As Arms Sales Fade, Aerospace Contractors Chase Commercial Customers

June 6, 2013

The aerospace and military industries, faced with lackluster sales of military equipment as the wars in Iraq and Afghanistan wind down, are turning their attention to the soaring market for commercial jets.

That is a big swing from just a few years ago, and the changes are shaking up the profit picture in both businesses, according to a new study by AlixPartners, a global business advisory firm.

Even with the rebound in commercial sales, plane makers like Boeing and Airbus are pressuring suppliers to cut costs to keep plane prices competitive and to seek a larger share of the growing profits.

Boeing and Airbus are also expanding their plane-servicing work to earn more as their fleets expand, especially in the wealthiest parts of the Middle East and Asia.

And with worldwide military spending falling for the first time since 1998, the major weapons makers are all chasing deals in the same Middle Eastern and Asian countries, where they have to compete with Chinese and Russian exporters.

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