How Tariffs May Impact the Aerospace Industry and Airline Pilots

The airline industry is deeply interwoven with the global economy, relying on intricate supply chains and international trade for manufacturing and operations. In early April 2025, President Donald Trump introduced sweeping tariffs on imported goods critical to the aviation sector, adding another layer of complexity to an industry already facing post-pandemic supply chain disruptions and rising costs.

As of May 8, most of the major airlines have reported their Q1 2025 earnings. Southwest Airlines, American Airlines, Alaska Air and Frontier all pulled their 2025 guidance. Delta Air Lines, which reported earnings on April 9th, also pulled its 2025 forecast and announced it would scale back expansion plans. CEO Ed Bastian noted, “With broad economic uncertainty around global trade, growth has largely stalled. We are protecting margins and cash flow by reducing planned capacity growth in the second half of the year to flat over last year while managing costs and capital expenditures.” After the companies reported, Goldman Sachs and J.P. Morgan projected lower foreign travel spending could trim 0.1% - 0.3% from U.S. GDP in 2025.

Consumer Confidence and Booking Trends

These actions point to widespread uncertainty, particularly regarding consumer spending power. Consumer confidence has been slipping for months, and in March, it fell for the fourth consecutive month. The index measuring future expectations for income, employment, and business conditions dropped to its lowest level in over a decade. For airlines, this drop is especially concerning, as flights are a discretionary purchase for most consumers. Reduced confidence can easily translate into fewer bookings.

For airline pilots, these changes mean a more uncertain job market. Reduced capacity growth and scaled-back expansion plans can lead to fewer new routes and flights, affecting both current job security and long-term career prospects. Additionally, the financial strain on airlines could result in reduced training budgets, impacting the quality and frequency of professional development.

Challenges for Aircraft Manufacturing

The industry also faces longer-term challenges due to the impact of tariffs on aircraft manufacturing. Boeing, America’s largest exporter, is particularly vulnerable. A single Boeing 737 requires over 2 million parts from 700 suppliers, many located in Canada and Mexico. Boeing CFO Brian West estimated that the new tariffs could impact first-quarter earnings by up to $150 million. AerCap CEO Aengus Kelly warned that tariffs could add up to $40 million in cost per Boeing 787 Dreamliner, potentially limiting U.S. airlines to Boeing planes while the rest of the world turns to Airbus. The situation escalated on April 15th when China ordered its airlines to halt all deliveries of U.S.-made aircraft, including Boeing jets and related parts. This poses a serious threat to Boeing’s international sales, as the Chinese market represents roughly 20% of global deliveries. According to Bernstein Research, this halt could result in a $1.2 billion hit to Boeing’s cash flow.

Industry Resilience and Future Outlook

For pilots, the halt in deliveries could mean fewer new aircraft to fly, leading to a stagnation in available routes and a reduction in the variety of aircraft they can operate. This can impact their skills and career development. Additionally, airlines keeping older aircraft in service longer can lead to more demanding and less comfortable flying conditions, as well as longer hours and more frequent maintenance-related delays.

Despite these headwinds, the industry has proven resilient. In 2024, global passenger traffic rose by 10.4% compared to 2023 and climbed 3.8% above pre-pandemic levels from 2019. The demand for air travel remains strong, but the industry is entering a new phase of uncertainty, adaptation, and strategic planning.

Boeing and Airbus are under pressure to ramp up production, but supply constraints for high-tech components and skilled labor continue to cause bottlenecks. The lack of available aircraft is limiting airline growth and driving up leasing costs.

While today’s trade tensions and tariff battles are a significant setback, the airline industry has always been cyclical and responsive to macroeconomic trends. The real question is how well companies like Boeing and the airlines can navigate the current storm while positioning for a smoother ride in the years ahead. For pilots, this means staying adaptable, continuing to hone their skills, and being prepared for a period of change and potential hardship.

Financial Planning for Pilots

For airline pilots, navigating this period of uncertainty requires proactive financial planning. Working with a financial advisor can help pilots prepare for different scenarios, from potential job reductions to long-term career development. Financial advisors can provide tailored advice on managing savings, investments, and retirement plans, ensuring that pilots are well-prepared to weather any economic storms and capitalize on future opportunities.

In a rapidly changing industry, staying adaptable and informed is crucial. By partnering with experienced financial advisors, pilots can make informed decisions that protect their financial well-being and support their professional goals, no matter what the future holds.

ABOUT THE AUTHOR

Justin Landreman

VP Senior Portfolio Manager | Johnson Financial Group

As Vice President, Senior Portfolio Manager, Justin crafts, oversees and manages multi-family investment portfolios, ensuring they align with each client’s unique goals and expectations. He is committed to transparent communication, regularly updating clients and their advisors on portfolio performance and progress towards their stated objectives. Justin's approach is deeply personalized, driven by a genuine desire to make a meaningful difference in his client’s lives.