 70% since 2020 and anticipates returning to pre-pandemic delivery volumes within the next two to three years.
Arturo Barreira of Airbus expressed a similarly optimistic view, describing the improvement as “significant” and projecting deliveries exceeding 720 aircraft in the current year. However, he cautioned that much of this production would be “heavily backloaded,” reflecting ongoing pressures within the supply chain.
Jose Sici of Boeing offered a more measured assessment, emphasizing the fragility of the current recovery. He highlighted that the supplier base predominantly consists of small companies, many employing fewer than 500 people, and stressed that rebuilding this network will require time. Sici also pointed to a “massive loss of human capital,” estimating that approximately 20% of aviation expertise has been lost across the industry.
Structural Risks: Sole-Sourcing and Tariffs
Alex de Gunten of HEICO drew attention to deeper structural risks, particularly the growing dependence on sole-source suppliers. He described this trend as increasingly problematic, likening it to “a cancer that will eventually” undermine supply chain resilience. According to de Gunten, the reliance on single supply chains means that any disruption to one link can have cascading effects throughout the industry.
De Gunten further criticized the impact of U.S. tariffs, which he said introduce additional paperwork, delays, and uncertainty. These factors, he warned, ultimately increase costs for airlines and, by extension, passengers. Quantifying the cost of such uncertainty remains challenging, he added.
Ricardo reinforced this concern by noting the potential impact of tariffs on the U.S. market, where Embraer jets account for 40% of all domestic flights.
Industry Response and Outlook
In response to ongoing labor shortages and sourcing risks, airlines and manufacturers are intensifying efforts to enhance supply chain resilience. Strategies include shifting toward more localized sourcing, forming strategic alliances, and investing in advanced technologies to improve supply chain tracking and risk management. Additionally, there is an increasing emphasis on sustainability, driven both by regulatory requirements and evolving consumer expectations.
Despite these modest improvements, industry leaders concur that overcoming persistent vulnerabilities and adapting to a rapidly evolving market environment will be essential to achieving a robust and sustainable recovery.

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