Supply Chain Leaders See "Fragile" Improvements, But Warn of Labor and Sourcing Risks
At the ALTA AGM & Airline Leaders Forum, executives from Boeing, Airbus, Embraer, and HEICO debated the path to pre-pandemic stability, citing data, labor shortages, and tariff impacts as key factors.
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The aviation supply chain is "definitely improving" after several years of crisis, but remains "very fragile," according to a panel of top industry executives. While manufacturers are ramping up production, panelists warned that a significant loss of expertise in the workforce, ongoing tariff disputes, and an over-reliance on single-source suppliers pose significant threats to a full recovery.
The panel was moderated by Carlos Garcia, Partner at Oliver Wyman, who framed the discussion by noting the supply chain's massive financial impact. "Just last week, Oliver Wyman and IATA published a report on the impact of the supply chain, and we quantified that the global impact for all airlines in 2024 is around $11 billion," Garcia said.
A 'Positive' but 'Fragile' Recovery
Panelists agreed that the situation has improved significantly since the pandemic. Wagner Ricardo of Embraer stated, "I think that [the situation] has been improving. Two, three years ago, all of us had a problem with all our suppliers". He noted that Embraer has managed to ramp up: "From 2020 to last year, we increased by 70% the number of E-Jets, E1 and E2 together". He projected a return to pre-pandemic delivery levels in "two [or] three years".
Arturo Barreira of Airbus concurred, calling the improvement "significant" and stating, "we're getting back to pre-pandemic levels... we plan to deliver well over 720 aircraft this year," though he cautioned that the year would be "heavily backloaded".
However, Jose Sici of Boeing offered a more cautious view. "I think today the trend is positive, but I would say it's still very fragile," he said. Sici pointed out that the supplier base is not just the "big guys" but that the "vast majority of them are small companies of 500 or less... and that supply chain... takes time to rebuild".
A key reason for this fragility, Sici noted, is the massive loss of human capital. "We lost about 20% of the expertise... in general in aviation," he said.
The 'Cancer' of Sole-Sourcing and Tariffs
Alex de Gunten of HEICO was outspoken about the structural risks in the industry, particularly the move toward consolidated, single-source suppliers. "I think one of the problems of this industry is that we've gone more and more into sole sourcing," he argued. "You basically have a supply chain which is one chain... every little break on that link is going to create a problem". He later described sole-sourcing as "a cancer that will eventually" cause harm.
De Gunten also criticized the impact of US tariffs, which create "more paperwork," "delays," and "confusion". "All of this ultimately increases the cost for the airlines. And that means it will increase the cost for the passenger," he said. "It's hard to quantify the cost of uncertainty, and that is a big cost".
Wagner Ricardo elaborated on the potential impact of tariffs on the US market, noting, "40% of all domestic flights in the US are flown by Embraer jets. We have 1,200 aircraft flying in the US... and more than 100 million passengers per year. The vast majority of those passengers connect through hubs in the US. Imagine the impact on the network in the US".
The Path Forward: Data and People
Looking ahead, the panel saw technology and data as critical. Arturo Barreira highlighted Airbus's initiative: "It was seven or eight years ago, we partnered with Palantir to create Skywise. It's an open data platform that we use with suppliers, with customers, and internally".
Jose Sici of Boeing spoke of using this data to change maintenance philosophy. "How do you get better? It's technology. It's how you go from predictive to prescriptive. How you anticipate," he explained, referencing the data from "very chatty" modern airplanes.
But technology alone cannot solve the problem. The human element, and the struggle to attract new talent, remains a primary concern. Alex de Gunten shared a personal, "sad" anecdote: "We have a challenge in getting young people to get excited about aviation. I have two kids who are engineers... I tried to get them into aviation. [They said,] 'Dad, that's old technology'".
Ultimately, the panel's consensus was one of cautious optimism. While data and new technologies offer a path to greater efficiency, the fundamental challenges of rebuilding a depleted workforce and mitigating the risks of a consolidated "one-chain" supply line will require a concerted effort from OEMs, airlines, and regulators alike.
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