Bloomberg News

Industry Group Sees No Growth in 2012 U.S. Aerospace Sales

December 16, 2011

Dec. 14 (Bloomberg) -- U.S. aerospace sales for 2012 may remain unchanged from this year’s revenue of $218 billion because of weak military sales, an industry trade group said today.

Sales may decline less than 1 percent to $217.7 billion from an estimated $218 billion this year, the Aerospace Industries Association said in its year-end review and annual forecast. A 4.1 percent increase in commercial airplane sales in 2012 is projected to offset a decline in orders for military jets, missiles and space equipment, the Arlington, Virginia- based trade association said.

“Aspects for growth are positive in commercial aerospace and neutral in the defense sector,” the group said. Still, “both the commercial and military sectors remain vulnerable to numerous variables that are capable of overturning current expectations and trends” including U.S. efforts to address fiscal deficit by cutting defense spending. The group’s members include Lockheed Martin Corp., Boeing Co., Northrop Grumman Corp., and Raytheon Co.

As airlines around the world replace their older fleets with newer models, as many 29,000 new commercial airplane deliveries are expected by 2029, the group said. New plane orders may add up to $3.2 trillion and will fill order books at Chicago-based Boeing and its European rival, Toulouse, France- based Airbus SAS, for as long as seven years, the group said.

Defense budget cuts in the U.S. and elsewhere may dampen demand for military equipment, especially for missiles and munitions, “as weapons stockpiles are cut first” when combat ends and budgets are reduced, the group said.

Rising Exports

After declining for two years, exports in 2011 are expected to rise 12 percent to $90 billion on the strength of commercial orders, the group said.

Overall, aerospace orders may increase slightly to $204.8 billion and backlog may rise slightly to $462.7 billion, the association said.

Employment in the industry may increase slightly to 624,400 after falling last year, the association said.

Sales of military aircraft -- including fighters, transports and helicopters -- may decline 2.1 percent to $65.1 billion, and sales of space equipment, missiles and munition may fall in 2012 compared with this year, the trade group said.

The Aerospace Industries Association represents the nation’s major aerospace manufacturers, including the five largest military contractors -- Lockheed Martin, Boeing, Northrop Grumman Corp., General Dynamics Corp. and Raytheon Co. -- and commercial companies such as General Electric Co.

--Editors: Steven Komarow, Leslie Hoffecker

To contact the reporter on this story: Gopal Ratnam in Washington at gratnam1@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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