Commercial aerospace revenues remain flat despite increased production levels
The global aerospace and defense (A&D) industry is expected to return to growth with total sector revenues estimated to grow at 2.0 percent in 2017, according to Deloitte Global's Consumer & Industrial Products Industry group's 2017 Global aerospace and defense sector outlook.
"After multi-year declines in revenues, the defense sub-sector is expected to grow at 3.2 percent in 2017. This increase is due to continued concerns about global security threats, growth in US defense budgets, as well as higher defense spending in the Middle East, Japan, South Korea and India," said Tom Captain, Deloitte Global Aerospace and Defense Leader.
On the other hand, stable global gross domestic product (GDP), expected strong airline passenger traffic, and continued airline profitability, supported by lower fuel costs, will likely drive increased commercial aircraft production. However despite an expected increase of 96 additional large commercial aircraft being produced in 2017, continued pricing pressure and product mix changes by airline operators will likely result in only a marginal increase of 0.3 percent in commercial aerospace sub-sector revenues.
For the commercial aerospace sub-sector, the Middle East remains an important market by virtue of its strategic location as a hub linking the major global airline networks. This has resulted in strong travel demand from the region. The Middle East region led travel demand growth globally during the last five years and is expected to continue to record the highest RPK (Revenues Passenger Kilometers) growth in 2016 as well," explains Rashid Bashir, partner and Public Sector leader at Deloitte, Middle East.
The 2017 Global aerospace and defense sector outlook reviews the sector's performance in 2016 and expectations for 2017. It outlines a long term projection for aircraft production, as well as defense spending by major countries. It also provides perspectives on defense contractor expectations, growth in travel demand driven by wealth creation in Asia and the Middle East, and observations on what it means for the commercial aerospace sub-sector.
View the report at: http://bit.ly/2iOdpJN
Deloitte Global Consumer & Industrial Products Industry group
The Deloitte Global Consumer & Industrial Products Industry group (Global C&IP) comprises more than 22,000 member firm partners and industry professionals in over 45 countries. Deloitte member firms provide professional services to 84 percent of the C&IP industry companies on the Fortune Global 500®, making an impact that matters in business sectors representing the entire value chain from raw materials to the end consumer. The group brings deep industry knowledge, service line experience, and thought leadership to solving complex business issues in every corner of the globe. Deloitte member firms attract, develop, and retain the best professionals, and instill a set of shared values centered on integrity, commitment, and serving clients with distinction. Sectors served include aerospace and defense; automotive; chemicals and specialty materials, including metals, forest, paper and packaging; consumer products; industrial products and services; retail, wholesale and distribution; as well as travel, hospitality and business services.