Russia-Ukraine War Could Cause Aerospace Supply Shortages
The conflict between Russia and Ukraine has shaken numerous economic sectors, including aerospace manufacturing. Under the circumstances, Embraer warned of potential issues sourcing metals due to the armed conflict and the sanctions imposed on Russia by the EU.
“We have contracts with other suppliers but the entire industry was buying supplies from Russia. Suppliers buy from other suppliers, which is why the supply of titanium is our main concern,” said Antonio García, Executive Vice President and CFO, Embraer. One of the world's largest producers of titanium is located in Verkhnyaya Salda, Russia, which could make sourcing this metal a problem.
Besides manufacturing challenges, global air cargo could also be affected by the rising fuel prices, economic sanctions and no-flight zones that are taking place since the start of the war, as reported by MBN. These problems could affect numerous markets including Mexico through rises in costs and delayed deliveries.
Manufacturing and supply chain delays could have long-term impacts on the aerospace industry, delaying the production and delivery of new aircraft. Latin America, for example, will need 2,530 new commercial aircraft during the next 20 years, according to Boeing. The region is expected to see a 4.8 percent annual growth in traffic until 2040, led mainly by low-cost and short haul carriers.
Boeing has paused buying titanium from Russia but Airbus continues sourcing the metal, according to Reuters. Both planemakers had previously halted the supply of spare parts to Russia. Moreover, a Russian law signed on Monday could allow airlines to keep leased airplanes, stoking fears of the potential default of millions of dollars. Many lessors fear that Russia could stop paying for the airplanes, which cannot be seized because they no longer fly to the west.
The scarcity of aircraft and the materials to build them could further affect the market, putting the industry’s recovery further away.