Bottom Line: 2014 is forecasted to bring high single to double-digit growth in the commercial aerospace sector, driven by rapid replacement of obsolete aircraft with more fuel efficient models, increases in passenger travel demand globally.
Fuel Efficiency Is Driving Commercial Jet Demand to Record Levels
Deloitte’s 2014 Global Aerospace and Defense Industry Outlook reports that the potential of more fuel-efficient aircraft to improve the profitability of global air carriers is the most significant of all factors driving their optimistic forecasts. More fuel-efficient jet designs can deliver a 15% better fuel burn rate, which translates into millions of dollars in operating cost reductions. You can download the report here.
Deloitte predicts that the unprecedented demand for commercial aircraft will be a powerful catalyst for increasing g the importance of enterprise compliance and quality management, with specific focus on supplier quality management. This study also alludes to the cost of quality as well, highlighting the strategic value of striving to pursue cost of quality as a metric and relentlessly driving down the cost of bad quality.
Additional key take-aways from Deloitte’s Global Aerospace and Defense Industry Outlook include the following:
- The global aerospace and defense (A&D) industry will attain a 5% growth in 2014, comparable to the two previous years. Deloitte reports that commercial aviation is driving up the entire industry and will continue to compensate for reductions in defense spending.
- Deloitte forecasts that the total demand for new aircraft production is expected to reach record highs for the foreseeable future, with production forecast to be between 29,000 to 34,000 jets a year for the next 20 years. The following figure from Deloitte’s study shows the aircraft delivery forecast from 2013 to 2032.
- Deloitte’s analysis shows that commercial aerospace continues to report stronger growth with the top 20 global and the top 20 U.S. companies reporting a 9.3% and 7.0% improvement in revenues. He top 20 global commercial aerospace companies outperforming their U.S. peers with a 13.7% increase in operating projects versus a 10.5% increase for the U.S.-based commercial aerospace companies. The following table from the report summarizes the revenue and operating profit of the top 20 global and U.S. A&D companies.
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