The U.S. aerospace and defense industry is facing some of its greatest challenges in decades. While weathering numerous trials during 2013, our industry produced relatively flat results compared with 2012. An overall slight decrease in sales is forecast, reaching $220.1 billion for 2013 – down from $222 billion last year – with only civil aircraft sales showing growth. Sequestration effects on the industry and Defense Department have forced industry layoffs and divestitures and will continue to put pressure on the fragile in-dustrial base. Despite these pressures, overall aerospace exports held their upward trend, improving by $12.5 billion, displaying posi-tive growth in both civil and military sectors. However, employment will drop slightly this year by a projected 13,000 jobs, declining to 618,200. Sequestration is clearly hurting our industry’s skilled and professional workforce and ultimately may stifle U.S. global com-petitiveness.

The industry could see some relief from sequestration over the next two years if the Bipartisan Budget Act of 2013 passes, but the impact of cuts will remain significant and continue in 2014 and be-yond. While larger companies continue to weather the worsening budget environment by aggressively downsizing and re-organizing, smaller companies in the defense industrial base are not faring as well, as they face even more difficult challenges. The continuation of sequestration will exacerbate the impact on the industrial base at all levels, especially among small and medium sized companies.

2013 YEAR-END REVIEWAND FORECAST

The industry remains extremely concerned about the potential overarching impact that sequestration cuts will have on Federal Aviation Administration’s current operations and its implementation of NextGen technolo-gies. The FAA has never experienced a reduction of this magnitude, and the budget process in 2014 could put additional pressures on agency activities.

Congress still needs to finalize a full-year FY2014 ap-propriations bill for FAA and other federal agencies. The House’s proposed budget for FY2014 was within the Budget Control Act cap. However, in meeting this overall target, the transportation appropriations bill resulted in deep cuts to NextGen and other FAA programs. In fact, cuts were so deep that the bill did not have enough politi-cal support to pass the full House when considered this summer.

With the likely passing of the Bipartisan Budget Act of 2013, and an avoidance of a government shutdown in January, we will continue to fight for a strong FAA budget and adequate funding of FAA oversight and certification budgets that support our members’ Research, Develop-ment, Technology, and Engineering (RDT&E) and pro-duction activities. Implementing NextGen as currently envisioned, on schedule, and meeting the congressional mandate of UAS integration into the national airspace system by 2015 are key industry imperatives, and we will strongly support and contribute to meeting these dead-lines.

Despite this chaotic domestic budget environment, the sector posted an increase in deliveries for the third con-secutive year. Total backlog for U.S. civil transport aircraft totaled 4,787 aircraft worth $344 billion – equivalent to seven and one-half years at current production rates. Sixty-six percent of those orders are from foreign carriers.

The large civil aircraft market notched several landmark announcements in 2013. At the Dubai Airshow, Boe-ing launched the 777X with record-breaking orders and commitments for 259 aircraft from Emirates, Qatar air-ways and Etihad Airways, on top of an earlier order from German-carrier Lufthansa. The 777X orders – at $95 billion – marked the largest product launch by value in commercial jetliner history. In addition, Eithad ordered 30 787-10s, which marked the 1,000th 787 sold.

Production of the Boeing 787 continued to grow – the 787 final assembly facilities in Washington and South Carolina are increasing the combined monthly production rate to 10 airplanes per month, rising to 12 per month by 2016.

The Next-Generation 737 also had unprecedented orders in order to meet the demand, production of the 737 line will increase to 42 aircraft per month in mid-2014 and to 47 per month in 2017.

The growth of unmanned systems for both civil and military use is projected to continue. It is estimated that Unmanned Aircraft Systems (UAS) spending will nearly double over the next decade, from $6.6 billion to $11.4 billion on an annual basis, and the segment is expected to generate $89 billion during the next 10 years. Administrator Huerta’s UAS roadmap announcement in November established a plan including regulatory stan-dards, policies, certification and operational procedures required to address full UAS integration into the national airspace system.

As the economy continues to rise out of economic tur-moil, the U.S. Maintenance, Repair and Overhaul (MRO) sector continues to expand by double digits as operators explore ways to maintain equipment and extend the life of their investments. By 2022, the global MRO market will nearly double to $84.7 billion dollars, driven by airframe and heavy engine maintenance. The U.S. represents 32.6 percent of the global market, expending $16.6 bil-lion, followed by Western Europe at roughly $12 billion.

2

Civil Aircraft

0

50

100

150

200

250

2012

2013

(P)

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

2014

(E)

BIL

LIO

NS

OF

DO

LL

AR

S

232.

1

222.

0

220.

