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AIA forecasts slower growth in 2010 for aerospace industry

By John McHale

WASHINGTON, 16 Dec. 2009. Officials at the Aerospace Industries Association (AIA) forecast modest growth in 2010 with military aircraft providing the largest boost and predict the Federal Aviation Administration's (FAA's) Next Generation Air Transportation System (NextGen) will create more than 100,000 jobs.

"Overall civil aviation sales are expected to suffer as conditions continue to worsen for helicopters and business and regional aircraft," said Marion Blakely, AIA president and chief executive officer during the AIA's Year-end Review and Forecast Luncheon today at the Mayflower hotel in Washington. "Additionally by this time, the moderate improvements in defense procurement will not be enough to compensate for the declines in aerospace sectors."

Blakely said that the AIA expects total aerospace sales in 2010 to reach $214.4 billion – a "modest growth" over 2009 sales which AIA officials say will close at about $214 billion.

The real casualty of the economic downturn was the business jet market, Blakely said. She blamed this drop in part on an unfair stigma of greed placed on purchasers of these aircraft by politicians. After and a five-year industry expansion, business jet sales dropped sharply in 2009 and production cuts were widespread, according to the AIA forecast report.

The bright spot continues to be in military aircraft sales.

Military sales are estimated to increase $1.6 billion to $63.3 billion in 2010, according to the AIA forecast report. There is "across the board improvement in the sector: fighters and military aircraft will have particularly good years, military transports registered strong growth, and military aircraft research and development increased more than 15 percent in 2009."

Missiles systems are also estimated to grow to $16.7 billion and increase of $1.9 billion over 2009 as are space sales, with an estimated $ 40.9 billion in sales in 2010, an increase of $.5 billion over 2009, according to the AIA forecast report.

For 2009 sales of military aircraft were up to $61.7 billion, a year-over-year increase of more than eight percent, Blakely said. Missile systems also outdid performance, rising 11 percent to $14.8 percent while space systems sales – including military, civil, and commercial programs, will improve modestly by $4.1 percent to $0.4 billion.

However, Blakely says that the AIA does not anticipate the downturn to be long-term or anywhere near the conditions encountered during the 1990s. "We believe the bottom at the valley of this cycle is very shallow and the pipeline is primed."

She listed the launch of the Boeing 787 Dreamliner aircraft, a resilient single-aisle market, and "pent-up replacement demand, which could be driven higher if fuel costs surge."

Blakely says she believes the aerospace industry will create jobs in the near future if Congress accelerates funding for NextGen .

"NextGen airborne infrastructure could be manufactured today and quickly put into place," she said. "Accelerating NextGen will not only bring immediate economic and environmental benefits to all Americans, it will also create jobs on our sector. A $6.4 billion federal investment in NextGen equipment is projected to create 156,000 new jobs, directly and indirectly."

"Congress still needs to pass the FAA reauthorization bill, which will provide stable funding and help expedite implementation," she continued. "With the appropriate funding by the government and the proper incentives for operators to equip, NextGen could be implemented seven to 10 years earlier than planned."

Blakely also said that she thinks NASA is underfunded.

"I am very concerned about the current funding levels," Blakely warned. "The Norm Augustine-led commission laid out its options for the manned space program and they are bleak. Unless we increase NASA's budget, we will be relying on the Russians for a ride to the International Space Station. We are working on a proposal for a new strategy to shore up support for NASA."



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