Aerospace & Defense Industry Insights

Kormac Insights

October 21, 2020

Aerospace & Defense Industry Insights
from Komac CEO Stan Gwizdak

Aerospace & Defense Industry Insights: As a former unit president at General Electric Aircraft Engines, I enjoy keeping abreast of the sector and collaborating with A&D executives. To follow are my take-aways from a recent A&D private equity panel discussion:

  • Companies and investors are looking for resilience in their product portfolios. Therefore, cultivating market and platform diversity boosts valuation.
  • Understandably, the commercial market is seeing lower volumes of build on the new manufacture side of the business. But even repair and overhaul have seen lower volumes due to reduced seat miles by the major airlines. Experts anticipate that volume recovery may not occur until 2023 to 2025.
  • Commercial market growth over the past decade prompted organizations to invest heavily in capacity expansion. Those who spent the most capital to address volume pressures are now facing layoffs and low machine utilization.
  • The military side of the A&D market has remained strong with high volumes across multiple platforms and segments, including capital spend, R&D, and life extensions on operations and maintenance. From an investor perspective, caution is warranted as company valuations have begun to climb.