A&D growth in 2024 hampered by supply chain and sustainability issues, AlixPartners study finds
Fundamentals in the Aerospace & Defence (A&D) industry are set to strengthen in 2024, but supply chain and quality issues are slowing production and threatening the ability to address a 15,000-aircraft backlog, according to AlixPartners’ analysis.
The 2024 AlixPartners Aerospace, Defense and Airlines Outlook examines key influences on the A&D ecosystem, forecasting post-Covid recovery amidst ongoing disruption.
Stefan Ohl, global co-leader of AlixPartners A&D practice, said: “The A&D industry is experiencing several tailwinds, including robust demand for air travel, increased defense spending, healthy commercial airplane orders, and an insatiable appetite for anything related to space.
“Four years after the pandemic’s outbreak, however, profit and revenue performances along with outlooks are choppy across various A&D segments; global economies are volatile; deglobalisation is accelerating; and the industry is facing a steep, demand-driven ramp-up accompanied by multiple operational and financial hurdles.”
Ohl added: “Challenges include ongoing supply chain disruptions, high interest rates, persistent inflation, and increasing tension around the world. Meanwhile, the industry must supercharge its decarbonisation efforts or risk missing key sustainability targets that many stakeholders want A&D companies to hit.”
The industry is facing 10 main disruptive challenges in 2024 that are “deeply interconnected,” the Outlook found.
In addition to ramp-up headaches, these challenges include wars in Ukraine and the Middle East; tensions in Asia-Pacific; supply chain disruption; talent shortages; growth in space; a renewed effort to improve quality; increases in private-equity activity; and sustainability.
David Wireman, global co-leader of AlixPartners A&D practice, said: “The list of disruptive events affecting the industry obviously presents A&D players with substantial opportunity for years to come. If mismanaged, these forces will derail performance and growth.”
Founded in 1981, AlixPartners is a results-driven global consulting firm that specialises in helping businesses successfully address their most complex and critical challenges. For more information about the firm and to find out more on the Aerospace, Defense and Airlines Outlook, visit alixpartners.com.