By Judson Rollins

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In last week’s analysis, LNA examined which airlines in greater China and the rest of Asia may be in imminent risk of financial distress due to the growing coronavirus outbreak. We found that airlines from Malaysia to Japan have significant exposure to the Chinese market. Several have shaky balance sheets and were already losing money prior to the outbreak, most notably AirAsia, AirAsiaX, Thai Airways, Nok Air, Malaysia Airlines, and Asiana.

The coronavirus outbreak has now spread to Europe and the Middle East, but we are continuing our focus on Asia as it’s been most greatly affected so far. Additional analysis focusing on Europe will follow, with particular attention to the potential for further airline consolidation on the continent.

LNA reviewed ownership and operating data on aircraft to understand top manufacturer and lessor exposure to greater China, which includes Hong Kong and Macau, and the rest of East Asia.

Summary

• Airbus has greater exposure to China and the rest of East Asia, especially in widebodies;
• Boeing’s 787, 777X difficulties will be exacerbated by Asian airline troubles;
• COMAC’s sales book is almost exclusively in China, but government support is likely;
• ATR has material exposure to Southeast Asia; other regional aircraft OEMs are largely unaffected.