Fighter jet

Aerospace & Defence

The Aerospace and Defence (A&D) industry provides products and services to five powerful markets — space, military aircraft, commercial aircraft, missiles, and general aviation. The product line of the A&D industry is broad because its primary products, aircraft, themselves require millions of individual parts. In addition to designing, developing, and manufacturing technologically advanced flight vehicles and defence capabilities, the A&D industry also includes support systems necessary to operate and maintain them.  

Several sub-sectors such as aviation security, airport infrastructure, commercial space, and Unmanned Aircraft Systems (UAS) help the industry function and grow.

The US has the largest A&D industry in the world in terms of its infrastructure and manufacturing activity, and exports. In 2021, US A&D exports amounted to $100.4 billion. COVID-19 had a severe impact on the A&D industry. With the lockdowns, commercial aviation came to a halt, and due to new government mandates and restrictions, the defence sector faced operations and logistics challenges. However, midway through 2021, the industry began to stabilise. 


  • The A&D industry includes companies involved in the development and manufacturing of spacecraft, aircraft for both military and civil purposes, and defence equipment such as tanks and missiles. 
  • The government’s defence budget, the current economic cycle, and the rise of purchasing power of emerging economies influence the A&D industry.
  • The growth and development of industries with vast potentials, such as space and urban aerial transportation, have a positively profound impact on the revenue and business opportunities for the A&D industry. 
  • The global green trend demands the industry to develop more fuel-efficient aircrafts that could also be cost-effective. 
  • Digital transformation is the key to building resilience and driving growth in the A&D industry. 



$856 billion



$1.08 trillion




Key players in the aerospace industry

(Source | As of 2021) 


Company NameRevenue GeneratedRevenue GeneratedRevenue GeneratedRevenue GeneratedRevenue Generated
Raytheon Technologies$67.1B$64.4B$56.6B$45.3B$34.7B
Boeing $66.6B$62.3B$58.1B$76.5B$101.1B
Lockheed Martin$66.0B$67.0B$65.4B$59.8B$53.8B
General Dynamics $39.4B$38.5B$37.9B$39.3B$36.2B
Northrop Grumman$36.6B$35.7B$36.8B$33.8B$30.1B

(source: Macrotrends

  • Raytheon Technologies (NYSE: RTX): A multinational commercial aerospace and defence conglomerate, Raytheon Technologies focuses on intelligent space technologies, smart defence systems, and other transformative technologies. 
  • Boeing (NYSE: BA): One of the largest aerospace companies in the world, Boeing is also a leading manufacturer of commercial jetliners, space and security systems, satellites, weapons, defence systems, and more. Boeing supports airlines as well as allied government customers in over 150 countries.
  • Lockheed Martin (NYSE: LMT): A global security and aerospace company, Lockheed Martin, provides a variety of advanced technology systems, products and services globally. It has over 375+ facilities and 16,000 suppliers in the US and over 1,000 suppliers in more than 50 other countries. 
  • General Dynamics (NYSE: GD): General Dynamics has four business groups — aerospace, marine systems, combat systems, and technologies — through which it offers a wide portfolio of technologically advanced business jets, command and control systems, nuclear submarines, and more.
  • Northrop Grumman (NYSE: NOC): Northrop Grumman is an aerospace company that is engaged in innovatively solving problems in space, aeronautics, defence, and cyberspace across the world.


  • Economic cycle: The A&D industry is one of the most impacted industries by the macro-economic environment. When there is economic growth, and the global GDP is rising, the demand in the industry, especially from emerging markets such as Asia rises. According to a report by KPMG, on average, for each percentage point increase in real GDP, there is a two percentage point increase in the growth of air passenger travel. This increases the revenue of A&D companies and may result in higher stock prices. An economic slowdown or recession, on the other hand, has the opposite impact.
  • Defence spending: Two of the five primary markets of the A&D industry — military aircraft and missiles — largely depend on the government’s defence budget and spending. In the US, the defence budget had been gradually decreasing post-2010. However, in the recent past, there has been a steady increase given the rising geopolitical tensions. The revenues of defence contractors are directly dependent on the budget and hence, increased government spending on defence positively impacts their financials and stock prices. In addition to domestic defence spending, the A&D industry is also impacted by Foreign Military Sales (FMS). In 2020, US FMS was $83.5 billion, a $15 billion increase from the previous financial year, which provided increased export opportunities and revenue for defence contractors.
  • Space exploration: Space launches have been steadily increasing due to reduced launch costs and advanced technology. Launch costs have sharply declined from $200 million a decade ago to $60 million currently and can go down to $5 million in the future. Such potential in space exploration has been benefiting the A&D industry, especially companies that are investing in innovative technologies. It is estimated that the revenue generated by the global space industry will reach $1 trillion by 2040 and this will have a direct and profound impact on the revenue of companies in the A&D industry. Newer revenue streams and capabilities would result in rapid expansion and a stronger market position.
  • Advanced Air Mobility (AAM): The A&D industry, the biggest aircraft manufacturers as well as technology startups, are getting involved in urban aerial transportation rapidly. Hundreds of millions of dollars have already been put towards R&D for electric vertical takeoff and landing (eVTOL) aircraft. While there are a range of challenges that will have to be addressed, such as safety and regulations, air traffic management, and infrastructure, this is an area with massive potential. It’s predicted that the Advanced Air Mobility (AAM) sector could become mainstream and reach $115 billion annually by 2035 in the US alone. Hence, A&D companies that have an edge in the AAM market will see tremendous growth in revenue and expansion of business activities. 


Going forward, the A&D industry will have to focus on fuel-efficient aircraft owing to customers and regulatory pressures. With the world trying to reach net-zero carbon emissions by 2050, regulations to limit carbon dioxide and nitrogen oxides have been propping up for the A&D industry. While this may seem like a challenge at first, it can also prove to be advantageous for A&D companies. Developing environment-friendly aircraft can lead to significant cost advantages by allowing the companies to better hedge fuel cost fluctuations and maintain their margins. 

Another area that A&D companies will be embracing is digital transformation. More than 80% of A&D executives believe that failure to overcome organisational challenges for digital reinvention will lead to significant cost hikes as well as loss of market share. There is a need to put digital at the core of all operations across the A&D value chain and this requires companies to set up cloud-enabled and AI-powered infrastructure. Companies that are successfully able to do so will see up to four times improvement on their digital investments. 
The A&D industry is one of the core facilitators of globalisation. It is also one that will significantly benefit from some of the most promising industries of the future including space and urban aerial transportation. So, if you want to follow the investment themes for the coming decade and invest in A&D stocks with high growth potential, download the Appreciate app.

Scroll to Top

We would love to hear from you

Have something nice or not so nice to say? Do you have any questions? Reach out to us, we’d love to start a dialogue with you.

Get early access

By joining our referral program, you agree to our Terms of Use