1

Aerospace Industry Sales

3

General Aviation Perhaps the greatest challenge to general aviation in 2013 was the 16-day government shutdown. The shutdown forced approximately 34 percent, or 15,514 of the FAA’s 46,070 employees to be furloughed. The FAA Registry office was closed, delaying aircraft certification activities required for the sale, import and export of air-craft. The stoppage delayed deliveries of more than 150 new aircraft with a value of more than $1.9 billion. Other suspended activities included: aviation rulemaking; devel-opment, operational testing and evaluation of NextGen technologies; development of NextGen safety standards; and most contracting and budgeting functions.

General aviation shipments are projected to reach 1,661 units by yearend, an increase of 9.7 percent over 2012 valued at $10.2 billion. Projections for 2014 call for deliveries to reach 1,801 units worth $11.3 billion. Multi-engine turboprop deliveries were up 42 percent in 2013, followed by single-engine turboprops, up 10 percent, as the segment leaders. On the other hand, business jet deliveries continue to face significant challenges reflected by a decrease of 2.1 percent as of the third quarter over a year ago signaling a slower, more muted recovery. More than half of the expected market for general aviation aircraft will remain in exports.

The small aircraft segment will benefit from the recently signed Small Airplane Revitalization Act (SARA). The law requires the FAA to adopt new certification regulations

that should reduce the cost of small aircraft and avion-ics upgrades. SARA gives the FAA until Dec. 15, 2015 to change regulations that govern the certification of many general aviation aircraft. FAA Administrator Michael Huerta said the changes will greatly improve safety, and lower costs.

In spite of the challenges, general aviation performance continues to improve, as a Gulfstream crew flying a G650 completed the fastest westbound around-the-world flight in July, setting a new record for a non-supersonic aircraft.

RotorcraftThe U.S. civil rotorcraft market has regained and sur-passed sales and unit production levels that have been down since 2009 – despite a government shutdown that hampered deliveries, training and other essential activities. Following several years of slowly rebounding deliveries and sales, U.S. civil helicopter shipments are expected to reach 596 units this year, with a value of $2.35 billion and up from $1.73 billion a year ago. This steady, upward trajectory is expected to continue in 2014 as international and domestic demand grows across the civil markets. These markets include offshore oil and gas exploration and production, public safety, law enforce-ment, VIP transport, and emergency medical services.

0

50

100

150

200

250

2014(E)2013(P)201220112010

KEYRelated Products& Services

Space

Missiles

Military Aircraft

Civil Aircraft

BIL

LIO

NS

OF

DO

LLA

RS

$207.6 $212.8 $222.0 $220.1 $232.1

$29.7

$44.4

$23.5

$61.9

$48.2

$30.0

$46.8

$23.2

$59.7

$53.2

$31.3

$46.4

$22.4

$59.7

$62.2

$31.0

$44.8

$21.4

$56.0

$67.0

$33.1

$47.1

$22.1

$57.6

$72.1

Aerospace Industry Sales By Product Group

Military sales are down across all categories, with aircraft sales dropping 6.3 percent, or $3.75 billion, to $55.95 billion in 2013. Missiles dropped 4.6 percent, or $1.03 billion, to $21.37 billion; and DOD space spending dropped 5.3 percent, or $1.38 billion, to $24.77 billion. This reflects ongoing budget reductions caused in large part by sequestration and a drop in overseas contin-gency operations funding. Reductions in DOD spending were partially offset by nominal growth of 4.2 percent in defense exports. Foreign sales will continue to be a key area of focus for defense companies, but it is becoming clear that defense exports will not offset steep declines in domestic procurement spending.

The onset of sequestration in March forced DOD to begin making difficult budget choices. While the impact of cuts in 2013 was minimized by a series of one-time actions taken by DOD, these actions will no longer be available in the future. The Bipartisan Budget Act of 2013, if passed, could potentially reduce the effects of sequestration for the next two years, but investment accounts – the life-blood of our industry – will remain under significant pres-sure, despite the budget agreement. Modernization fund-ing, though less than one-third of the defense budget, will likely absorb nearly half of the sequester’s early year cuts, due to its immediate accessibility. As a consequence, DOD will be committing 15-20 percent less to needed programs, which will erode the technological superiority of our warfighters that our nation so heavily relies upon.

Military

4

20

40

60

80

Imports

Exports

Surplus

2013 EXPORTS111.9

2013 SURPLUS73.5

2013 IMPORTS38.5

BIL

LIO

NS

OF

DO

LL

AR

S

100

120

2013

(P)

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

Aerospace Foreign Trade

5

TradeThe U.S. aerospace industry continues to lead the United States in the net export of manufactured goods, with a dramatic increase in exports of $12.5 billion, while im-ports increased by less than $5 billion. As a result, the fa-vorable balance of trade in aerospace products increased from $65.7 billion in 2012 to $73.5 billion in 2013.

Exports of civil aircraft, engines and parts continue to represent about 88 percent of all aerospace exports with almost all of the increase coming from the civil sec-tor. Continued growth over the next several years is expected, given the large backlog of civil aircraft orders. A healthy global economy and high oil prices remain important factors in ongoing demand for new, more fuel-efficient civil aircraft.

