The Aerospace and Defense Industry (A&D) comprises manufacturers who develop military aircraft, commercial aircraft, tanks, missiles and other weapons-related equipment – including engine parts, landing gear, propellers and rotors. There is a surprising amount of choice in the type of businesses available for purchase within the industry, as it also requires support systems that help in the operation and maintenance of vehicles.
Aerospace and Defense showed signs of a strong rebound in 2022, but supply chain and talent issues continued to limit the industry’s growth. The Russian invasion of Ukraine disrupted global supply chains, especially for critical metals and rare earth elements, and exacerbated fuel price volatility. Inflation also remains a challenge for the industry.
To address the sustained rise in jet fuel prices, aircraft manufacturers are investing in aircraft and engine design to make them more fuel-efficient, lower operating costs, and explore lower- and zero-emissions commercial aircraft for the future. The strong recovery in air travel is leading to increased aircraft orders and aftermarket activity. Leading global commercial aerospace original equipment manufacturers (OEMs) estimate that global passenger traffic will far surpass 2019 levels by the end of the year, driving industry revenue.
The defense segment is expected to outperform the commercial aerospace segment, with a key focus on electronic warfare, cybersecurity and future military technologies. Emerging markets such as space and advanced air mobility (AAM) gained further traction in 2022 – private participation in space resulted in solid growth in the space economy compare to recent years. The general business outlook for the A&D industry for the next year is optimistic and A&D companies focused on innovation and prepared to capitalize on new emerging opportunities are expected to outperform their peers.
