Canadian aerospace market overcomes “disappointing global economy”
Aerospace manufacturers earned their highest pre-tax profits last year since 2001.
The Conference Board of Canada has released its industrial outlook report. The report indicates that Canada’s aerospace manufacturers earned their highest pre-tax profits last year since 2001 as the lower Canadian dollar helped the export-oriented sector overcome a “disappointing global economy.”
In a new report, the economic think-tank says the country’s aerospace industry earned $1.56 billion in pre-tax profits in 2015 on $21.8 billion of revenue — up from $952 million on revenue of $19.9 billion the previous year.
The report suggests lower jet fuel prices provided a boost to the global airline industry’s profitability. If demand for air travel continues to rise, airlines will continue to be in a position to expand their aircraft fleets.
Canada’s business jet market outlook was recently downgraded, in response to the slowdown in deliveries in 2015 and an anticipated contraction for 2016. Still, the outlook remains positive (but challenging) over the medium-to-long term.
The Conference Board forecasts sector profits will surpass $2.13 billion in 2020 as the weak business jet market improves and Bombardier Aerospace delivers CSeries aircraft and its new Global business jets, currently under development.
The aerospace division of the Montreal-based plane and train builder had a net loss of US$5.1 billion last year. But the company, which reports in U.S. dollars, said the division earned US$242 million in pre-tax operating income, excluding hefty special charges.
Higher industry profitability last year was also bolstered by increased prices and a reduction in labour costs.
Besides Bombardier, Canada’s top aerospace companies include Boeing Canada, CAE, Magellan Aerospace, Thales Canada, Heroux-Devtek and Avcorp Industries.
The Conference Board says improving global economic conditions and record airline profits will propel new aircraft orders and support the industry’s financial situation.