While global defense revenues continue to decline, the global aerospace and defense (A&D) grew by $681 billion in 2011, with sluggish revenue gains of 2.3 percent in 2011, compared to 2.5 percent in 2010, according to a new report by Deloitte.

The 2011 Global Aerospace and Defense Industry Performance Wrap-Up reported this growth is primarily being driven by increased production of large commercial aircraft, with revenues that increased by 10.1 percent in 2011. Overall, 2011 was the best year ever for production in the commercial aircraft industry and the second best year for orders. The demand is being driven by lightweight aircraft requiring less maintenance and more fuel-efficient jet engines that reduce the fuel costs for airlines.

The comparative financial performance between the commercial and defense segments widened in 2011, with commercial revenues growing 10.1 percent while defense revenues declined by 3.3 percent, the report stated. The overall reported operating earnings for the global A&D industry decreased 3.1 percent, as well as reported operating margins (down 5.3 percent), free cash flow (down 13.3 percent), and reported operating earnings per employee (down 5.2 percent). However, the book to bill (BTB) ratio, an indicator of future revenue growth, increased 17.4 percent, primarily due to higher sales of new fuel-efficient commercial aircraft.

“With the defense segment comprising about two-thirds of the global A&D industry, our report suggests that ongoing defense outlook uncertainty is likely to impact overall financial performance in 2012,” said Tom Captain, principal, Deloitte Consulting LLP and global and U.S. aerospace & defense leader.

There are also financial performance differences between A&D companies in the United States and Europe. The industry achieved 3.3 percent revenue growth in the U.S. in 2011, yet grew by 0.8 percent in Europe.

Another study, the Global Aerospace Industry Outlook 2015 report from Research and Markets, also projects the global aerospace industry to have a 2.5 percent CAGR from 2012-2015. That study says the U.S. represents the biggest aerospace market in the world, followed by France, UK, Germany and Canada. Yet in the near future, developing nations, like China, India, Mexico, and Brazil are expected to grow as markets for aerospace products.

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Chandler Harris is a freelance business and technology writer located in Silicon Valley. He has written for numerous publications including Entrepreneur, InformationWeek, San Jose Magazine, Government Technology, Public CIO, AllBusiness.com, U.S. Banker, Digital Communities Magazine, Converge Magazine, Surfer's Journal, Adventure Sports Magazine, ClearanceJobs.com, and the San Jose Business Journal. Chandler is also engaged in helping companies further their content marketing needs through content strategy, optimization and creation, as well as blogging and social media platforms. When he's not writing, Chandler enjoys his beach haunt of Santa Cruz where he rides roller coasters with his son, surfs and bikes across mountain ranges.