Military aircraft market forecasted to grow to $65.8 billion, says AIA

WASHINGTON, 16 Dec. 2010. Officials at the Aerospace Industries Association (AIA) say that military aircraft sales 8 percent over 2009 with sales of $64.5 billion in 2010, increasing to $65.8 billion in 2011. However, the space sector will remain flat, according to the AIA's "2010 Year-End Review and Forecast."

Dec 16th, 2010

Posted by John McHale

WASHINGTON, 16 Dec. 2010. Officials at the Aerospace Industries Association (AIA) say that military aircraft sales eight percent over 2009 with sales of $64.5 billion in 2010, increasing to $65.8 billion in 2011. However the space sector will remain flat, according to the AIA's "2010 Year-End Review and Forecast."

Through 2011 and 2012 the U.S. Department of Defense (DOD) budget will continue to be substantial, "which means high output through 2014," said Marion C. Blakey, AIA president and chief executive officer during the AIA's Year-end Review and Forecast Luncheon in Washington at the Mayflower Hotel. "The DOD budget represents 48 percent of federal discretionary spending," so it is a big target for an administration looking to make cuts, Blakey added.

Therefore in the long run defense spending likely fall, but not as AIA forecasts an increase to $5.8 billion in 2011, Blakey said. For news from the civil side of the AIA forecast see Global aerospace sales showed increase in 2010, according to AIA forecast.

"While aircraft procurement will continue to consume the largest share of DOD investment, the federal budget crisis will likely constrain adequacy of aircraft funding," Blakey continued. "Efforts to cut the defense budget and eliminate programs run the risk of creating greater economic turmoil as well as undermining national security."

Blakey said she her team would like to see a defense budget that consistently each year allocates about 35 percent to procurement and research and development -- to maintain investment in innovation.

Space sector

Space sector sales are likely to be relatively flat in 2011, totaling about $45.5 billion, Blakey said. "Beyond fiscal year 2011, NASA's year-to-year budget is projected to average 2.5 percent growth through fiscal year 2015."

Most of the growth will come from commercial space sector investments, Blakey noted. New strategies for national security space projects such as military satellites and research and development in small satellites will also boost the market long-term, she added.

However, Blakey said she thinks the biggest growth opportunities for the U.S. space industry lies in international sales. "Developing a more diverse customer base will not only help the U.S. maintain a strong industrial base, but developing space-related business opportunities in India, South Korea, the Middle East, and elsewhere will serve to strengthen relationships with current partners."

That said, U.S. imports of aerospace products have slipped in recent years, Blakey said. In 2010 exports are expected to reach more than $80.5 billion, off slightly from 2009.

The drop in civil aircraft exports is mostly responsible for the decrease, but this was offset by strong military sales.

The best performers in the military sector included "helicopter sales, which rose 76.0 percent, as well as a 23.4 percent increase in the exports of missiles, rockets, and parts," Blakey said.

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