Aerospace Business Booming, Despite Western Defense Cutbacks

by Stuart Burns on

It would seem not everyone is frozen by indecision in the headlights of the European debt crisis. In many emerging markets, both governments and corporations are forging ahead with ambitious investments with plenty of money in the pocket or access to ready sources of finance. At the Dubai Air Show, Emirates Airlines, fast earning itself accolades for world’s most successful airline, has just placed a record order with Boeing, according to the Financial Times.

The order for 50 Boeing 777 long-haul aircraft is worth $18 billion at list prices, a record contract by value for the US company that will add to the 162 777s the airline already operates. Competition is equally fierce in the defense sector, where Boeing has not fared quite so well against their arch-rival Airbus. Via their military side, EADS, the group appears to have sidelined Boeing with sales of their Typhoon Eurofighter to India, where the Boeing F-18 and Lockheed Martin F16 have been dropped in favor of the Typhoon and possibly the French Dassualt Rafale for a 126-fighter-jet contract said to be worth $11 billion.

In Japan on the other hand, Lockheed looks to be in much better shape, edging the Typhoon out in favor of their stealth technology F-35, according to the Telegraph. Again, Boeing’s F18 is not looking too hot a prospect as, like the Typhoon, they can’t match the F-35’s stealth capabilities for running clandestine surveillance flights over North Korean, Chinese and Russian military assets in the region. The Typhoon has been trading recently on the highly successful results of over 3,000 operational hours over Libya, in which it is said to have achieved a 99% success rate against fixed targets and 98% success rate against mobile targets, apparently making its eye-watering, nearly $100 million price tag a bit of a bargain.

The wooden spoon goes to the poor old French, who haven’t secured a single sale outside France for the Rafale in spite of heavy lobbying by President Nicolas Sarkozy at every opportunity. Dassault had hoped to secure an order for 60 jets to replace the UAE’s aging fleet of Mirages, but it seems the order is more likely to go to the Typhoon in spite of three years of French lobbying.

Defense aircraft makers may be facing a stagnant market in Western countries as major players settled aircraft numbers for the next 10 to 15 years late last decade, but they have a wealth of sales opportunities in emerging and overseas markets among countries looking to replace fleets of aging Mirages, Migs and assorted American hardware. Brazil, for example, is tendering for the first 36 fighters to replace a collection of Mirages, Northrop F-5s and A-1s with either Boeing F-18s, Typhoons, possibly Saab Griffen’s and, oh yes, of course, the Rafale too. It’s not clear where Brazil sees the national threat by requiring so much expenditure, but apparently the total demand could rise to 100 aircraft potentially worth some $15 billion.

The governments of Qatar, Oman, South Korea, Denmark, Switzerland, Turkey, Romania, Malaysia and Bulgaria, in addition to the above, are all also reportedly considering acquiring aircraft. So on both the civilian and military aerospace front, Boeing, Lockheed Martin and European consortium EADS/Airbus, not to mention their component and subcontractor supply chains, are likely to remain busy well into the middle of the decade meeting the demand.

–Stuart Burns




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