With the U.S. corporate results on Friday, it emphasizes that although the global economy is shaky, there is a massive demand from the aviation industry specifically the aviation suppliers. It is even more shown as a sudden demand for commercial jet manufacturers is driving a great increase in supplier’s profits.
With investors worried about the slowed growth outside of the United States as well as other markets such as energy, a steady investor confidence may be steadied by these latest earnings.
General Electric Co. (GE.N) declared an almost overflowing record of ordered engines as well as a profit rise of 16 percent for its aviation unit. Meanwhile, some analysts’ forecast was beaten by Honeywell International’s (HON.N) revenue in aerospace as it improved its’ division’s margin of profit.
A more than 9 percent increase in the shares of Textron Inc (TXT.N), makers of Cessna, is seen after its full-year profit forecast was raised.
The demand for air travel is forecasted to increase to around 5 percent a year over the next 20 years along with these historic trends, according to the two aircraft manufacturing company and aviation suppliers, Boeing Co (BA.N) and Airbus (AIR.PA)
With the advent and development of jets that are more fuel efficient, a tsunami of orders is being brought down on big plane makers, giving a big boost of more than $700 billion combined to their backlogs which also translates to about production worth of 8 years.
Similar aviation suppliers, companies such as GE and Honeywell are also enjoying this high demand as it pours down the supply chain as these companies build essential components such as engines and avionics. Plane builders like Boeing and Airbus purchase around two-thirds of the aircraft’s components from suppliers.
It is concluded and stated by Sterne Agee analyst Peter Arment that despite the rocky global economy, the global usage rate in terms of aircraft remains strong and healthy.