The impact of higher inflation on OEMs and Airlines

Subscription Required By Vincent Valery Introduction   June 7, 2021, © Leeham News: As the world economy recovers from its sharpest shock since World War II, an unwelcome side effect started appearing: higher inflation rates.

One Hundred Trillion Zimbabwean Dollars Note, issued during a period of hyperinflation in the country

The Consumer Price Index (CPI) in the USA increased by 4.2% year-over-year in April 2021. The leading causes of the increase are higher commodity prices and worker and material shortages in the US economy. Aside from temporary commodity-induced spikes, inflation rates have stayed moderate over the last 30 years. However, numerous countries (including the USA and Europe) experienced persistently high inflation rates throughout the 1970s and early 1980s. It is premature to say whether the latest spike is temporary or will persist. Should the latter happen, it would have profound consequences for the commercial aviation ecosystem. LNA analyzes the potential implications for OEMs, airlines, and lessors of such a scenario.
Summary
  • Inflation 101;
  • Winners and losers in high inflation environments;
  • Consequences for OEMs;
  • Impact on airlines and lessors.

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