AIA: Civil Aircraft Sales Shine in U.S. Aerospace

 - February 1, 2012, 12:25 AM
Marion Blakey, AIA president and CEO (Photo: Paul Lowe)

U.S. civil aircraft sales for 2011 are expected to total $49.7 billion, an increase of 3.2 percent over 2010, and the Aerospace Industries Association (AIA) believes the sector will boost its revenue to $51.7 billion this year. But overall aerospace sales will likely experience a moderate decline in 2012 due to government cuts in space and defense.

AIA president and CEO Marion Blakey said the association is projecting “a much different year” for 2012. “Looking ahead to [2012], we expect aerospace sales to decrease by about half a billion,” she told more than 300 members of the news media, government and industry at the AIA’s 47th annual year-end review and forecast luncheon in December.

“Under sequestration, our industry faces exposure all around,” Blakey said. “Not only are the defense cuts unsustainable, but domestic discretionary programs could be cut by about 7 percent as well, including deeper cuts to NASA, NOAA and critical FAA programs such as NextGen.”

AIA expects declines in nearly every product group except civil aviation. Space sales are projected to decrease by about $1 billion, and military aircraft sales are predicted to drop by $1.5 billion.

Civil aircraft sales will be driven in large part by rising commercial air traffic and high fuel prices, as both continue to spur world airlines to replace older, less fuel-efficient aircraft with newer models.

“These trends, combined with rapid growth in air travel in Asia and the Middle East, continue to create demand,” the former FAA Administrator said. “And that demand continues to call out the need for NextGen, the Next Generation Air Transportation System.”

AIA said that preliminary sales figures of $218 billion make 2011 the eighth consecutive year of growth, despite “significant headwinds and under the cloud of recession.” Aircraft and parts orders jumped to an estimated $204.8 billion, an increase of $8 billion over 2010. Backlog rose by $20 billion, to nearly $463 billion, compared with 2010. According to the association, these numbers indicate an ongoing rebound since the downturn seen in 2009.

New civil helicopter deliveries also improved last year. The market includes emergency medical service providers, offshore oil and gas exploration and law enforcement applications. Following two years of sizeable decreases, U.S. civilian helicopter shipments were expected to climb to 454 aircraft in 2011, an annual increase of 5.3 percent.

At the December meeting the AIA projected that by the end of the year, U.S. aerospace exports would reach nearly $90 billion, up 12 percent, after falling during the two previous years. The increase is due primarily to strengthening civil exports, which were expected to improve 14 percent in 2011, reaching nearly $77 billion. The industry’s positive trade balance of $57.4 billion is the largest trade surplus of any manufacturing industry.

Meanwhile, Blakey noted, the association expected aerospace employment to register a slight increase in 2011. Total year-end employment was up slightly, reaching 624,000 jobs. “So despite a down economy, we’re holding steady,” she added.

But a study AIA commissioned recently concluded that if $1 trillion is cut from the defense budget beginning in 2013–as sequestration calls for–the jobs impact will be devastating. The association has estimated that 350,000 aerospace and defense workers will lose their jobs.

“And when these jobs go, the impact in the supply chain and in local communities will be just over one million jobs lost,” Blakey told the gathering. “That’s the loss of real jobs that are here today, and in this economy that is unthinkable.”