Market Analysis

Modest uptick in industry revenues: The aerospace and defence industry reported revenues of $741 billion in 2022 (up just 3% from 2021) and $67 billion in operating profit (up 8%), according to PwC analysis. The modest improvement in revenue fell short of expectations as surging demand in end markets ran into production constraints due to supply chain and labor challenges.

The commercial aftermarket leads a continuing industry recovery: The best-performing companies in 2022 were generally those with significant commercial aftermarket exposure. Despite surging demand, overall industry revenue results (+3%) were less than might be expected because of production constraints caused by supply chain disruptions and labor shortages. Raytheon Technologies became the industry’s largest company at $67 billion in revenue, surpassing Lockheed Martin, which reported a 1.6% dip. Lockheed Martin remained the most profitable company despite an 8.3% decline, reporting $8.3 billion in profit. This performance was nearly 50% above that of the second-most profitable company, Airbus, with $5.6 billion in profits. GE Aerospace reported the best profit improvement — a 66% increase to $4.8 billion.

Overall, defence profits were down significantly despite strong demand in end markets: Boeing Defence, Space and Security reported a loss of $3.5 billion (-330%), resulting from charges on multiple fixed-price development programs. Raytheon’s Missiles and Defence and Intelligence and Space segments’ aggregate profits were down by $976 million (-25%), owing to program mix and nonrecurring adjustments. Airbus Defence and Space reported a loss of $124 million. Lockheed Martin reported a profit decline of $775 million (-8.5%). In general, industry results were due mostly to program performance issues. Furthermore, production and efficiency were constrained by supply chain and labor challenges.