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The aviation sector is facing commercial turbulence
Aviation is booming. Passenger traffic is rising, fuel prices are under control and rising demand from Asia is driving aircraft orders.
So, what could go wrong? A big thing: a trade war.
This week's Farnborough International Airshow aircraft makers, a biannual extravaganza where billions of dollars worth of aircraft and parts are purchased, say that thousands of jobs are at risk in this international industry. Donald Trump threatens to raise tariffs on a variety of products and other countries are preparing to retaliate.
The aeronautical experts say that American companies like Boeing, based in Chicago, will be the first victims, because the majority of the American aerospace production is destined to the foreign buyers. "Well over 80% of the US aerospace industry is exported," said Richard Aboulafiah, a respected aeronautical analyst from the Teal Group. "The American aerospace is on the front line and expects to be shot first."
This is because aviation is truly global in production and demand. Boeing and Airbus, its European rival based in Toulouse, dominate the commercial aircraft market, competing for companies and suppliers from China to Qatar and Canada. Being able to shop for components makes companies more profitable and their planes better.
"The aerospace feeds on a free and open trade," Boeing chief executive Dennis Muilenburg told BBC on Monday. "We are concerned that this may affect the costs of the supply chain, but these supply chains flow in both directions (between China and the United States.) It is a complex network in the whole world."
billion Chinese products, with China responding with an equivalent sum. The Trump administration plans tariffs on 200 billion US dollars of goods. The United States also imposed duties on steel and aluminum from China, the EU and several other countries, which reacted in kind.
Boeing, who describes himself as the "first US exporter" 93.4 billion dollars last year. It employs more than 140,000 people in the United States and 65 other countries.
Nearly 80% of the 713 commercial aircraft orders for which Boeing identified a buyer last year came from foreign companies, according to data from Boeing 's website. Flydubai, a low-cost carrier based in the United Arab Emirates, ordered 175 Boeing 737 Max in December, the company's biggest contract of the year.
China, which has been the target of much of Trump's anger to swap, is also a major customer for Boeing. 120 Boeing companies ordered 120 Boeing aircraft last year.
The global aerospace industry is worth 838 billion US dollars in trade and investment.
Boeing is only one of 108 American companies exhibiting their wares at Farnborough, including leading defense contractors such as Lockheed Martin, Northrop Grumman and Raytheon. Exhibitors reported orders for 856 aircraft and 1,407 engines valued at US $ 116.6 billion at the last Farnborough Air Show in 2016.
-AP
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