As expected, 2nd quarter has proven to be just as challenging as the 1st quarter of 2020. The aviation industry is still suffering from a serious decline in market demands, forcing most of the industry to downsize their operations in order to stay operational. Massive cutbacks on investments have left OEM’s like Airbus and Boeing in a tailspin, downsizing their immediate monetary expectations for both current fiscal year but also the future to come. Many of thousands from the aviation sector have lost their jobs over the past 6 months and there’s no immediate resolution to when the industry will be fully operational again.
Government funding, or aid packages, has been crucial during the pandemic to support global trade, including import and export of critical and important commodities, in order to avoid a total collapse of our trade infrastructure. This has kept most freight operators busy, which is one of the only few highlights from Q2.
As expected, our pax services remained dormant throughout Q2 ascending towards the end. Our cargo services experienced a slightly higher activity level with a minor increase in our capacity. Our inventory request level (IRL) saw an 8% climb to almost 130 million dollars indicating a positive sign of optimism in the market compared to Q1.
Q2 had a few surprises with the introduction of a few new prospects. This included a new major carrier in Asia joining our portfolio, as we continue our growth in that part of the world.
Our consultancy units saw as expected, an increase in our global activities, and we expect to see this grow in Q3 as well. As the industry continues to suffer from low yield, our main responsibility is to assist and align global expectations with current market demands, to prevent further financial disruptions, or even worse a chain of bankruptcies. Lessors, including OEM’s, are desperately trying to restructure their businesses in order to minimize loses, keeping as many aircrafts operational as possible. Hopefully this will give the ACMI market and start-ups favorable conditions, preventing further loses for the stakeholders, but also keeping other businesses alive who heavily relies on the aviation industry. However, all this depends on how well the individual countries around the world deals with the pandemic, and how fast the politicians are ready to act to get the industry operational again.
We still expect to see a slight improvement in the global market throughout the 3rd quarter of 2020. Our pax services and freight services will slowly begin to accumulate revenue as the recovery in the industry is gathering speed and we see a higher level of activity among travelers and goods.
Our consultancy services will continue to grow as the financial situation intensifies and the need for restructuring is required.
There’s no doubt Q3 will be challenging and that the industry will continue to struggle until the pandemic is under control. Continuous government support is needed to prevent a further collapse of the infrastructure and the aviation sector as a whole. It is critical that we remain focused on the road ahead, preventing spontaneous decisions from disrupting an immediate reconstruction of the aviation sector, but also focusing on a future reliable supply chain to support the road ahead as traffic begins to populate our skies again.
Dustin Paul Wilden
Chairman of the Group