There is reason for optimism with regard to export growth. In 2013, we saw the beginnings of implementa-tion of Export Control Reform, with Congress passing leg-

islation allowing commercial satellites to be moved from the U.S. Munitions List, and the Obama Administration initiating revisions to USML Category VIII (military aircraft) and Category XIX (military engines) by moving essentially commercial technologies to the Commerce Control List. Continued support for the Export-Import Bank is also a critical element of American competitiveness in overseas markets. The Bank not only facilitates sales of complete aircraft, but also fuels a continuing stream of revenue for parts suppliers and maintenance, repair and overhaul companies for the lifetime of the aircraft.

Increasing defense exports is a critical priority for industry, given reductions in overall defense spending in the do-mestic market. We must see a renewed partnership be-tween industry and government to develop and execute a National Defense Export Strategy that supports U.S. national security, foreign policy and economic interests.

Overall space sales dropped 3.5 percent, or $1.62 billion, to $44.79 billion in 2013, largely driven by reductions in DOD space spending. However, despite gridlock in Washington, including Congress’ inability to agree on a new NASA Authorization and the sequestration of NASA’s budget in the FY2013 continuing resolution, civil space programs continued to make substantial progress.

This year marked the successful completion of NASA’s Commercial Orbital Transportation Services program, with the certification of two providers of commercial cargo services to the International Space Station and the launch of new spacecraft to explore the moon and Mars. Our industry continues to support NASA’s commercial launch priorities as well as its exploration and science programs.

In 2013, the U.S. and the rest of the world experienced devastating severe weather that caused widespread de-struction and significant loss of life. Storm prediction ca-pabilities are critical to saving lives, protecting infrastruc-

Spaceture and informing recovery efforts. Continued funding for NOAA programs like polar-orbiting weather satellites remain critical for accurately predicting storm tracks and the impact of major weather events.

In 2014 and beyond, sequestration budget cuts will continue to threaten progress if they continue unchanged. NASA risks dropping to a funding level of approximately $16 billion – a reduction of nearly $2 billion from 2011. While the pending budget deal could potentially offer some relief, continued investment in ongoing space pro-grams is crucial to our success.

Budget prospects for U.S. military space programs also remain extremely uncertain given the downward pres-sure on defense spending – even if a budget sequester is avoided in fiscal year 2014. Unclassified military space programs have been reduced as programs migrate from development to production. In the meantime, making investments for the next generation of systems – such as defense support weather satellites – is essential.

0

100

200

300

400

500

600

700

800

2013

P20

1220

1120

1020

0920

0820

0720

062005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

BIL

LIO

NS

OF

DO

LLA

RS

2007 Peak321.2 ORDERS

295.6

SHIPMENTS245.4

BACKLOG613.3

Backlog

Orders

Shipments

Aerospace Shipments, Orders and Backlog

6

After the sequester became law, the Pentagon in June outlined the policy’s harmful effects on the DOD budget. Some defense firms responded to the sequester by di-vesting units while others offered buyouts to employees.

The result is that aerospace employment will decrease slightly overall this year from 631,400 in 2012 to a pro-jected 618,200 by year’s end. Industry will have to pay particular attention to the impact overarching budgetary forces will have on research and development spend-ing and the sector’s efforts to attract and retain a skilled workforce.

Employment

2013 Total:618.2

KEY

EM

PL

OY

EE

S (

TH

OU

SA

ND

S)

100

200

300

400

500

600

700

800

Search, Detection & Navigation Instruments

Guided Missiles, Space Vehicles & Parts

Aircraft, Engines & Parts

2011

2010

2012

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

2013

(P)

71

420

128

Aerospace Employment

7

Until it is completely reversed, sequestration will remain a real and immediate threat to the U.S. aerospace industrial base. Left unchanged, further cuts envisioned under the Budget Control Act through 2021 will significantly erode the critical workforce that underpins the country’s defense and aerospace capabilities. With the approach of 2014, it is also important to ensure that government leaders fully comprehend the importance of maintaining, strengthen-ing and protecting American design and manufacturing capabilities.

At the close of 2013, the overall outlook is mixed, with substantial gains in the commercial sector largely offset by losses in the domestic military market, illustrating industry resilience in the face of significant challenges. Sustaining this trend, however, depends on continued economic growth in the U.S. and Europe, and favorable policy and budget decisions.

Commercial aviation remains an American success story. Commercial aircraft represent America’s leading manu-factured export, supporting jobs and economic growth across all 50 states. To maintain this momentum and remain competitive in the global marketplace, a key AIA focus for 2014 is congressional reauthorization of the U.S. Export-Import Bank. Export credit is an important competitive tool for U.S. companies. Ex-Im Bank supple-ments – rather than competes with – other sources of finance. To lose that support would give foreign compa-nies a substantial advantage over large and small U.S. business. Roughly 89 percent of Ex-Im Bank transac-tions involve small businesses.

