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Domestic Airline/Aerospace Industry Poised for a Lift in 2009

The manufacturing outlook for the airline/aerospace industry for 2009 is starkly different from the scary projections coming out of the automotive industry. According to a newly released report from the Aerospace Industries Association (AIA), the category encompassing civil aviation, defense, and space is expected to see growth in the 2–3% range this year. Albeit modest, analysts say it is welcomed growth nonetheless.

Specifically, the AIA predicts the greatest increase will come from civil aviation, where sales are expected to rise almost 8% to $86 billion. This represents a 7.4% increase over analysts’ preliminary estimates for civilian aircraft sales for 2008. By comparison, military and space aircraft sales are expected to increase 4.2% and 2%, respectively. In terms of total dollars, AIA believes aggregate sales—which includes missiles and related products and services—could reach as much as $214 billion, a projected increase of 4.8% over 2008.

Why the upbeat forecasts, particularly in such a challenging economic climate? Industry observers point to various factors, namely the sector’s resiliency and strength relative to other markets. “We are in an extremely challenging economic atmosphere, but our industry is proving to be remarkably durable,” said AIA president and CEO Marion Blakey during the association’s recent Annual Year-End Review and Forecast meeting. “We anticipate this to continue, and we expect our industry will continue to be an asset to the U.S. economy as we climb out of our current financial hardships.”

Other supportive evidence of the industry’s projected ascension: AIA estimates defense sales will continue to climb—particularly in the near term—given Defense Department budgets are mostly in place. While spiraling government deficits related to recent federal bailouts and reduced tax revenue might normally stand to crimp defense spending, experts cite a counter-balancing phenomenon: any delay between defense funding and the actual shipment of the purchased equipment can take several years. In short, this would cause a lag between any future budget declines and current outlays. Since new procurement spending is essentially committed for fiscal year 2009—with the new administration having a limited impact on fiscal year 2010—aerospace companies will likely see defense sales growth continue apace through calendar year 2012, AIA reports.

 

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Aerospace  •  Editorial  •  Industry Trends & Happenings

 

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