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What's inside PwC's 2024 global aerospace and defense industry report?
The 2024 edition of PwC’s global aerospace and defense: Annual industry performance and outlook shares key performance metrics of the global commercial aerospace and defense (A&D) industry. We drew our data from financial reports for fiscal year 2023 and include financial results for the largest 100 A&D companies by revenue (see the complete list in the appendix).
We also highlight notable industry developments and express PwC’s point of view on topics affecting the industry, developed through interactions with our clients and other industry leaders and analysts.
A year of record recovery: Key findings from the aerospace and defense industry
A record industry revenue of $829 billion in 2023 marks a significant recovery from the pandemic. Civil aviation companies led the way with double-digit revenue increases, with Boeing Commercial Airplanes revenue higher by 30%, and revenues for tier 1 suppliers GE Aerospace, Rolls-Royce and Safran higher by more than 20%.
Surging passenger aviation demand defies capacity constraints
Demand for passenger aviation surged despite constrained capacity and higher ticket prices. Operating profit rose to $73 billion,10% higher than 2022 (though still 9% below the pre-pandemic record of $82 billion set in 2018). Performance continues to be somewhat hampered by production constraints, supply chain and workforce disruptions, and higher inflation.
Rising defense demand amid global tensions
The defense sector is experiencing significant increases in demand amid increased global tensions and partly due to the wars in Ukraine and the Middle East. Global defense spending set a record as many countries moved to increase their deterrence capabilities.
Soaring space demand continues
The space sector is also experiencing surging demand, with small satellite networks proliferating as the world embraces a space-based economy. Mergers and acquisitions in aerospace and defense (A&D) are likely to continue driving activity in 2024, focusing on the space sector, green aviation, and niche technologies.
A growth trajectory: Outlook for the aerospace and defense industry
Despite the challenges posed by factors like inflation, supply chain disruptions and worker transitions, A&D has demonstrated a full recovery from the pandemic based on revenue.
In the commercial aviation sector, the demand for aircraft continues to outpace production capacity, resulting in a backlog equivalent to 11 years of current production. The vast, untapped expected market of new middle-class customers and an optimistic long-term forecast indicate significant growth potential for the industry.
The air cargo market contracted slightly in 2023 but added capacity, pushing load factor down to 44%. Overcapacity and restored PAX bellyhold competition challenge the industry in the short term, but its long-term prospects remain bright, with robust 20-year forecasts for freighter production and conversion.
The defense industry is also poised for growth. Current global conditions, marked by escalating conflicts and increasing tensions, have renewed focus on defense prioritization. As a result, defense spending should keep pace with or exceed inflation, driving innovation and modernization in the sector.
Furthermore, the emerging space sector presents substantial opportunities for the A&D industry. With a potential growth contribution of $1 trillion over the next decade, this sector is characterized by innovation, startups, and mergers and acquisitions, adding a new dimension of growth and excitement to the industry.
Overall, the A&D industry's health is strong, with positive forecasts for both the near and long term. Still, profitability remains a challenge, historically falling below broader industrial measures. To enable sustainable success, the industry must prioritize safety, operational performance, innovation, a talented workforce and scalability to support the global economy.
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