By Alix Leboulanger, Research Analyst, Aerospace, Defence & Security
At the start of writing this paper one month ago, the market was enjoying an optimistic moment: Vladimir Putin was emphasising the Russian government commitment towards procuring circa 1000 helicopters for the Russian Armed Forces, India was expecting to go ahead with procurement and delivery of 900 helicopters, and the US were announcing the potential order of 650 plus MH60's. It was almost a perfect picture, alluding with the same optimism shared a few years ago, when market trends for both civil and military helicopters were showing positive growth signs. The replacement cycle of the global ageing fleet and growing disposable income in emerging markets were heightening the market demand. However, the world financial crisis has considerably downgraded market promises for the next 10 years. Apart from fleet size reduction and increasing Research & Development spending in renewable energies to cut the overreliance on oil, the current financial context will certainly be the biggest challenge that leading Original Equipment Manufacturers (OEMs) will have to overcome.
The world financial crisis and growing distrust of the global banking system is indeed threatening OEMs' very own existence, as it questions the end users and the industry's borrowing capacities, revives protectionism barriers and even State warranties. Since the financial crisis is impacting the global helicopter market earlier than expected, the global helicopter market revenue forecast growth at a CAGR of 2.40 per cent could be reversed and worsen at a greater pace.