- ECONOMIC IMPACT -

Latest update: 11 October

Covid-19 infection rates remain high. The virus has now spread to over 198 countries with a total of more than 232 million confirmed cases and over 4.7 million deaths.

In the 4-week period up to 26th September, the UK had the highest rate of new cases of the ten most infected countries.

97%

Percentage of US Covid patients admitted who are unvaccinated.

2.9 billion

Global single vaccine does administered.

Global real GDP growth

% change on previous year

2.6%

-3.7%

5.4%

Pre-Covid-19 2020 forecast

Adjusted 2020 forecast

2021 consensus
forecast

The cost of Covid-19

$375bn

Estimated monthly cost of the Covid-19 pandemic globally

$11tn

Cumulative loss for global economy over the next two years

- IMPACT OF COVID-19 ON EMPLOYMENT OUTLOOK -

GlobalData analyses company filings and transcripts, uncovering overarching company sentiment and underlying trends hidden in vast amounts of financial and non-financial data.

Sector indices

GlobalData analyses company filings and transcripts, uncovering overarching company sentiment and underlying trends hidden in vast amounts of financial and non-financial data.


The mentions of COVID-19 in the financial filings of aerospace, defence and security companies grew 7.75% in H1 2021 compared with H1 2020.

-  SECTOR IMPACT: AEROSPACE, DEFENCE AND SECURITY -

Last update: 7 October

Airbus now expects commercial aerospace to recover to pre-Covid levels between 2023 and 2025, led by single-aisle extra long-range aircraft. The potential of further lockdowns and travel bans will impact the primes unevenly, with Boeing having a higher exposure to the faster recovering US domestic market.


Defence markets, although relatively shielded from both immediate demand and supply side shocks, are looking vulnerable in many parts of the world as national debates are ignited around fiscal priorities. However, countries with large domestic capacity are using defence as a stimulus measure and to offset impact in related aerospace markets. Both the US and UK defence markets have seen significant uplift as a result.


The future role of the military in supporting civil contingency planning is also under consideration, as is a redefinition of security to implicitly encompass public health and biosecurity aspects. Western supply chain concerns stemming from Chinese-US rivalry have also been exacerbated by Covid-19. This will result in greater FDI scrutiny, multi-sourcing, and onshoring in key areas such as microelectronics.

Aerospace, Defence and Security Covid-19 mitigation strategies

Short and mid-term strategies: one to three years

  • Mitigate supply chain risks, start long-term movements away from single sourcing where possible, full financial and commercial audits of supply chain and ERP refresh.

  • Position for aftermarket parts boost to extend service life of older models as well as long term draw-down in wide-body demand, particularly if oil price still depressed.

  • For defence primes, future budgetary impact should be extant by this point, allowing positioning to occur.

Long-term strategies three to five years

  • Expect higher levels of long-term government involvement and state ownership in key areas.

  • Prepare for future overproduction caused by government support to aerospace pulling forward demand.

  • Confront rebooted defence-industrial policies – a broader definition of strategic industry may emerge. Governments will pick winners in this crisis and may get used to it.

  • Address regional and subsector variation in defence austerity.

  • Expect increased localised production demand for export orders.

Boeing mentioned Covid-19 more than any other company in the aerospace, defence and security sector during H1 2021.


General Electric held the second position with 2,860 mentions, followed by Howmet Aerospace with 2,280 and L3Harris Technologies with 2,174.


The top ten companies together accounted for 39.8% of total Covid-19-related mentions in the aerospace, defence and security sector.

-  SECTOR IMPACT: AEROSPACE, DEFENCE AND SECURITY -

Covid-19-related mentions in the filings of aerospace, defence and security companies rose to 53,467 in H1 2021 from 49,623 in H1 2020.


During the review period Q1 2020 to Q2 2021, the highest number of Covid-19-related mentions in filings were seen in Q2 2020, while Q1 2020 had the least mentions.


Europe occupied the top spot among geography-related mentions of aerospace, defence and security companies discussing Covid-19, followed by Asia-Pacific, North America, and India between Q1 2020 to Q2 2021.



Sub-sector impact

Revenue predictions

Boeing and Airbus post unprecedented losses throughout the year, with last quarter being the worst on record for the global aerospace industry.


Defence is being used as a stimulus measure in markets with large domestic capacity, particularly the US, but there will be medium-term constraint due to fiscal pressures.

Military aerospace: moderate negative impact

Supply chain disruption from commercial aerospace impact and Covid-19 overall, and possible impact on low TRL-level programmes or legacy support programmes in favour of active production lines as an immediate stimulus measure.

Land platforms: moderate negative impact

Elements of limited exposure to broader automotive industry supply chains but little impact on programmes so far. Higher levels of domestic capability across regions compared to naval and aerospace and less regulated supply chains mean future readjustment should be easier and quicker.

Naval shipbuilding: moderate negative impact

Mostly short-term production challenges. Defence demand impact only extant in the medium term.

C4ISR and EW: moderate positive impact

Military cybersecurity and IT sub-sectors well positioned in the medium term as a result of demands on distributed working and secure collaboration. Logistic IT specialists also stand to benefit, with new Enterprise Resource Planning implementations for supply chain tracking.

Credit: L3Harris

Homeland security/soldier systems: moderate positive impact

Thermal imaging cameras, decontamination systems, deployable medical capabilities and personal protective equipment submarkets are seeing immediate boosts.

Unmanned systems: moderate positive impact

Demand for small form-factor drones has increased, with adjustment of civil aviation restrictions being made to allow for this in many regions. Precedent may result in permanent relaxation of current rules and greater adoption.

Simulation and training: moderate positive impact

Likely to hasten the adoption of distributed synthetic training environments in the medium term. Required enabling technologies across C4ISR also stand to benefit.