Aerospace Industry Flying Into Strong Turbulence Ahead, According to New AlixPartners Study

NEW YORK --- After very strong financial performance over the past five years, the global aerospace industry is facing tougher times ahead. Order books are full, and the good times may continue through 2008but storm clouds are on the horizon. The negative impact of sky-high fuel prices on airline customers, the weak U.S. dollar and uncertainty about future U.S. defense spending will create turbulence for this high-flying industry in the year ahead, or at least bring it back down to earth. Thats according to a new study released today by AlixPartners LLP, the global business-advisory firm.>> Supply Chain Already Scrambling>> Driven by past growth in commercial-airline demand and by strong U.S. defense spending, the study finds that the global aerospace industry presently has unprecedented order backlogsnot only the commercial segment, with Airbus and Boeing fully booked until 2012, but also defense products, helicopters and business jetswith revenues in the industry up 95% from 2001 to 2007. Even revenues of the bottom ten performers have grown by average of 22% over that period, according to the study, the 2008 AlixPartners Aerospace & Defense Review.>> However, to deliver this huge backlog, The whole industry supply chain is scrambling to increase capacity to deal with very stiff ramp-up demands, said Philip Toy, a managing director of AlixPartners and co-lead of the firms global aerospace practice. On top of this, the industry is also getting additional pressure from skyrocketing raw-material costs and a dramatically weakened U.S. dollar.