Aerospace and defence performance grounded

But Tom Captain, global leader of aerospace and defence at Deloitte, said that despite these growth challenges, the industry remained resilient and was performing better than many other sectors hit hard by the recession. The imperative now would be to cut costs and grow top line revenue in new areas to demonstrate to global markets the ability to grow profits again, he believed. The commercial aircraft industry is rebounding from its 15-year sales low of 2009. If the recovery continues into the second half of 2010, total orders for commercial aircraft are expected to be in the 800 unit range for the year. The firm's Pauline Biddle added that long-term growth in aircraft production was expected to increase due to global trends including the growing wealth from the Asia-Pacific region, replacement of older aircraft in favour of fuel-efficient and environmentally-friendly aircraft, new point-to-point markets and the opening up of historically under-served regions. The market demand for new large-scale commercial aircraft is forecast to be close to 30,000 new commercial aircraft through to 2029, worth an estimated $3.2 trillion Merger and acquisition activity has been accelerating over the last several months and more deals are expected in the remainder of 2010 and into the next few years. "We expect to see more deals by private equity and strategic buyers alike as competition for desirable assets heats up over the next several months. In addition, strategic buyers will broaden their focus expanding beyond established markets," Biddle said. The global picture for defence budgets is mixed. While budgets in the US and Europe are under pressure, spending in India and the Middle East is growing significantly. US and European aerospace companies now recognise India as a critical market, as well as a potential engineering and manufacturing partner. For defence contractors, new areas will generate growth in 2010 and beyond. In particular, the number and variety of large hardware-based platforms is expected to decline and more innovation and capability will be found in software integration. In the US, aerospace and defence advisor General Charles Wald commented: "Decreasing defence spend by developed countries will require smarter use of the remaining funds in order to develop and deploy the technologies needed to counter our ever more sophisticated adversaries."