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AIA Reports Sales, Employment Better Than Expected For 2003 Extended Forecast Calls For a Return to Growth

WASHINGTON, D.C., December 10-- The Aerospace Industries Association (AIA) reported in its annual state-of-the-industry address today that commercial aircraft sales and employment had fared better than expected in 2003 and it predicted a return to growth in 2005-2006.

AIA also presented the industry's election year issues for 2004. AIA President and CEO John W. Douglass called on the presidential candidates to support the development of a national aerospace policy to promote aerospace careers, accelerate basic research in future technologies, and lower barriers to trade for aerospace manufacturers. He said AIA is preparing an investment plan that will be released early next year calling for an increase in federal R&D spending between 2004 and 2008.

Speaking to 350 representatives of the media, industry and government attending AIA's 39th annual Year-End Review and Forecast luncheon, Douglass said, "The surprising news is that the slump is not nearly as sharp as predicted a year ago, and not as deep as we experienced a decade ago." He predicted a recovery for civil aviation between 2005 and 2006 and a concurrent upswing for aerospace employment. He said, however, "The next administration must step up to the plate and play a stronger role in determining the future health of the U.S. aerospace industrial base and our aviation and space infrastructure." AIA will present to candidates a set of initiatives-some of which require no money-that would secure the economic and national security advantages that the U.S. has enjoyed in the past though its leadership in aerospace.

AIA's election campaign issues reflect the recommendations of a report issued last year by the Commission on the Future of the U.S. Aerospace Industry. Candidates for the presidency will be asked to support plans to modernize air traffic control, increase NASA's R&D budget, reverse the decline of the aerospace workforce, fund a replacement vehicle for the space shuttle, and reform the export licensing process. Douglass also said that the government needs to integrate aerospace policy horizontally by creating aerospace policy offices in the White House, Congress, the Office of Management and Budget and all federal agencies.

Douglass pointed to data collected by AIA that shows increased sales of military equipment to the Defense Department partially offsetting the drop in commercial sales. He said an extended forecast for 2005-2006 predicts a return to growth as defense spending is increased and as airlines begin to post profits and purchase new airplanes.

The U.S. aerospace industry generated $147 billion in sales in 2003, he said, down $6 billion from $153 billion in 2002. Sales of commercial jetliners fell $7.1 billion, following a drop of $6.6 billion in 2002. Aerospace profits fell to an estimated $5 billion-the lowest level in eight years. Employment for the sector also fell for the fifth straight year-down 41,400 to an estimated total of 575,400. In 2002, employment fell by 43,900 jobs. The U.S. aerospace industry continued to show a trade surplus, but a negative trend in that statistic. In 2003, U.S. aerospace exports exceeded imports by $28 billion, compared to $30 billion in 2002 and well below the 1998 peak, when the surplus hit a record $41 billion. On the plus side, Douglass said, military sales to the Defense Department increased $2.1 billion to $59 billion. Missile sales also increased 1.8 percent in 2003 to $12.9 billion.

The reduced production of commercial jet airliners-280 airplanes in 2003 compared to 379 in 2002-dragged transport revenues down by 26 percent, to an estimated $21 billion. General aviation sales, with 350 fewer deliveries, fell $2 billion, to $5.3 billion. Civil helicopter sales doubled-from $157 million to an estimated $348 million. Total orders increased $2.3 billion to $142 billion in 2003. With shipments totaling $145 billion, the unfilled order backlog decreased $2.5 billion to $203 billion.

Douglass said that AIA predicts better times ahead:

• AIA forecasts that aerospace sales industry-wide will grow less than one percent in 2004-- $1 billion, to $148 billion.
• Sales to the Defense Department in 2004 are expected to increase $1.9 billion to a total of $61 billion.
• Sales to non-defense government agencies are expected to grow by $570 million to $17 billion.

Read the transcript of the speech and view the associated slides presented by Douglass.

Review AIA's Election 2004 issue briefing.

P.A. Rel 2003-35

12.10.03

-AIA-

Contact: Matt Grimison, AIA
(703) 358-1076
matt.grimison@aia-aerospace.org