Midyear outlook for the global aerospace and defence industry
The global aerospace and defence (A&D) industry capped off a record-setting five-year period in 2008, with strong growth in sales revenue of 7.9% to $595 billion and earnings of $54.2 billion.
However, the global economy slipped into economic turmoil in the fourth quarter of 2008, resulting in orders for new commercial aircraft dropping dramatically and business jet manufacturers entering a deep slump.
The result was declining financial performance for the entire industry on average, which continued the negative trend into the first half of 2009. Military equipment spending, led by the U.S. Department of Defence (DoD), is moderating, and several weapons platform programmes are being terminated or transformed.
Financial performance fell across the board for the top 20 global A&D firms. In the 2009 first quarter financial results, sales revenue growth fell 83%, down from 10% to 1.7%. Operating profits decreased 12%, while quarterly operating margin declined by 13.9%, from 10.3% to 8.9%.
As we near the close of the second quarter of 2009, the key question on the minds of the industry executives and shareholders: when is the A&D industry expected to rebound?