The mission to create economic opportunity also extends to the global competitive environment. We will continue to work aggressively with U.S. government trade financ-ing, promotion, and enforcement agencies such as the U.S. Department of Commerce, U.S. Export-Import Bank, the U.S. Trade Development Agency to protect and grow market access for U.S. civil aviation products.

Continued progress on the deployment of the Next Generation Air Transportation is hampered by the se-quester cuts and poses a great risk. In allocating a four percent budget cut from the FY2013 sequester, the FAA reduced their capital budget by nine percent. And within the capital reduction, NextGen programs were reduced by 15 percent. In other words, short-term needs are receiving the highest priority for scarce funding. AIA will continue to advocate for a revision to the BCA caps and for final FAA appropriations in FY2014 that provide for an adequate balance between operating requirements and long-term capital needs. Growth in the capacity of our

national airspace system and full integration of unmanned aircraft systems are dependent upon deployment of the Next Generation Air Transportation System. Maintaining investments in NextGen also will be a critical priority for industry in 2014 and beyond.

AIA will continue to meet with key congressional leaders to underscore our concerns and to press for adequate funding for priorities such as NextGen, certification, UAS integration, and aeronautics and environmental research. America’s space enterprise continues to return substan-tial dividends in the form of advanced research and spi-noff technologies. However, continued investment is an absolute requirement if we are to maintain our leadership in space endeavors. While we celebrated the successful certification of two providers of commercial cargo servic-es under NASA’s COTS program, we are still dependent on Russia for crew-rated launch services. Sequestration cuts pose a direct threat to the development of domestic commercial crew services. Additional cuts will only serve to delay capabilities or cause the outright cancellation of important space programs. Advocating for advanced space program funding will remain a top priority for AIA in the years ahead.

Despite the many triumphs of 2013, our industry faces major headwinds in the years to come. A dysfunctional fiscal environment has led to sequestration cuts across all government agencies, threatening investments in mod-ernization at DOD, FAA, NASA and NOAA. Research and Development, the lifeblood of our nation’s technological superiority, is especially hard-hit, as both universities and private companies conducting government-sponsored programs suffer cuts in funding. Going forward, seques-tration’s impacts will be felt in the form of many delayed or cancelled programs.

A climate of uncertainty limits industry’s ability to plan and invest in infrastructure, personnel and research and development. This is particularly damaging in the lower tiers of the industrial base supply chain. By June of this year, 88 percent of respondents to a supplier survey

8

Summary & Outlook

9

reported negative impacts to their businesses that included lost rev-enue, cancelled contracts, hiring freezes and layoffs. After the early-October government shutdown that caused serious disruptions in the aerospace and defense industry, the number of companies harmed by Washington gridlock is approaching 100 percent. The uncertainty is also having negative impacts on our workforce, as companies are increasingly experiencing difficulties in recruitment and retention of talent.

Our deepest concern remains the health of the aerospace and de-fense industrial base. Left unchanged, further cuts envisioned under the Budget Control Act through 2021 ($1.2 trillion in deficit reduc-tions, with $500 billion to be absorbed by defense alone) will continue to erode industrial capabilities. While the impact on industry is not apparent to some, the supplier community is already suffering, larger companies have aggressively re-organized and downsized in prepa-ration, and future cuts are expected to significantly exacerbate the impact on the industrial base at all levels, especially among small and medium sized companies.

As further cuts to the military begin to take hold, U.S. military lead-ers have cautioned members of Congress that American men and women in uniform will bear the brunt of these cuts if a more rational budgeting approach cannot be agreed on. In September of 2013, three of the four Joint Chiefs told the House Armed Services Commit-tee that if sequestration persisted they would struggle to meet even one major theater contingency, let alone execute the military’s basic Strategic Planning Guidance of defeating an enemy in one theater while deterring another enemy in a different area.

Supporting a predictable and stable defense budget, including adequate funding for investment accounts, will remain paramount in AIA’s advocacy efforts in 2014.

Our resolve going forward is to continue to oppose sequestra-tion, secure adequate funding for essential aerospace and defense programs, fight against acquisition practices and regulatory burdens that harm the industry and its competitiveness, and create a more competitive industry globally that will continue to generate the largest positive trade balance of any U.S. manufacturing sector.

