b"Seller's Market stopped short of 150, in the highexpects these constraints to con-140s. tinue for another 12 to 18 months.HesaidmajormanufacturingAlthough Aboulafia doesnt see to just over a $100 billion-a-yearproblems include difficulty findingany major technological disrup-industry. personnel and supply chain issues,tions on the horizon, he did point Besides COVID-19-related issues,such as the inability to obtain suf- to a couple of developments in the a main culprit was the shutdown officient quantities of castings andaerospace industry. One is that over Boeings 737 Max line for a coupleforgings. This particular shortfall,the past year, it has become clear of years. he said, can be blamed on recentthat the military aircraft market will In terms of supply, things are adiplomatic difficulties with Russia,change with the introduction of messas messy as they were athe worlds largest supplier of tita- Loyal Wingman combat aircraft. He year ago, maybe even more messy,nium sponge, as well as castingsdescribes these as smaller, pilotless Aboulafia said. There are seriousand forgings made of the material.combat planes that accompany and problems getting things out theHe reports that U.S. companies haveare controlled by a piloted fighter.door. stopped buying Russian titanium.There might be one, two or a As an example, he pointed toAnd while Europeans still purchasedozen companions (that) extend what he called the biggest programit, there are concerns about a cutoff. the fighting power of a traditional in aerospace: production of the Air- In addition, Aboulafia said road- fighter, he said. Its a big change, bus A320. blocks are in the way of lining up al- but youre not going to see metal The company is trying to boostternative suppliers. cut in any meaningful way for an-A320 production to 65 per monthNot everyone is willing to in- other dozen years.in a year or two, up from a low ofvest in new tooling, mills and cast- Another development is electrifi-40 per month, Aboulafia said, buting facilities, he said. Because ifcation of aircraft, such as small, very there are enormous hurdles on thethe problem with Russia is resolved,short-range helicopters designed way to getting there. then the business case for this newto lift people out of urban areas.In the defense segment, he saidinvestment evaporates. Electrification is happening very the biggest program is the pro- For 2022, Aboulafia forecasts anslowly in some segments, but its duction of Lockheed Martins F-35industry expansion of about 17%. going to be a very long road and fighter aircraft. Thats certainly good, but itmight not be relevant to the over-We were supposed to be at 156would be a heck of a lot betterwhelming bulk of the industry, planes this year, Aboulafia said,if it werent for supply chain con- Aboulafia said. The reason is that but it looks like were going to bestraints, he said, adding that hefor the most part batteries just Aviation Segments byTrends Damage(most to least)Twin aisle jetliners International traffic hit hardest and longest Already an overcapacity situation Secular shift towards single aisles already underway Today: Yeah, just that bad.Single aisle jetliners Fuel prices a big problem China comeback uncertain Some relief due to deferred Airbus ramp, and MAX stop Today: Much better, except for ChinaBusiness JetsLarge cabin strongly correlated with oil prices Small/medium strongly correlated with corporate profits, equities indices Recovering quickly; just a 2020/21 downturn Today: Much more upside than downsideCivil RotaryOil and gas segment (large) hit again, before recovery even began Today: No real change, but not better, eitherMilitary Programs Emphasis on shovel-ready. Advance development programs at greater risk Pure-play contractors in best shape; suppliers with most defense in good shape too Today: All good, as expected. In fact, betterAeroDynamic Advisory16DECEMBER 2022 Yearend.indd 16 11/15/22 12:02 PM"