Reinvigorated-Commercial-Airline-Industry-Supply-Chain
The United States has the oldest and
deepest commercial airline supply chain in the world. After
decades of losses, the reorganized commercial airline industry now
has three large, financially strong U.S. carriers - Delta,
American, and United. In addition, regional U.S. carriers
Southwest and JetBlue are also financially strong.
Perhaps more importantly, some of the world’s largest airlines now
operate outside of the United States, including in Asia and the
Emirates, and are growing even more rapidly than U.S. airlines.
Growth Impact
This level of industry growth impacts
the entire airline industry supply chain. Increased orders
for new planes ripple through the entire supply chain. Existing
aircraft bodies themselves can last for decades, however sustained
growth generates engine and component replacements including
landing gear, tires, and seats. Existing aircraft can be
updated to today's avionics and the seat replacements can include
today's entertainment systems and accompanying audio visual
systems.
Tax and accounting advisers have the opportunity to provide a
variety of airline supply chain growth related services.
Financial Statements and Loans
Expanding aircraft suppliers need
working capital and facility expansion financing which often
requires regular, timely, and typically a higher level of
financial statement preparation. To get lenders comfortable
with the new industry environment, advisers should communicate
recent positive industry trends to the lending community.
Equipment Purchases
A strong commercial airline supply
chain needs new machine tools and other equipment. Today's
advanced machine tools provide the precision and quality necessary
in this industry. The aircraft industry has become the
leading purchaser of new 3D printers for both original equipment
manufacturing (OEM) and replacement parts. Tax and leasing
opportunities are available for 3D printers which are described in
detail in Thomson Reuters’ October 2015 newsletter issue
(Providing Business, Tax, & Accounting Advice for 3D Printer
Purchase Decisions).
Regulatory Industry
For obvious safety and reliability
reasons, the airline parts and equipment business is highly
regulated. U.S. suppliers have made major investments in
time and money to achieve the certifications and approvals
necessary to supply and serve this industry. Informed advisers can
help the U.S. airline supply chain industry leverage its existing
intellectual property and position in this industry and capture a
large percentage of this new growth in the U.S.
