sector Overview:

The aerospace industry is seeing a welcome recovery. The civil aviation market has emerged from a post 2001 recession with deliveries of Boeing and Airbus large commercial aircraft higher in number and value: Boeing and Airbus both reported higher orders in 2005 of 1002 and 1055 aircraft respectively and combined deliveries for 2006 are expected to increase further - driven in part by significant growth in Asia. Welcome though the recovery is it remains fragile and as yet is not translating to increased profits for the many of companies in the sector – especially the US based airlines which together lost $10bn. Regional and business aircraft production is expected to stay at the same level in 2006 as 2005 – with increased business aircraft production to serve the fractional ownership and corporate markets making up for the continued drop in regional aircraft deliveries. Overall international passenger traffic in the global airline system grew by 7.6% in 2005 while freight traffic grew by 3.2%.