Summary

Aerospace & Defense design and manufacturing is one of the core competencies of the U.S. economy, along with innovative technology, allocating capital, and pharmaceutical R&D. In our view, the sector is positioned for solid growth over the next few years. During 2025, global revenues for the total A&D industry are expected to grow by 6% from 2025 and reach $950 billion, as tracked by The Business Research Company. Looking ahead, forecasts call for the industry to grow at a CAGR of 5.8% and top $1.1 trillion by 2028. Drilling down, the recovering global airline industry bodes well for commercial aerospace demand over the next several years. Airline passenger levels and airline revenues are again growing at a healthy pace. As well, with international markets reopened, we believe that the industry will be able to recover a substantial amount of its pre-COVID-19 revenues and profitability into 2026. We also expect solid military spending over the next few years. According to the Office of the Undersecretary of Defense, military funding for FY 2024 tallied $817 billion. For FY 2025, the White House has requ