Defense contractors, who mostly flourish in the United States and Western Europe, are on the lookout for new places for customers as military budgets persist to tighten in the traditional big markets, and emerging nations are working toward protecting themselves and their growing economies. Image source: eurotech.com The ratings for the aerospace defense are stable, with growing spending on the military defense section particularly in the United States and Europe, which includes higher aircraft production rates. These production rates are in support of the high demand for commercial aerospace supplies. On the downside, some suppliers’ credit profiles have experienced overtaxing due to operational problems and required investments to meet the increased production. Experts in the industry expect the credit ratio to improve in 2018 on moderate revenue growth and higher margins. However, the growth may likely be restrained for the large U.S. contractors, who return most of their finances to their shareholders, also the impact of certain debt finance acquisitions. The volume of commercial aircraft orders is expected to be flat, even to declining, in 2018, but higher production is anticipated at Boeing and Airbus. In U.S. and Europe, experts expect defense spending to rise. The biggest risk commercial aerospace is facing is the continuous shift in the relationship between aircraft manufacturers and their suppliers that could have a negative effect on the latter. The key risks for U.S. defense contractors are the political concerns and competing fiscal priorities that limit the growth of military spending. In Europe, the possible fallout from Brexit is included in the key risks; program execution and corruption probes are also considered. Scott Beale has been working in the aviation industry for more than 20 years, successfully growing businesses, including those he acquired and founded. At present, he is the Senior Vice President of Corporate Sales and Development at Tempus Applied Solutions. For similar reads, click here.
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