2012 Global aerospace and defence industry outlook
Key takeaways for the Australian aviation and defence sectors
This latest report by the Deloitte Touche Tohmatsu Limited (DTTL) Global Manufacturing Industry group forecasts optimism for the commercial aircraft sector and caution for suppliers to defence.
The optimistic outlook of a prolonged up-cycle in production for the commercial aircraft sector is a result of increasing demand for leisure and business travel, particularly in the Asia Pacific region. It is also driven by continued development and production of next-generation aircraft programs that aim to address increasing fuel costs.
By contrast, the financial performance of global aerospace and defence companies is expected to remain flat in 2012 due to anticipated decreases in military spending, principally in the United States and Europe. Continuing global economic challenges coupled with revenue gaps and cost pressures are also likely to result in margin contraction for global defence players. From a business operations perspective there is likely to be more cost streamlining of cost structure, divestiture of non-core assets, and transformative acquisitions.
In all, the 2012 financial performance of the top global aerospace and defence companies is expected to be similar to 2011 performance, with the decline in defence revenues offset by cost-cutting and aggressive growth actions.
Despite the challenging environment, the aerospace and defence industry is likely to continue to develop game-changing technology innovations in areas such as cyber-security, directed energy, high-powered microwave weapons, hypersonic missiles, long-range and high-altitude unmanned aerial systems, and extraordinary software that can trace financial transactions of known terrorists.