Dear Fellow Zeitgeist Purveyors,
AeroDynamic Advisory enjoyed strong growth last year. More business, more people, and we’ve moved into a much bigger and way spiffier home in Ann Arbor (106 E Liberty St., Ste 300, Ann Arbor MI, 48104). We needed more space. And my annual crowdsourced Winners and Losers letter needs more space too. It’s now three pages. Winners first:
European Defense Companies. Klaus Mueller opines, “EU defense companies cashed in from 2025’s crazy geopolitical landscape. Rolls-Royce, MTU, Rheinmetall, MBDA, BAE, Leonardo, Safran, Thales, Hensoldt, Quantum and many others received large budgets for future developments. The EU defense shield is developing slowly but steadily.” As Mike Stengel notes, “The stock indices vs. US defense stocks say it well enough.” Jeremiah Gertler adds that Saab is “positioned for the current moment. GlobalEye is squarely in the sweet spot between capability and cost. Gripen offers US-fighter capability at a reasonable cost without all the baggage. And their missile systems business is working overtime.”
Boeing. Quoth Mike: “Finally good news out of Seattle with 38/month on 737MAX and approval to go up to 42/month, although good news partly offset by another 777X delay.” Max Weber adds, “There just seems to be a general air of optimism about their decisions and outlook that was not there a year ago.” Alex Strehlow agrees, “Dare I say it? They seem to be on track to recovery….at least in a way better spot than a few years ago.”
Commercial Space. Liang Sim notes, “Multiple companies raised nine-figure rounds (Stoke, Impulse, True Anomaly, K2, Apex, and more) based on solid execution rather than the SPAC-driven hype of 2021. Starship deployed payloads in orbit for the first time; New Glenn’s monstrous first stage landed successfully on its ocean landing barge on only its second flight.” Billy Vogel adds, “There is a lot of buzz around space, and rightfully so – many new companies are finding needs and filling them. And you can’t mention space without looking at SpaceX – they had an unbelievably successful year and are set to be the most valuable company in the world (a projected IPO estimation of $1.5 trillion).”
GE/CFMI. Klaus notes that they are maturing into a well-respected aerospace giant. “A good outlook with RISE and fewer product teething and production ramp issues in 2025. Looking at the aftermarket, it seems that CFMI/GE/Safran developed a good set-up with 28 MRO shops to support LEAP engines. Geoff Murray (our newest colleague) seconds this assessment, succinctly noting, “They absolutely killed it this year. Seem to have their mojo back!”
Legacy (4/4.5 gen) military aircraft. Kevin Klempner points out, “Demand for upper middle tier fighters like the F-16, Rafale, Eurofighter, and Gripen exceeds supply, while workhorses like the H-60 are seeing stable rates despite doubts about rotary wing survivability and relevance in a new conflict environment. Sometimes the more things change the more they stay the same, with trusted and established platforms meeting the needs of a global customer base.”
Small thrust class engines (<5000 lbs thrust). Andreana Izotov comments, “The momentum of CCAs accelerated this year, making a somewhat ‘unsexy’ class of engines extremely relevant. Companies like Williams International will reap the rewards of being able to provide near off-the-shelf engines to CCA OEMs like Anduril who are more concerned with software development and integration than parts design. Their new $1B manufacturing facility in Florida is an indication that Williams is all in on CCA and new defense.”
Business/General Aviation. Dylan Volanth notes “Strong OEM deliveries, increased utilization, and a surge in value for even older aircraft.” Alex points out that “Fractional operators are blowing everyone out of the water with sustained 60% growth in departures since 2019 (with some months in 2025 being 80% higher than the same month in 2019!).” Mike notes that Cirrus is “a surprising stand-out with the fastest-growing fleet in general aviation with a premium customer base. Just delivered 11,000th SR-series aircraft.”
On a related note, Alex cites GA Pilots as winners: “The MOSAIC rule change significantly lowers the barrier to entry for recreational pilots and allows more aircraft types to be operated under sport pilot privileges (EAA estimates ~3/4 of the active piston fleet is accessible to sport pilots and expanded sport pilot operating rules).” She also cites Garmin’s Autoland system, “now on both Cirrus platforms and numerous other GA/Bizav aircraft as retrofit options or new build features.”
Aviation training organizations. Per Geoff: “Many suspected that aviation training organizations would not be able to keep up with hiring demand and the associated training volumes that stretched into early ’25. Over just the past few years many airlines and suppliers have experienced turnover greater than 50% without the oft-predicted increase in accident and incident rates.”
