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M&A News – Aviation, Aerospace and Defense Industry

By Joe Contaldo | Jul 14, 2016

Aviation, Aerospace and Defense IndustryIllustrating increased competition in a key market segment in the aviation, aerospace and defense industry, Boeing, in March 2016, struck a deal for United Airlines to order 25 737-700 single-aisle jets, beating out smaller rivals Bombardier and Embraer. The agreement followed a similar deal in January, when United agreed to buy 40 737-700s. The airline is working to replace its aging fleet of smaller, 50-seat aircraft. The competition for the United orders was fierce as Bombardier hoped a win would help boost demand for its CSeries narrow-body jets, the company’s first product that aims to compete directly with Boeing. Executives at other airlines were said to watch the United decision closely, and are expected to weigh the outcome when considering the Bombardier CSeries as a potential part of their own narrow-body strategies, according to The Wall Street Journal. Single-aisle jets are expected to account for more than 70% of global new aircraft deliveries through 2034, according to a recent Airbus market report. 

Global shipments of general aviation aircraft fell more than 6% in the first nine months of 2015 compared to the same period in 2014, according to the General Aviation Manufacturers Association (GAMA). Industry watchers suggest demand for US-made general aviation aircraft may have been harmed when Congressional authorization for the US Export-Import Bank lapsed in July 2015. The Export-Import bank provides financing to US export manufacturers who are unable to secure financing in the private sector. The Export-Import Bank was reauthorized in December 2015. Worldwide shipments of business jets were a bright spot, which increased more than 4%. However, shipments of piston aircraft in the first nine months of 2015 dropped nearly 11% and turboprop aircraft deliveries were off more than 9%. Overall, rotorcraft shipments were down nearly 6%; a 1% rise in piston rotorcraft shipments was more than offset by an 8% fall in turbine rotorcraft deliveries.

Posted by Joe Contaldo.

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