San Diego Union-Tribune

December 13, 2001

Drop in aerospace sales forecast for '02
   Experts see 20% decrease in civilian plane purchases

By Otto Kreisher 
COPLEY NEWS SERVICE 

WASHINGTON -- A plunge in commercial aircraft purchases after the Sept. 11 terrorist attacks weakened expected record-high aerospace sales this year and could drive down sales and employment next year, a key industry group warned yesterday.

John Douglas, president of the Aerospace Industry Association, released an annual forecast predicting that total aerospace sales in 2002 could drop by $6.6 billion from this year's $151 billion mark, despite an expected jump in defense purchases sparked by the war on terrorism.

Next year's expected $144.4 billion in sales would be the lowest since 1997, according to industry data. While sales of military aircraft and missiles are expected to grow by $5.3 billion, sales of civilian aircraft are projected to decline by $11.2 billion, or 20 percent.

In related sectors, sales of radar gear, air-traffic-control
equipment, space-launch rockets and satellites are expected to remain basically level.

Aerospace companies have announced layoffs of 65,000 to 70,000 employees from a total work force of 795,000, Douglas said in his annual report on the health of the U.S. aviation, space and missile industry.

The industry's sales "showed amazing growth" in the first nine months of this year and could have hit a record high of $154 billion, "if it had not been for nine-one-one and the contraction in the last quarter," Douglas said, referring to Sept. 11.

Despite the year-end drop in sales, the industry's net profits grew to a near-record $8.7 billion.

Douglas said the predicted drop next year might not occur if sales of commercial aircraft rebound.

But the National Association of Manufacturers predicted a "sluggish recovery" from the recession in manufacturing next year. That could curtail any increase in airline bookings, which are driven heavily by business travelers.