Year Total Civil Military Missiles Space

Current Dollars (Billions)2003 $152.59 $75.96 $32.44 $43.52 $16.93 $35.86 $23.842004 157.88 78.32 32.52 45.80 19.66 35.70 24.202005 169.41 86.58 37.16 49.42 20.80 36.66 25.362006 185.26 100.19 45.85 54.34 21.03 37.56 26.482007 204.75 112.96 52.55 60.41 22.59 40.15 29.062008 210.07 112.19 48.18 64.01 24.59 43.11 30.182009 207.29 110.76 51.30 59.46 24.70 42.39 29.442010 207.55 110.02 48.16 61.87 23.46 44.40 29.682011 212.80 112.87 53.15 59.72 23.17 46.75 30.012012 221.98 121.87 62.17 59.70 22.40 46.41 31.302013(P) 220.09 122.90 66.95 55.95 21.37 44.79 31.032014(E) 232.05 129.73 72.14 57.59 22.08 47.13 33.11

Constant Dollarsa (Billions)2003 $164.82 $82.05 $35.04 $47.01 $18.29 $38.73 $25.752004 167.38 83.03 34.48 48.56 20.84 37.85 25.662005 176.51 90.21 38.72 51.49 21.67 38.20 26.432006 187.18 101.23 46.32 54.90 21.25 37.95 26.762007 207.20 114.31 53.18 61.13 22.86 40.63 29.402008 211.35 112.88 48.48 64.40 24.74 43.37 30.362009 207.29 110.76 51.30 59.46 24.70 42.39 29.442010 207.75 110.13 48.20 61.92 23.48 44.44 29.702011 211.96 112.43 52.94 59.49 23.08 46.57 29.892012 218.99 120.23 61.33 58.90 22.10 45.78 30.882013(P) 215.64 120.41 65.59 54.82 20.94 43.88 30.412014(E) 226.03 126.37 70.27 56.10 21.51 45.91 32.25

Source: Aerospace Industries Association (AIA), based on company reports; The Budget of the United States Government, National Aeronautics and Space Administration (NASA), U.S. Department of Commerce, and Department of Defense, 2013.

* Government purchases reflected as appropriated funding. a. Based on AIA’s aerospace composite price deflator, (2009=100). E. Estimate.P. Preliminary.

Table I Aerospace Industry Sales by Product Group*

Calendar Years 2003-2014

Total Sales

AIRCRAFTRelated

Products &Services

10

Year Total Civil Military Missiles Space

Current Dollars (Billions)2003 $152.59 $75.96 $32.44 $43.52 $16.93 $35.86 $23.842004 157.88 78.32 32.52 45.80 19.66 35.70 24.202005 169.41 86.58 37.16 49.42 20.80 36.66 25.362006 185.26 100.19 45.85 54.34 21.03 37.56 26.482007 204.75 112.96 52.55 60.41 22.59 40.15 29.062008 210.07 112.19 48.18 64.01 24.59 43.11 30.182009 207.29 110.76 51.30 59.46 24.70 42.39 29.442010 207.55 110.02 48.16 61.87 23.46 44.40 29.682011 212.80 112.87 53.15 59.72 23.17 46.75 30.012012 221.98 121.87 62.17 59.70 22.40 46.41 31.302013(P) 220.09 122.90 66.95 55.95 21.37 44.79 31.032014(E) 232.05 129.73 72.14 57.59 22.08 47.13 33.11

Constant Dollarsa (Billions)2003 $164.82 $82.05 $35.04 $47.01 $18.29 $38.73 $25.752004 167.38 83.03 34.48 48.56 20.84 37.85 25.662005 176.51 90.21 38.72 51.49 21.67 38.20 26.432006 187.18 101.23 46.32 54.90 21.25 37.95 26.762007 207.20 114.31 53.18 61.13 22.86 40.63 29.402008 211.35 112.88 48.48 64.40 24.74 43.37 30.362009 207.29 110.76 51.30 59.46 24.70 42.39 29.442010 207.75 110.13 48.20 61.92 23.48 44.44 29.702011 211.96 112.43 52.94 59.49 23.08 46.57 29.892012 218.99 120.23 61.33 58.90 22.10 45.78 30.882013(P) 215.64 120.41 65.59 54.82 20.94 43.88 30.412014(E) 226.03 126.37 70.27 56.10 21.51 45.91 32.25

Source: Aerospace Industries Association (AIA), based on company reports; The Budget of the United States Government, National Aeronautics and Space Administration (NASA), U.S. Department of Commerce, and Department of Defense, 2013.

* Government purchases reflected as appropriated funding. a. Based on AIA’s aerospace composite price deflator, (2009=100). E. Estimate.P. Preliminary.

Aerospace Industry Sales by Product Group*

Year

Current Dollars (Billions)2003 $152.59 $128.75 $71.28 $16.52 $40.95 $23.842004 157.88 133.68 75.38 16.98 41.32 24.202005a 169.41 144.05 80.71 17.25 46.09 25.362006 185.26 158.78 84.04 17.22 57.52 26.482007 204.75 175.69 94.17 17.70 63.82 29.062008 210.07 179.90 103.44 19.16 57.30 30.182009 207.29 177.85 99.43 19.50 58.92 29.442010 207.55 177.88 103.48 19.73 54.67 29.682011 212.80 182.79 101.53 20.61 60.66 30.012012 221.98 190.68 97.55 19.82 73.31 31.302013(P) 220.09 189.06 92.21 20.33 76.52 31.032014(E) 232.05 198.94 94.60 21.50 82.84 33.11

