AIA: U.S. Military Aircraft Sales In Decline

 - December 14, 2012, 12:30 PM
The final Lockheed Martin F-22 Raptor rolled off the assembly line in Marietta, Ga., last December accompanied by employees and a marching band. (Photo: Lockheed Martin)

Sales of U.S. military aircraft will fall by 2.4 percent this year to $58.2 billion, the lowest level since 2006, according to a preliminary estimate of the Aerospace Industries Association (AIA). Sales are expected to decline by another 10 percent next year as budget cuts force the Pentagon to reduce procurement spending, the association said in its year-end review and forecast, released earlier this month.

Military aircraft sales represented 27 percent of total estimated U.S. aerospace sales of $218 billion, and for the first time since 2002 dropped below civil aircraft sales of $60.6 billion this year. “The defense sector appears to be the most problematic in 2013 and beyond, particularly with respect to the domestic market,” the AIA said. The Pentagon will spend $487 billion less than planned over the next decade as a result of the 2011 Budget Control Act, and it faces another $500 billion in cuts if the Congress fails to prevent automatic budget cuts through “sequestration” by January 2. Sequestration would “cause major disruptions, particularly for the supply chain,” the AIA said.

The closure of Lockheed Martin’s F-22 production line in Marietta, Ga., which delivered its last fighter in May, and decisions not to fund the acquisition of additional Boeing C-17 transports and the development of a future strategic airlifter all had a negative impact on results, the AIA said. Other major platforms–the F-35 Joint Strike Fighter, the P-8A Poseidon and the KC-46A tanker–continue to be funded, the association noted. The unmanned aircraft systems sector continues to expand, but the growth has slowed since the height of the Iraq and Afghanistan campaigns.

AIA said foreign sales of U.S. military aircraft provide an important growth area. The association noted that three production lines–the Boeing C-17 line in Long Beach, Calif., the Boeing F-15 line near St. Louis, Mo., and the Lockheed Martin F-16 line in Fort Worth, Texas–are being sustained largely by international customers. Total military exports this year are estimated at $11.2 billion for 1,948 complete aircraft, including 705 helicopters, 643 transports and 334 fighters and bombers.

Late last year Saudi Arabia signed a $29.5 billion letter of offer and acceptance for 84 new and 70 upgraded F-15s. “A truculent Iran…has resulted in large, recent purchases of U.S. military aerospace products by Gulf countries,” the AIA observed. Demand for military exports is expected to remain strong for the next few years, the association said.