The rising passenger travel demand in the Middle East and Asia-Pacific and the production of next generation fuel-efficient aircraft will help the growth of the global global aerospace and defense (A&D) industry this year, a report said.

Revenue and earnings growth in the commercial aerospace sector is expected to be a bright spot and driving force behind the global aerospace and defense (A&D) industry performance in 2015, according to the Deloitte Manufacturing Industry group 2015 Global aerospace and defence industry outlook.    

Overall, the global aerospace and defense industry is set to grow around 3 per cent this year, it said.

While the rate of growth for the overall industry has been slowing over the last two years as a result of declines in defence sector spending, the commercial aerospace sector is likely to enjoy close to an 8 per cent growth rate, the report said.

“The commercial aerospace sector is expected to set new records for aircraft production in 2015. The accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, and growing passenger travel demand, especially in the Middle East and the Asia-Pacific region are key drivers behind this trend,” said Tom Captain, Deloitte global aerospace and defence sector leader.  

“Recent lower oil prices will not likely have a dramatic lasting impact on production rate increases for commercial aircraft, given the nine-year backlog the industry enjoys,” explained Captain. “Supply chain capacity and capability remain the critical risks that need to be managed in order to maintain production commitments.”

Global revenues in the defence sector will likely continue to decrease in 2015 at an estimated 1.3 per cent. Yet, defence spending is increasing in several areas of the globe, especially in the UAE, Saudi Arabia, India, South Korea, Japan, China, and Russia, as these countries equip their militaries with modern defence platforms and technologies.

The report noted that escalating tensions between nations and damaging cyber-attacks may have an impact on future spending in the sector.

Over the next few years, the defence sector will be challenged in two major ways: how to grow profitably in a declining market and what actions are necessary to cut costs to maintain acceptable financial performance. Successful defence companies are addressing these challenges by branching out into adjacent markets, focusing on foreign military sales, and investing in next generation product development in cyber security, defense electronics, precision strike, unmanned systems, and advanced analytics, the report said.  

“As we celebrate the 111th anniversary of the Wright Brothers’ first powered flight, we are reminded that the industry is still young, yet it has contributed much with game changing technologies,” added Captain. “For 2015, technology innovation is the key to advancements in the industry in order to address current markets and to create demand in markets that have yet to be addressed.” - TradeArabia News Service