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The Global Aerospace and Defense Industry – The industry with rising profits

  • By admin
  • June 10, 2014
  • 27 Views

Introduction
Among all the industries, which globally impacted the revenue, the aerospace and defense industry had marked one of the most important places in the global platform. The industry generating revenue of USD 719 billion has witnessed a healthy growth in 2013. The operating profit registered by the industry was USD 66 billion and marked a 10 percent increase than the previous year. The revenue increase marked 4 percent. The global leaders of the industry contributed significantly to the majority of the revenue generation in 2013. The commercial segment of the aerospace industry is one of the most profitable in the industry. This segment stands in the limelight in current times and is foreseen to benefit the industry the most. The companies like Boeing generated the highest revenues in the industry, accounting for USD 86.6 billion and 6 percent hike than 2012. This revenue generation was predominantly dominated by commercial aircraft generation.

Current Scenario
The industry revenues are mainly generated from two segments, namely, commercial aerospace and defense. In the, the commercial aerospace segment, the dominating position, in terms of revenue and production is held by Boeing and Airbus. The highest production figures were registered by Airbus. In 2013, the record number of orders was placed for the commercial aircrafts amounting to 2,858. This huge order is continuing for the three years in a row. The complexity of the design and the extraordinarily long lead time has not impacted the segment till now. Boeing had launched a new aircraft 777X on November 17, 2013, which is being considered the most significant addition and also an indication that the Middle East region is one of the emerging markets. The regional aircraft and the business jet segment are also following the lead of the commercial segment and are modestly progressing. In the defense segment, there has been notable revenue increase in case of European countries. The top twelve market leaders in this segment generated an increased operating margin of 8.7 percent. Rolls-Royce Defense registered the highest operating margin of 16.9 percent. The defense segment, however face setbacks due to slash in military expenses due to economic crisis. The supply chain of the industry is also suffering due to the expenditure difficulty and affordability.

Outlook
The performance of the industry is expected to go on a high note for the coming years. The commercial aircraft segment might expect a marginal slowdown in terms of revenue. The global market leader Boeing is expecting a rise of 10 percent in the delivery of units. Airbus is predicted to continue its record production figures for the 13 years in a row. Thus, in terms of output, the industry is set to achieve record figures by 2014. The key lookout for the industry is expected to revolve around solving the supply chain setbacks. With higher figures forecasted for the orders, the backlog is also expected to rise. With new regulations like the Bipartisan Budget Act, the defense segment is expected to benefit in terms of revenue. The decline in revenue for this segment is predicted to restrict to single digit. The overall industry looks healthy in terms of revenue and the minor hiccups from the defense segment seem to be nullified with the commercial aircraft segment performing well.

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