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Stable 2012 for Global aerospace and defence sector

Fitch Ratings has released its outlook for the global Aerospace and Defence sector in 2012, predicting stability - with commercial growth offsetting defence pressure.
 
"Fitch expects the commercial aerospace sector to grow in 2012, but this outlook is tempered with caution based on several economic indicators," it said. "In contrast, global defence budgets are falling, cash deployment is a key risk, and thus pure-play defence names could see ratings come under pressure."
 
In the commercial segments, Fitch expects that deliveries from Airbus and Boeing will rise approximately 15 per cent in 2012 and 9 per cent in 2013, with 20 per cent revenue growth in 2012.

Aftermarket revenues should grow in the mid single digits in 2012. It expects business jet deliveries in 2012 will increase approximately 5 per cent, with revenues up 5 per cent-10 per cent, while regional jet aircraft deliveries are expected to rise 10 per cent. It does not expect aircraft financing to be a limiting factor on commercial aerospace, though it sees a likely 20 per cent higher financing requirement in 2012.
 
"The key risk to Fitch's outlook is a global economic downturn," it said.
"The downside risks for the aerospace industry were recently illustrated by the International Air Transport Association's (IATA) estimate that a downturn driven by a banking crisis could lead to global airline losses greater than $8 billion in 2012. Most commercial aerospace indicators are positive, yet jet fuel prices and cargo traffic are currently concerns. Several other indicators are at risk of turning negative later in the year. Considering euro zone uncertainty and some signs of slowing growth in key emerging markets, Fitch sees reason to be cautious."
 
Joe Pinto, Vice President and Chief Operating Officer of Performance Review Institute commented: "A recent poll we conducted showed that over 70 per cent of our customers feel confident about the long-term future of the industry, but 79 per cent do not feel that the worst of the economic crisis is over. This is up from nearly two-thirds (64 per cent) in 2010, showing that there is less confidence in the situation than there was a year ago. This is the time for companies to focus on their core competencies and work out how to add value to their products or services to keep their customers happy, even in these difficult times."
 
Its 2012 Outlook: Global Aerospace and Defense is available at www.fitchratings.com








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