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Aircraft sector waits for Covid-19 to pass

29th Oct 2020 7 min read

Santander’s Life Sciences Week initiative offered the chance to support businesses in the sector with a series of webinars and sessions focusing on challenges and opportunities.


The commercial aircraft sector has been particularly badly hit, following a highly challenging period for the global aviation industry during the Covid-19 pandemic. New orders in August hit their lowest level on record, down 59.0% and 91.3% on the same months of 2019 and 2018 respectively. On aircraft deliveries, August 2020 was down 13.3% on August 2019 and 55.9% down on August 2018.

However, it is worth pointing out that part of the decline relates to the impact of the issues with the Boeing 737 Max, which prompted a pause in its production during 2019. Airbus, meanwhile, posted its highest delivery figure of the year in September, and has managed to keep its net order figure at 300 for the first nine months of the year – more than double what it had achieved at the same point of 2019.

Nevertheless, it is clear that low aviation passenger numbers continue to impact manufacturers. ACI World data shows airport numbers globally saw a 58.4% year-on-year reduction in passenger numbers during the first half of 2020. International passenger traffic was worst hit, with a 64.5% decline, with aircraft movements falling 41.6% and cargo volumes down by 12.4%. Some 4,500 aircraft remain out of service, with around 650 expected to be retired before the end of the year.


Planning for Brexit

The UK government published the latest version of its Border Operating Model on 8 October, following an early edition published in July. The document provides further detail on the arrangements that will apply when the post-Brexit transition period comes to an end on 31 December. It includes guidance on areas such as the UK’s new infrastructure, including locations, more detail on delayed customs declarations and the requirements of Entry in Declarants Records (EIDRs).

The publication also highlights further detail on movements of goods, as well as information relating to passengers’ policies, the requirements for the aviation, rail and energy sectors and the responsibilities of EU member states. The model does not cover Northern Ireland or the Protocol. You can access the document here


Opportunities in space for UK businesses

The UK’s space sector operates at the cutting edge of innovation and generates revenues of £14.8bn a year. The UK has ambitious targets for the sector, aiming to secure 10% of the global space market by 2030, when it is expected to be worth £400bn, and to create 30,000 new jobs.

The UK Space Agency (UKSA) has just signed a historic agreement with NASA on the latter’s Artemis programme, which aims to land the first woman and the next man on the moon by 2024. UK space businesses will play a key role in this mission, with contracts to build the service and habitation modules for the Lunar Gateway, a new space station that will orbit the moon.


Rail industry moves ahead on HS2

High Speed 2 Ltd has awarded the contract to design and manufacture modular slab track for the HS2 project to a consortium led by Porr UK and Aggregate Industries UK. The £260m award, announced on 5 October, covers track for the London-West Midland Phase 1 and the West Midlands-Crewe Phase 2a elements of HS2.

The work will rely on the Slab Track Austria construction system developed by Porr and Austrian Federal Railways, with manufacturing taking place a in a new facility to be established near Shepton Mallet in Somerset. The work is expected to support up to 500 jobs over the life of the contract.

Elsewhere, the launch event for Rail Forum Midlands’ second SME Challenge, one element of the Rail Sector Deal Midlands Pilot workstream, took place on 21 October. This challenge focuses on “Opportunities for Decarbonising Freight”. More details are available here


Manufacturing sector news

The 2020 Santander Trade Barometer, published on 8 October, is the latest instalment of our regular landmark survey of business sentiment and their views about international trade. This edition of the report suggests many businesses remain surprisingly optimistic about future growth, with 59% confident they will grow over the next three years, down only marginally from the 62% who said the same thing in the spring survey. Among manufacturers, however, this figure falls to 54%.

The report also charts a deterioration in performance, with just 32% of all businesses reporting an in improvement in performance (compared to 46% in the spring), falling to 22% among manufacturers. And worryingly for the sector, where productivity improvements are badly needed in this challenging environment, business investment remains depressed; just 39% of businesses intend to invest in product development over the next 12 months, while only 36% expect to take on new staff.

It isn’t only the Covid-19 pandemic that presents difficulties for businesses, with the ongoing uncertainties of Brexit also representing a challenge. However, the Trade Barometer suggests businesses do not intend to back away from exports – 26% say international markets are now more important to them in the wake of Covid-19, against only 5% who say less. 

This will require businesses to address obstacles to international growth, with the Trade Barometer highlighting areas including regulatory change post-Brexit, bureaucracy and the difficulty of finding trustworthy partners and connections. Then there are pandemic-related problems. Some 48% of manufacturers cite supply chain disruption from Covid-19, 44% point to falling demand, and 40% are concerned about the loss of opportunities for face-to-face meetings in overseas markets, or to attend events such as exhibitions and conferences.

To discuss how Santander can help your business during the Covid-19 pandemic, please contact