In this episode of the Advanced Manufacturing and Mobility Business Minute, EY leaders Raman Ram and Mike Cadenazzi discuss the impact of changes in the Aerospace & Defense (A&D) sector.

The commercial aerospace sector continues to demonstrate resiliency as both global and domestic air traffic volume draws closer to 2019 levels. On the defense industry side, global spending is increasing, and a consistent set of growth drivers is emerging in the US. A&D is recovering from steep declines in airplane production and aftermarket service across the sector. That’s the good news.

Increasing debt levels at airlines and a sustained reduction in business travel are concerning, however. Will business travel recover to previous levels, or is this the normal in a world where it’s easier than ever to conduct business via digital technology? In the defense sector, how will artificial intelligence and machine learning (AI/ML) transform the way armies operate and fight, and how will that impact the supply chain?

The podcast also includes perspective from EY Americas A&D Leader Raman Ram and EY Americas A&D Managing Director Mike Cadenazzi on what to expect at Paris Air Show 2023. The event will likely feature updates on orders within the industry and the regions where those orders are being made. Technology and capability advancements could also offer a glimpse at what’s next in A&D.

Key takeaways:

• Air traffic could exceed 2019 levels by 2024, and should continue to grow at a rate of 3 or 4 percent over the next decade.
• With aircraft utilization up, deferred maintenance and aftermarket services are coming back. And with traffic up, airplane production should also increase.
• Geopolitical decisions are having a real-world effect on funding flow and spending decisions in the defense sector.
• Unlike past economic downturns, talent is not flowing into defense at the same pace.