Business & Lobbying

Recession hasn’t dampened sales of military planes

The worst recession in decades hasn’t slowed the sale of military
aircraft, which increased by 8 percent, to $61.7 billion, in 2009,
according to a yearly review conducted by the Aerospace Industries

AIA, the trade association representing the major aerospace and defense manufacturers, on Wednesday reported that military aircraft sales lead a strong growth curve in total aerospace sales for 2009.

{mosads}According to AIA, total aerospace sales at the end of this year will be slightly more than $214 billion — a record for the sixth straight year. Net profit after taxes for the overall aerospace industry increased 6.5 percent, to $15.6 billion, in 2009, according to AIA.

“Despite national and global economic troubles that triggered large-scale government bailouts for other business sectors, I’m pleased to report that the U.S. aerospace industry more than held its own in 2009,” AIA President and CEO Marion Blakey said in a speech during her association’s annual year-end aerospace review and forecast lunch.

AIA’s prognosis is that fighter jets and military helicopters have “particularly good years,” while military transports already registered “strong growth” and military aircraft research and development increased more than 15 percent in 2009.

Sales of missile systems continued their upward trend in 2009, reaching $14.8 billion, an 11 percent improvement, according to preliminary numbers for 2009.

Spending on missile research and development by the U.S. Army, Navy and Air Force increased significantly, while Department of Defense-wide spending by the Missile Defense Agency decreased by nearly 8 percent, resulting in a net decrease of R&D spending for the year, according to AIA.

While the association forecasts growth of the aerospace industry will slow down in 2010 — to a modest increase in sales, at $214.4 billion — the military portion of the business is still expected to fare well.

“Military-related products will give a boost to overall aerospace sales in 2010, offsetting any slip in civil sales,” said Blakey in her speech at the lunch.

The eventual ramp-up of the Joint Strike Fighter is expected to at least partially offset the potential impact of one or two aircraft program reductions or cancellations. Sales of unmanned aircraft systems are also likely to bolster military aerospace sales.

Demand for unmanned systems by the U.S. military has increased more than 600 percent since 2004, and is forecast to double again between 2010 and 2015, according to AIA.

Just as Blakey delivered her speech on Wednesday, the House passed the 2010 defense-spending bill, which holds telling examples of funds allocated for military aircraft and aerospace programs.

While the industry took a blow when Congress heeded President Barack Obama’s call to terminate Lockheed Martin’s F-22 fighter jet program, lawmakers added funds for several other high-profile programs.

For example, Congress added: $2.5 billion for 10 additional Boeing C-17 cargo aircraft; about $750 million for nine additional Boeing Super Hornets, for a total of 18; $142 million for Northrop Grumman’s E-2D Hawkeye aircraft, for a total of three aircraft; and $465 million for a second engine for the F-35 Joint Strike Fighter, made by a team of General Electric and Rolls-Royce.

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