Boeing flies back to the top

Following a year of stable revenue and growth, but sharply declining profits in the aerospace and defence industry, Boeing has leapfrogged EADS to reclaim its place as the biggest aerospace manufacturer. This is according to the latest Top 100 survey compiled by PricewaterhouseCoopers LLP (PwC) in association with Flight International magazine.

Boeing re-gained its position at the top of the rankings as rising sales of its commercial and military aircraft coincided with declines in both areas for its European rivals. Boeing delivered 481 aircraft in 2009, which was a steep increase on 2008's figure of 375 and its defence, space and security division generated some $10bn more revenue than EADS' equivalent businesses.

The survey, which is based on company returns for the previous financial year, showed a 17.3% decrease in collective profits following five years of growth. Sales showed a moderate growth of 0.6% on the previous year, but this is also a much smaller rate compared to 7.1% in 2008 and 13% in 2007.

Neil Hampson, partner and global aerospace and defence leader at PricewaterhouseCoopers LLP, commented: “Clearly, last year was a challenging year for the global aerospace industry with reduced passenger and air freight demand leading to a dramatic decline in new aircraft orders as airlines looked to preserve cash. These factors, combined with much publicised, widespread programme delays and cost overruns in both military and commercial programmes, has meant the impact on revenues has been quite dramatic - this is the first decline in profits we have seen in five years.

“However, as global economies recover, we expect to see a return to airline demand growth. Globalisation is driving growth in the aerospace and defence industry and as these companies expand their global footprints, a race to capitalise on rising opportunities has begun. The companies that win the race will be those who are able to overcome the new competitive threats and complex operational challenges that doing business on a global scale presents.”

Total sales for the Top 100 in 2009 were $558bn, with North American companies accounting for 63% of this total ($352bn) and 49% of the Top 100 companies by number. European companies make up 38% of the Top 100 by number and brought in $177bn worth of sales. The rest of the world is still considerably behind these two regions with combined sales of only $29bn, representing 5% of the total.

Within the Top 100 companies, the defence sector remained relatively robust with revenue growth of 4%. This is an improvement on 2008 when defence growth was below that of civil aerospace and is partly as a result of a shift in defence strategy away from large military platforms towards more intelligence-based and intelligence-support programmes. However, as the commercial market stabilises in 2010, the defence market faces uncertainty with increasing pressure on US and UK defence budgets along with all public sector spending.

Hampson continued: “The release of the recent US defence review and US defence budget has eliminated some of the uncertainty surrounding upcoming spending priorities enabling strategic decisions to be made around increasing exposure to support activities and unmanned aircraft.

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