Aerospace & Defense

This sector is impacted by domestic private sector economic activity, international development, and public sector dynamics. Commercial airline activity has been strong in recent years, mostly thanks to increased air travel in emerging markets and airline fleet replacement needs. However, the sector’s growth has been counteracted by a leveling off in U.S. defense spending. Missiles and ordnance demand from the U.S. government fell off significantly as the Iraq and Afghanistan Wars were wound down. However, the recent escalation of tensions and greater activity in Asia, Europe, and the Middle East has buoyed this segment lately. Also, commercial space flight is an area of intense investment and attention, and has been significantly impacted by the entry of operators such as SpaceX.


Value of Closed Domestic M&A Transactions ($mm)



Sector Performance vs. National GDP


For the most part, current trends are generally expected to be maintained in the sector for the foreseeable future. One new concern, however, is that the commercial space may have saturated the international market to a point that aircraft prices and profitability will begin to decrease. Also, oil prices being so low may temper demand for investing in new fuel-efficient planes, despite lower expenses making such an investment easier to commit to. The defense segment will likely benefit from sustained international demand for missiles and other new technologies, driving much of the sector’s increase in revenues in the near future. This demand might not be as strong from oil-based economies, such as Saudi Arabia. Space exploration is moving forward steadily, but not at a volume that will significantly impact the sector’s overall growth.

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