Aircraft industry heads upward

Reading the business news page over the past year has been enough to give a person motion sickness: One day things are up, the next they're down; one announcement trumpets improvements in leading economic indicators, the next pronounces doom. Luckily, there's a bright spot out there it appears we can depend on: Aviation is doing well. According to the latest numbers from the Teal Group, the aviation market grew 4.1% in 2011, at a time that much of the rest of the global economy was locked in fibrillation. “Since most aircraft are built in the developed world, and the developed world’s economy in 2011 was either sluggish (US) or terrifying (Europe), our industry remains an island of prosperity in a difficult environment," says vice president of analysis Richard Aboulafia, citing a 1.8% compound annual growth rate (CAGR) for the industry from 2008-2011. Even better, he predicts growth of around 9.3% over the coming year.

The pessimistic view is that after things worsening further at the end of a three-year downturn, the economy was bound to snap back and it only looks good because things were so awful. Growth is growth, though, and 9.3% is quite a tidy number.

Of course, when it comes to the aircraft industry, numbers booked are not necessarily a guarantee of delivery. All too often, they can be a function of wishful thinking. In this case, though, Aboulafia thinks there is reason to believe what he's seeing. “The thing that makes it more real is the we're starting to see a firming in the numbers of used aircraft available for sale. They do appear to be orders that will lead to slightly higher production rates, at least in the second half of the year," he says. "We're starting to see the percentage of the fleet available for sale get down to pre-recession levels and therefore I'm inclined to believe OEMs when they talk about increased sales activity.”

If the European economy dives, all bets are off, of course, but overall there's reason for optimism.

How's that for some good news to end your week?