AIA Year-End Review & ForecastAIA Year-End Review & Forecast

December 13, 2006December 13, 2006

Aerospace Industry SalesAerospace Industry Sales

$1

95

.4

$1

84

.4

$1

70

.1

$1

55

.7

$1

46

.6

$1

52

.3

$1

51

.6

$1

44

.7

$1

53

.7

$1

48

.0

$1

31

.6

$1

16

.8

$1

07

.8

$1

10

.6

$1

23

.2

$1

38

.5

$1

39

.2

0

20

40

60

80

100

120

140

160

180

2001

99

1

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

p

20

07

e

Bllio

ns

of

Do

lla

rs

Aerospace Industry SalesAerospace Industry Sales

$40.4 $46.6 $50.0 $52.8 $53.5

$35.9$35.9 $37.3 $39.4

$24.4$26.0

$28.3 $30.7 $32.2$32.4

$32.5$39.2

$47.5$54.6

$13.5 $14.9 $15.8$15.3$14.7

$38.6

0

25

50

75

100

125

150

175

200

2003 2004 2005 2006p 2007e

Bil

lio

ns

of

Cu

rre

nt

Do

lla

rs

Civil Aircraft

RelatedProducts

Space

MilitaryAircraft

Missiles

$195.44

$144.6 $155.7 $170.1 $184.4 Total

Orders, Shipments, and BacklogOrders, Shipments, and Backlog

133

178

122

239

192

294

0

50

100

150

200

250

300

350

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Bill

ion

s o

f D

olla

rs

Shipments

Orders

Backlog

Aerospace Profits & Profit MarginsAerospace Profits & Profit Margins

$9.5$10.2

$7.3$6.6 $6.5

$7.2

$12.6$13.3

4.7%

3.9%

6.5%

4.1% 4.2%

5.2%

6.4% 6.5%

0

2

4

6

8

10

12

14

1999 2000 2001 2002 2003 2004 2005 2006p

Pro

fits

(in

bill

ion

s)

Profits

% of Sales

Aerospace Foreign TradeAerospace Foreign Trade$81.8

$52.2

0

10

20

30

40

50

60

70

80

901

99

2

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

p

Bill

ion

s fo

Do

llars

Exports

Imports

Surplus

$29.6

Aerospace EmploymentAerospace Employment

936.1

741.1

635.0

612.3592.0

587.1

672.1

400

500

600

700

800

900

1,000

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

p

Em

plo

ye

es

(in

Th

ou

sa

nd

s)

Where We Are TodayWhere 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 & BeyondLooking 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 2007Issues 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

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