KeyBanc's Q2 survey shows aerospace supplier orders up 5% as Boeing and Airbus production stabilizes and inventory excess clears. The supply chain recovery may have legs.
Aerospace suppliers posted a 5% increase in orders during the second quarter, according to KeyBanc's latest survey of parts makers. The gain breaks a pattern of flat-to-down quarters that stretched through late 2024 and early 2025.
KeyBanc said the improvement was broad-based across engine components and airframe structures, with cabin interiors also participating. The brokerage attributed the shift to steadier delivery schedules at Boeing and Airbus after two years of disruption.
The survey also found that inventory levels across the supply chain are normalizing. During the post-COVID scramble, suppliers stockpiled parts like titanium sheets and avionics modules, betting demand would keep accelerating. When the 737 MAX crisis hit and Airbus cut delivery targets, those bets left manufacturers holding excess parts. The destocking that followed crushed pricing and triggered write-downs at several publicly traded suppliers. KeyBanc's data suggests that destocking is largely complete.
For Boeing, the survey offers a rare positive data point. The planemaker has struggled to push BA stock page output past 38 a month after a series of quality lapses and supplier bottlenecks. The KeyBanc data suggests those constraints are easing enough for suppliers to book more work.
The production ramp remains fragile. Boeing has not hit its own 50-per-month target for the MAX, and FAA caps stay in place. The supply chain's ability to sustain higher output depends on labor availability and raw-material lead times, both flagged as watch items in the survey commentary.
Supplier margins could benefit from the shift. Tightening inventories typically improve cash conversion cycles and reduce working capital drag. KeyBanc noted that the order book is filling with production-scheduled parts rather than safety-stock builds, a change that supports healthier margins. When inventory excess clears, pricing power returns – the discounting forced by bloated stockpiles fades.
KeyBanc analysts said the 5% quarterly increase provides a baseline for the supplier outlook. A step down in the next survey would snap the narrative back to a supply chain still unable to absorb demand. Acceleration would strengthen the bull case for aerospace suppliers and for Boeing's delivery recovery.
KeyBanc plans to publish the next iteration in October, timed around the third-quarter earnings season.
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