Constant Dollarsb (Billions)2003 $164.83 $139.08 $77.00 $17.85 $44.23 $25.752004 167.38 141.72 79.92 18.00 43.81 25.662005a 176.52 150.09 84.10 17.97 48.02 26.432006 187.18 160.43 84.91 17.40 58.12 26.762007 207.20 177.80 95.30 17.92 64.58 29.402008 211.36 181.00 104.07 19.28 57.65 30.362009 207.29 177.85 99.43 19.50 58.92 29.442010 207.74 178.04 103.57 19.75 54.72 29.702011 211.96 182.08 101.13 20.52 60.42 29.892012 218.99 188.12 96.24 19.55 72.32 30.882013(P) 215.64 185.24 90.35 19.91 74.97 30.402014(E) 226.03 193.78 92.15 20.94 80.69 32.25

Source: Aerospace Industries Association (AIA), based on company reports; The Budget of the United States Government,National Aeronautics and Space Administration (NASA), Department of Commerce, and Department of Defense, 2013.* Government purchases reflected as appropriated funding.

a. Beginning in 2005, NASA sales were reported separately from other agencies. b. Based on AIA’s aerospace composite price deflator, (2009=100). E. Estimate.P. Preliminary.

Table IIAerospace Industry Sales by Customer*Calendar Years 2003-2014

Total Sales

AEROSPACE PRODUCTS AND SERVICESRelated

Products &Services

Other Customers

NASA & Other

Agencies

Department of Defense

Total

11

Year Shipments Orders Backlog 1994 $112,511 $98,621 $183,3081995 110,928 115,279 187,6591996 110,840 134,142 210,9611997 132,787 143,071 221,2451998 150,077 138,407 209,5751999 152,728 140,329 197,1762000 144,740 165,994 218,4302001 153,571 149,411 214,2702002 140,889 135,527 208,9082003 135,955 140,937 213,8902004 145,305 155,574 224,1592005 152,081 218,626 290,7042006 165,652 256,446 381,4982007 202,723 321,163 499,9382008 211,943 264,227 552,2222009 201,577 109,164 459,8092010 200,294 210,698 470,2132011 209,847 258,702 519,0682012 236,877 280,915 563,1062013(P) 245,423 295,595 613,278

Source: Aerospace Industries Association (AIA), based on data from the Bureau of Census, Manufacturers’ Shipments, Inventories, and Orders (M3), 2013.

Notes: Includes both Civil and Defense aerospace data.Not seasonally adjusted; includes aircraft, engine, and parts manufacturing.

P. Preliminary.

Table III Shipments, Orders and Backlog: Aircraft & Parts and Search & Navigation EquipmentAs of End-of-Year 1994-2013

12

2009 2010 2011 2012 2013a TOTAL BACKLOG:

Number of Aircraft 3,375 3,443 3,771 4,373 4,787 Value (in millions) $250,476 $255,591 $293,303 $317,287 $344,283 Boeing: B-737 2,076 2,186 2,365 3,074 3,467 B-747 108 107 97 67 51 B-767 59 50 72 68 51 B-777 281 253 380 365 328 B-787 851 847 857 799 890 Foreign Order Backlog Percent of Total Backlog: Number of Aircraft 79.5% 77.8% 67.0% 65.3% 65.5%Value 82.3% 81.2% 74.4% 72.5% 69.2% Number of Aircraft 2,682 2,679 2,528 2,856 3,136 Value (in millions) $206,167 $207,639 $218,112 $229,924 $238,235 Boeing: B-737 1,605 1,643 1,394 1,836 2,178 B-747 94 95 89 63 49 B-767 34 30 26 10 2 B-777 230 221 323 316 276 B-787 719 690 696 631 631 Domestic Order Backlog Percent of Total Backlog: Number of Aircraft 20.5% 22.2% 33.0% 34.7% 34.5%Value 17.7% 18.8% 25.6% 27.5% 30.8% Number of Aircraft 693 764 1,243 1,517 1,651 Value (in millions) $44,310 $47,952 $75,191 $87,363 $106,048 Boeing: B-737 471 543 971 1,238 1,289 B-747 14 12 8 4 2 B-767 25 20 46 58 49 B-777 51 32 57 49 52 B-787 132 157 161 168 259

Source: Aerospace Industries Association (AIA), based on Company SEC filings and Boeing reports, 2013.

a. As of third quarter.

