Moody's: Aerospace sector stable

The stable outlook for the global aerospace and defense sector reflects a six-year-plus order backlog for airframe manufacturers as well as expectations for record U.S. defense spending in the near-term, Moody's Investors Service said in a new report.

During the financial crisis, the substantial backlog of the large commercial airplane makers, Boeing and Airbus, provided flexibility to keep production fairly stable, Moody's said.

With the big backlog, the airframers overbooked production slots and were able to accommodate deferral requests, which kept production steady and prevented the negative financial impact of slowing and then increasing the assembly lines in response to current demand shifts, the agency said.

The industry avoided the sharp production cuts characteristic of past down cycles, the report said.

While results for this year will likely be weaker than they were for most business jet makers in 2009, orders and deliveries could begin to recover in mid-2011, due to improving fleet utilization and business income, Moody's said.

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