Maintenance, repair, and overhaul (MRO) suppliers. Kevin Michaels opines, “The air transport fleet continues to age thanks to inadequate production rates, and a crucial byproduct is surging maintenance spending, which increased 50% to $125 billion since 2019. Business aviation and military sustainment spending are also poised for expansion.” Dylan adds Alternative Engine MRO Approaches as a winner too – “The use of whole engine (and module) swaps to mitigate against extended TAT and strained supply chains continues to grow, extending from air transport (FTAI stock up ~135% in 2025) through bizav and even into general aviation piston engines.”
Jonas Murby, however, counts Airline Maintenance Procurement as a loser: “Continuing labor rate inflation, parts price inflation and difficulties in finding maintenance slots in a capacity-starved market were all bad: now the mature aircraft will remain in service even longer, which means airlines will need to source more D-checks and cabin upgrades.”
Which brings us to the other Losers. Sustainability was a big one, driven by politics of course. As Alex says, “it’s crickets these days (at least in the US).” Geoff adds, “What a blow ’25 has been to a critical topic.” Andreana offers details: “In 2023 and to some extent 2024 there was a huge influx of sustainability-related press releases from airline SAF pledges, offset deals, and new exciting aircraft configurations like hybrid electric regional jets and hydrogen powered widebodies. Since then progress has seemed to slow, if not stagnate. Europe, which was leading the charge for net zero by 2050 has become increasingly preoccupied by the Russia-Ukraine war and consequent defense ramp up. While the EU SAF mandate of 2% seems to have been achieved, there is a lot of skepticism of moving beyond that to achieve 6% in 2030 and 70% by 2050. The issue is a lack of supply – and furthermore a lack of demand for fuel that is 2-3x the price of JetA. We shall see if subsidies and mandate enforcements ease the bottlenecks.”
Max offers a bit of hope for hybrid-electric: “One loser is fully electric/sustainability in general. But it’s hybrid-electric’s time to shine. Some of it is a much-needed dose of realism, as the US government decides that it doesn’t want anything to do with power sources that don’t involve chugging gallons of oil. The eVTOL dream may be alive and kicking over in China, but elsewhere things look rocky.” Andreana also notes the shift towards hybrid: “The biggest indicator was GE’s $300M investment in Beta for a hybrid electric turbogenerator.”
Regulatory Bodies. Dylan cites “Workforce challenges at FAA/EASA leading to certification delays, ATC challenges during the US government shutdown and aging infrastructure; also, the FAA is now proposing to eliminate DERs.” Kevin M too notes “slowing development programs (just ask Boeing) and STCs, thereby raising the barriers to market entry. Not only are regulatory bodies under-resourced, but regulatory fragmentation is adding to the workload. We are no longer in an FAA-centric world.”
On a related note, Liang lists NASA as a loser: “Budget cuts, layoffs, and leadership turmoil, highlighted by the year-long saga to nominate Jared Isaacman. In the next 5-7 years, the US could lose its 65-year leadership in human spaceflight to China, both in Earth orbit (post-ISS) and in returning humans to the lunar surface.”
Advanced Air Mobility. Alex notes, “This year Lilium and Volocopter ceased operations; Eviation and Supernal collapsed, too. Top prospects emerged (Beta, Electra, Joby, etc.).”
Office of the Secretary of Defense (OSD) Policy. Jeremiah comments, “A freshman Model UN team knows not to start their national security strategy by giving up 2/3 of the world to Russia and China.”
Clean-sheet commercial aircraft programs. Jonas notes that “Development & certification complexity combined with geopolitical risks and fragile industrial ramp-ups means new program launches will move to the right.” Stephen Lynn adds, “It’s been a long time since Boeing or Airbus have embarked on a clean sheet program, with some wondering if it could even be certified in a ‘reasonable’ amount of time. The workforce has changed, new technologies are being introduced, the regulatory environment has gotten more complex, and safety expectations are higher than ever.”
Supply Chain. Stephen says “I expect the smaller companies in the supply base in the US to experience more disruption than normal with CMMC 2.0 implementation. Flowdowns from the Primes have begun and will drive difficulties and potential consolidation at suppliers with a defense/commercial revenue mix. Even if interest rates drop, encouraging investment, uncertainties will likely hold back substantial increases in commercial jet production. There are a lot of compounding factors that are just beginning to emerge and will be issues for several years.”
Honeywell. Klaus points out they’re in a weak position. “Their transformation into a pure-play aerospace company seems to take forever and customer satisfaction is still suffering. Delivery delays and skyrocketing price escalations echo through markets, which still wait for positive news.”
Yours, ‘Til AeroDynamic Builds A Winners And Losers Walk of Fame,
Richard Aboulafia