According to the latest data from ADS, aerospace manufacturers maintained steady levels of aircraft orders and deliveries in in August 2022, showing strong signs of recovery and bucking the trend being seen within the wider manufacturing industry where output is lagging and new orders are contracting.
Despite soaring energy and raw material costs, manufacturers delivered 74 aircraft in August 2022, up 12% on August 2021, with global aircraft deliveries still on track to make the ADS forecast of 997 by the calendar year end. The current backlog of new orders is 13,393 – 4% higher than August 2021 and worth £207 billion.
Mark Nisbett, partner and head of aerospace and defence at RSM UK, comments: ‘With aircraft orders in August 2022 continuing to make progress, albeit with a few cancellations, the aerospace industry is bucking the trend of the wider manufacturing industry given airlines’ medium-term expectations of continued growth in passenger numbers. Changes to travel trends, and widebody aircraft being replaced with more efficient, less energy-intensive models indicates that demand for single-aisle aircraft continues to surpass wide-body demand.
‘Although global aircraft orders slowed following the uptick seen in last month’s data after the return of the Farnborough International Airshow in July, the show has also enhanced industry recovery for the longer term; facilitating new global connections between manufacturers and airlines as they work towards establishing new greener and cleaner technologies. Although the industry is in a strong position with the backlog of orders expected to take several years to complete, concerns remain as manufacturers grapple to deliver orders on time with the pressure of ongoing labour shortages and soaring energy prices.’
He added: ‘However, the government measures outlined in the mini-budget to support businesses and boost growth by removing barriers, reforming supply and cutting taxes bring welcome news for the industry. With corporate tax frozen at 19% – the lowest rate in the G20, aerospace and other energy intensive businesses in the UK will benefit from this financial support at a time when margins are being squeezed by energy costs, irrespective of the additional government support relating to energy recently outlined. With the annual investment allowance remaining at £1m rather than reverting back to £200,000 as previously planned, this tax benefit will enable aerospace manufacturers to gain additional relief on plant and machinery investments and will help them to tackle labour shortages as well as supporting their ESG plans for greener travel.
‘However, the sector remains energy intensive, and clarification is needed urgently from the government with further specifics of the energy support scheme, including what potential future support might be available after that period, specifically for the aerospace and wider manufacturing sectors