Airplane Mini Recession?

Recently, Lufthansa huddled about its long standing 777X order made in 2013. Monarch airlines went out of business holding 30 Boeing Max 737 orders. Is this an airplane mini recession or just the normal churning of aircraft orders in the daily business cycles  of  risk adverse management?

The Emirates wide body order looms large in a holding pattern over the Dubai airshow. Its order intent may lose fuel and come crashing down at this year's show citing a lessening passenger demand while causing some industry re-thinking.

A deeper study from every business goal and intent may reveal a small aviation trend where orders are in a flattening order spin over the last several years. Its getting harder to find mega orders for any class of aircraft.   The buyers swamp has been drained, a little bit. However, an order storm cloud is gathering an ominous view via the intent route. Airlines are ordering (sort of) using MOU's or LOI's. The customer retains a golden LOI parachute when intending a purchase, thus making it a mini airplane recession.

Buying aircraft outright is an indicator of  awesome demand or when negotiating for six months is an indicator financial ducks are not in a row. A mini recession could be measured in how long it takes to confirm an order. The longer the confirmation time taken, the more of an indication of its airplane customer's financial well being.

When would a current mini recession evaporate? Remember the reference to a storm cloud, it too can evaporate with the right cross-winds. The expectation for a returning demand market is controlled by
every conceivable action from the world's social/political environment. It is also affected by the environment itself. Aviation's business models are in the gate awaiting the bell and a gate swaying start. The occasional bankruptcy and the re positioning of billions of dollars are all micro-recessionary influences which can and will pass through as a wisp in the morning fog. The main thing in the current market is the end of year measure by mega aircraft builders. Both Boeing and Airbus each have its own worries but tend to look through mini recessions.

Within a annual cycle these events would lend to a bump in the order road.

• A mini-recession would last no longer than six months
• Its spread would encapsulate a handful divergent airlines
• A possible and immediate change to a demand cycle exists within this period.
• A mini recession is difficult to track.
• Airshows tend to balance the outlook for any recessions and demand
• Airshows tend to point to absolute trends.

The current trend is for a mix of rough air and smooth flying until early 2018. The one off problematic encounters for each of the mega framers will go under cover thus indicating a visible normal cycle creating a market balance until what few mega sales remaining are announced.