Table IVU.S. Civil Transport Aircraft Backlog Calendar Years 2009-2013

13

Year TOTAL

Number of Aircraft Shipped

2000 $3,794 $485 $493 $2,8162001 3,575 526 415 2,6342002 2,904 379 318 2,2072003 2,935 281 517 2,1372004 3,445 285 805 2,3552005 4,094 290 947 2,8572006 4,443 398 898 3,1472007 4,729 441 1,009 3,2792008 4,538 375 1,084 3,0792009 2,636 481 570 1,5852010 2,135 462 339 1,3342011 2,365 477 435 1,4532012 2,601 601 486 1,5142013(P) 2,907 650 596 1,6612014(E) 3,123 710 612 1,801 Value (millions of dollars)

2000 $39,155 $30,327 $270 $8,5582001 43,043 34,155 247 8,6412002 35,078 27,202 157 7,7192003 28,180 21,380 366 6,4342004 27,256 19,925 515 6,8162005 30,848 21,365 816 8,6672006 39,675 28,465 843 10,3672007 46,657 33,386 1,330 11,9412008 43,097 28,263 1,486 13,3482009 44,105 34,051 972 9,0822010 40,602 31,834 893 7,8752011 46,269 36,171 1,145 8,9532012 58,874 49,127 1,730 8,0172013(P) 63,648 51,068 2,350 10,2302014(E) 68,841 55,000 2,540 11,301

Source: Aerospace Industries Association (AIA), based on company reports, data from the General Aviation Manufacturers Association (GAMA), Helicopter Association International (HAI) and Teal Group, 2013. E. Estimate. P. Preliminary.

Table V Civil Aircraft ShipmentsCalendar Years 2000-2014

Transport Aircraft

Helicopters General Aviation

14

Table VIU.S. Aerospace Balance of Trade Calendar Years 2009-2013

(Millions of Dollars) 2009 2010 2011 2012 2013(P)

BALANCE OF TRADE

Current Dollars $56,034 $51,152 $55,753 $65,744 $73,465Constant Dollarsa 56,034 51,199 55,534 64,860 71,980AEROSPACE EXPORTS: AEROSPACE EXPORTS

Current Dollars $81,166 $77,503 $85,326 $99,385 $111,937Constant Dollarsa 81,166 77,575 84,991 98,048 109,675 AEROSPACE IMPORTS

Current Dollars $25,132 $26,351 $29,573 $33,641 $38,472Constant Dollarsa 25,132 26,375 29,457 33,188 37,694

Source: Aerospace Industries Association (AIA), based on data from the Department of Commerce and Economic Consulting Services (ECS), 2013.Note: Balance of Trade may not equal the difference between exports and imports due to rounding.

a. Based on AIA’s aerospace composite price deflator, (2009=100). P. Preliminary.

15

(Millions of Dollars) 2009 2010 2011 2012 2013(P)

TOTAL IMPORTS $25,132 $26,351 $29,573 $33,641 $38,472

Aircraft $9,299 $9,041 $10,025 $10,267 13,199

Military 0.4 61.7 124.4 103.8 168.2

Civil 9,299 8,979 9,900 10,163 13,030Transports 4,955 3,258 4,972 4,588 6,594General Aviation 2,337 2,191 2,667 2,730 3,044Helicopters 833 838 896 1,161 1,141Othera 1,173 2,692 1,365 1,685 2,251

Aircraft Engines 3,752 3,799 4,101 5,146 5,508Turbine 3,616 3,700 4,035 5,081 5,431Piston 136 99 66 64 77

Aircraft and Engine Parts 11,383 12,498 14,293 17,070 18,870

Spacecraft, Missiles, Rockets, and Parts 698 1,013 1,154 1,158 895

Source: Aerospace Industries Association (AIA), based on data from the U.S. Department of Commerce and Economic Consulting Services (ECS), 2013. Notes: Import data includes non-military aircraft parts and aerospace products previously exported from the United States. Totals may not equal sum of terms due to rounding.

a. Includes used aircraft, gliders, balloons and airships. P. Preliminary.

Table VII U.S. Imports of Aerospace ProductsCalendar Years 2009-2013

16

(Millions of Dollars) 2009 2010 2011 2012 2013 (P) TOTAL EXPORTS $81,166 $77,503 $85,326 $99,385 $111, 937

TOTAL CIVIL EXPORTS $70,500 $67,128 $75,275 $86,814 $98,834

Complete Aircraft (D) (D) (D) (D) (D)Transports General Aviation Helicopters Used Aircraft Other Aircraft Aircraft Engines Turbine Piston Aircraft & Engine Parts, Including Spares Missiles, Rockets & Parts Spacecraft, Satellites & Parts

TOTAL MILITARY EXPORTS $10,666 $10,375 $10,051 $12,571 $13,104 Complete Aircraft 2,235 1,742 1,738 3,442 2,357Transports 276 140 614 1,410 1,501Helicopters 520 832 539 690 601Fighters & Bombers 1,208 432 324 737 -Used Aircraft 93 43 44 444 128Other Aircraft 228 294 217 161 127 Aircraft Engines 517 357 478 422 654Turbine 381 271 387 357 552Piston 137 86 92 65 101 Aircraft & Engine Parts, Including Spares 6,126 6,404 6,242 6,836 6,873

Missiles, Rockets & Parts 1,509 1,741 1,502 1,745 3,102 Spacecraft, Satellites & Parts 189 133 91 126 207

Source: Aerospace Industries Association (AIA), based on data from the U.S. Department of Commerce and Economic Consulting Services (ECS), 2013. Notes: Totals may not equal sum of terms due to rounding.D. Civil aerospace export data suppressed by the Bureau of Census beginning in the first quarter 2009. P. Preliminary.

