Canadian Manufacturing

Aerospace firms lament Chinese economic slowdown

While the slower economy has an impact, a J.P. Morgan analyst said demand for aircraft is relatively secure

August 26, 2015  by Ross Marowits, The Canadian Press

MONTREAL—Fears of a Chinese economic slowdown that shocked markets and rattled investors is also hampering Bombardier’s efforts to firm up sales of its new CSeries aircraft, according to the Montreal aircraft manufacturer.

“Discussions are moving at a slower pace,” says spokeswoman Marianella de la Barrera.

Bombardier said it remains in discussions with potential buyers, especially customers with conditional orders for the plane set to enter into service next year.

“Those are the ones we’re waiting to go firm and they are taking a little more time,” de la Barrera said.


Meanwhile, Quebec-based flight simulator maker and pilot training provider CAE remains optimistic despite the economic troubles in China.

Demand for its services is driven by air travel growth, which is up more than seven per cent in Asia on average over the last three years and is expected to continue growing at a similar pace.

“So far our Asian training centres continue to operate at normal capacity,” said vice-president Helene Gagnon.

CAE has nearly 15 training centres in Asia and joint ventures with airlines including China Southern and China Eastern.

U.S. aerospace giant Boeing has said it expects the global aviation industry will need more than one million new workers through 2034—558,000 commercial pilots and 609,000 maintenance technicians. About half the spaces will be filled in the Asia Pacific region.

It anticipates that the Chinese fleet will almost triple by 2034 with orders for 6,330 planes valued at nearly US$1 trillion. Almost three-quarters of the orders will be for single-aisle aircraft.

“Despite the current volatility in China’s financial market, we see strong growth in the country’s aviation sector over the long term,” Randy Tinseth, vice-president marketing for Boeing commercial airplanes, said in a news release.

The company also anticipates growing sales of its wide-body 787 and 777s. That will help Canadian companies like landing gear supplier Heroux-Devtek, which is beefing up its workforce as it prepares to build the world’s tallest landing gear for Boeing’s 777 aircraft.

While lower economic growth is not positive, analyst Seth Seifman of J.P. Morgan said demand for aircraft is relatively secure. He expects global air traffic will grow five per cent annually through 2019.

In China, air traffic has grown 15 per cent so far this year. While aircraft deliveries are expected to slip next year, Chinese carriers will continue to add capacity and could announce orders as the government releases its next five-year plan in October, Seifman said.

“Given the government’s goal of making China’s economy more consumer-oriented we expect air travel to remain a priority,” he wrote in a report.

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