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Aircraft Markets: Outperforming The Economy Presentation To Mazak Regional Open House Windsor Locks, CT By Richard Aboulafia Vice President, Analysis Teal.

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Presentation on theme: "Aircraft Markets: Outperforming The Economy Presentation To Mazak Regional Open House Windsor Locks, CT By Richard Aboulafia Vice President, Analysis Teal."— Presentation transcript:

1 Aircraft Markets: Outperforming The Economy Presentation To Mazak Regional Open House Windsor Locks, CT By Richard Aboulafia Vice President, Analysis Teal Group Corporation May 2012

2 Aircraft Markets, Through Good And Bad Years

3 The Commercial Market

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8 What’s Different With This “Cycle” High fuel prices. Stronger emerging markets. Government export credit finance. – From 15% to ~35%. Other government support (sovereign funds, government banks and airlines). Global flight to safe assets (“excessive demand”?). Build to forestall emerging competition? The primes really need cash. – Persistently high IR&D – With declining defense, everyone needs a growth story.

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12 Single Aisles: The Next Generation Bombardier: first engine adapter. – Serious execution risk. – Needed: airlines to reassure lessors. Lessors to reassure airlines. Seeking one good hit… – Pioneer or martyr? Airbus: doing the right thing, aggressively and successfully. Boeing: belatedly but correctly following. Probably. – The 68 inch question. Emerging players: more smoke than fire. Embraer: less of a wild card than thought.

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19 Business Aircraft

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25 Military And Rotorcraft

26 Defense Budget: The Sky’s Not Falling. But Keep An Eye On It Anyway.

27 Sequestration: Like A Game Of Chicken For Adults…Of A Kind. Sequestration will add another $492 bn in cuts to the planned $487 bn in cuts. There’s no way at all to stop it…except for a large “off” switch, located in Congress. A majority in both parties would like to push this switch, but on their own terms. – Most Democrats want to raise revenue to pay for it, at least by letting some of the Bush tax cuts expire. – Most Republicans want to pay for it by cutting other parts of the budget. A lot can happen November 6 – January 20… – Republicans: no reason to make Obama look bad after election. Last chance to make a tax increase happen while Democrats control the Senate and White House. – Democrats: last chance to leverage their final days of controlling the Senate.

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29 Source: DoD Selected Acquisition Reports/American Enterprise Institute

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41 What Happens Next

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44 Growth Rates By Supplier Nation: Top 10 (By Volume)

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