Table VIIIU.S. Exports of Aerospace Products Calendar Years 2009-2013

17

ALL WORKERS (THOUSANDS) 1999 708.5 468.0 263.3 98.5 106.2 79.2 161.42000 666.1 438.4 242.7 98.1 97.6 78.4 149.42001 660.7 434.5 241.3 95.6 97.6 76.5 149.82002 618.4 396.7 220.2 87.9 88.6 73.6 148.12003 587.1 371.9 209.1 81.3 81.5 70.2 145.02004 592.0 369.9 207.2 79.2 83.5 71.6 150.52005 611.7 380.0 211.3 81.9 86.8 75.1 156.62006 631.8 398.5 221.7 84.4 92.4 75.5 157.72007 646.8 413.6 230.2 85.3 98.1 75.5 157.62008 659.8 428.9 237.4 87.2 104.3 77.6 153.32009 644.4 414.0 234.9 80.4 98.7 78.3 152.22010 623.6 401.7 228.2 76.6 96.9 75.9 146.02011 625.4 412.1 234.4 77.8 99.9 74.6 138.72012 631.4 424.9 238.6 80.5 105.9 72.4 134.02013(P) 618.2 418.9 233.8 79.5 105.6 70.9 128.4 1Q12 628.9 420.1 236.5 79.8 103.9 72.7 136.12Q12 629.5 421.7 235.5 80.5 105.7 72.9 135.03Q12 634.1 428.6 240.9 80.8 106.9 72.3 133.24Q12 633.0 429.4 241.5 80.8 107.1 71.9 131.8 1Q13 628.6 427.5 240.2 80.3 106.9 71.3 129.92Q13 623.4 423.8 237.9 79.6 106.3 70.9 128.73Q13 611.8 412.4 228.9 79.2 104.4 71.1 128.3

Aerospace Industries Association (AIA), based on data from the Bureau of Labor Statistics (BLS), Current Employment Statistics Survey, 2013.

P. Preliminary.

Table IX Aerospace Related EmploymentCalendar Years 1999-2013

Total Aircraft Aircraft Engines &

Parts

Other Aircraft Parts & Equipment

Guided Mis-siles, Space Vehicles &

Parts

Search, Detection & Navigation Instruments

Total Employment

Year

18

Aerospace Industry Profits*

Year Dollars Sales Assets Equity Sales Assets Equity 1994 $5,655 4.7 4.3 14.8 5.4 5.8 15.6 1995 4,633 3.8 3.5 11.1 5.7 6.2 16.2 1996 7,150 5.6 5.1 17.1 6.0 6.5 16.8 1997 7,221 5.2 4.8 17.3 6.2 6.6 16.6 1998 7,701 5.0 4.8 18.0 6.0 6.1 15.7 1999 9,816 6.4 6.0 21.2 6.2 6.1 16.5 2000 7,067 4.7 4.2 14.1 6.1 5.9 15.2 2001 6,565 3.9 3.6 11.6 0.8 0.8 2.0 2002 6,572a 4.2 3.7 12.2 3.3 2.9 7.8 2003 7,225 4.2 3.3 12.5 5.4 4.7 12.1 2004 10,291 5.5 4.3 15.3 7.1 6.4 15.8 2005 12,383 6.3 4.6 16.5 7.4 7.0 16.6 2006 14,203 6.8 5.1 18.7 8.1 7.7 17.5 2007 18,658 8.0 6.6 24.1 7.3 6.7 15.2 2008 14,568 6.1 4.7 18.6 4.2 3.8 8.9 2009 16,424 6.8 5.5 26.9 5.6 4.2 10.3 2010 16,516 6.8 5.5 22.9 8.3 6.6 15.1 2011 18,802 7.4 6.1 24.3 9.2 7.7 17.0 2012 19,842 7.4 5.9 25.5 8.5 6.8 15.5 2013(P) 23,384 8.7 5.0 21.1 8.8 5.4 12.2

Source: Aerospace Industries Association (AIA), based on data from the Bureau of the Census, Quarterly Financial Report for Manufacturing, Mining, and Trade Corporations, 2013.*Not seasonally adjusted.

a. Includes non-operating expenses (less interest expense) totaling $3.5 billion. P. Preliminary.

Table XNet Profit After Taxes Calendar Years 1994-2013

As a Percent of: Profits as a Percent of:

(In Millions)

All Manufacturing Corporations

19

1000 Wilson Boulevard, Suite 1700 Arlington, Va 22209-3928

703.358.1000

WWW.AIA-AEROSpACE.ORG