Kevin O'Toole/LONDON
FIRST-HALF figures from the US aerospace industry hold few major surprises, but signs of recovery are showing through, helped by early gains from consolidation.
Financial results for the top ten aerospace companies are largely steady, with most of them posting improvements in bottom-line profits. The only exceptions come from the top of the list, with Lockheed Martin and Boeing paying up-front for the next phase of rationalisation.
The most obvious changes in the ranking stem from the latest round of mergers and acquisitions. Lockheed Martin, reporting its first combined figures since the approval of the merger in March, rises to the top of the list, narrowly ahead of a shrinking Boeing.
Northrop Grumman is holding its own at sixth place, while Loral's acquisition spree in defence electronics has seen the group rise up the ranking. Raytheon should also shore up its position in defence with the recent acquisition of E-Systems, which is yet to appear in the financial results.
Evidence of greater stability throughout the US industry is underlined by the latest figures from the Aerospace Industries Association (AIA). At the halfway stage, the AIA estimates that the industry will again show a rise in new order intake for 1995, gradually climbing back from the collapse of two years ago.
The recovery has yet to feed through into a growth in shipments, however, which are expected to dip again in 1995, falling below the $100 billion mark for the first time in a decade.
The recovery, such as it is, must be put into context. Shipments are down from a high of over $130 million three years ago, while order intake at about $92 billion compares with a peak of $162 billion, at the end of the 1980s.
Perhaps better news comes from the stabilisation in production output, expected to hold steady in 1995 for the first time since the recession hit. Production capacity, meanwhile, is continuing to edge down from its peak. The result is that capacity utilisation has started to creep up, although, at 63%, it is still down from the 70-80% averaged over the past 15 years.
Even with a recovery in sales in prospect, the figures point towards a further drive to rationalise capacity. Latest AIA returns confirm that aerospace employment has continued to decline this year, albeit at a slower rate than has been the case over the past five years.
Source: Flight International
