AIA Year-End Review & Forecast December 13, 2006

Aerospace Industry Sales

Orders, Shipments, and Backlog

Aerospace Profits & Profit Margins

Aerospace Foreign Trade

Aerospace Employment

Where We Are Today Highest aerospace sales in history fueled by civil boom Profits low but better than past years Highly skilled but aging workforce, growing since 2003 Best R&D program for defense in the world A collapse of federal R&D for the civil sector Under-funded space program High degree of uncertainty regarding defense needs

Looking Forward to 2007 & Beyond More questions… –How long will the civil aviation boom last? –What about civil military integration? –How will the changed political landscape affect aerospace priorities? –What will emerge as the post-Iraq national security strategy? More preemption Modified deterrence Containment Neo-isolationism –How will WTO case be resolved? –Will space and aeronautics continue to be under-funded? –How will homeland security evolve? –Will any of the above be issues in the 2008 election?

Issues to Focus on in 2007 – Ethics, ethics, ethics at home and abroad – Air traffic system modernization – NextGen – International competitiveness Export control modernization Level playing field Buy American – DoD budget priorities Service funding Modernization Global War on Terror Space programs – NASA funding Aeronautics Shuttle fly out The Vision – Post Iraq national security strategy New Secretary of Defense New Congress