S&P posts healthy outlook for global commercial aerospace sector

Mumbai: Standard & Poor''s Ratings Services has said that it is maintaining a stable outlook on about 80 per cent of the commercial aerospace companies globally mainly due to an increasing demand for new jetliners from global airlines, in particular those from Asia and the Middle East. S&P said that its robust outlook on the sector is also derived from a healthy growth in the global economy, which is contributing to a growth in air traffic.

This all round growth, S&P said, has positively impacted not only the fortunes of many airlines globally, but also that of aerospace companies.

It also said that its near-term outlook of the US and European defence sector was stable on the back of brisk government spending, but warned that deferments or cancellation of major projects was likely.

Commenting about the two leading commercial airplane manufacturers, Boeing and Airbus, S&P said that though these aerospace giants continued to see strong demand for their jetliners during 2005 to 2007, with existing backlogs equivalent to more than five years of production, it warned that this strong demand did not seem sustainable and future orders were likely to be smaller, and would match deliveries more closely.

It also said that the current surge in the fortunes of Boeing and Airbus was likely to be extended as several large US legacy carriers that had postponed their fleet renewal plans were expected to order new jetliners over the next three years.

The long-term prospects of aerospace companies continued to remain ''solid'', S&P said, on the back of projected air traffic growth of about 5 per cent per year.