Dear Fellow Idea Conglomerators/Consolidators/Crunchers,
As Mark Twain – or someone – once said, “I’m sorry I wrote you a long letter. I didn’t have time to write you a short one.” It takes time to distill stuff. But my very smart AeroDynamic colleagues found lots to love and hate in 2024, and it’s my job to boil down their brilliance. My annual Winners and Losers letter draws from ten very lengthy emails. Winners first:
1. Airbus. Looking good. And looking great by comparison. Klaus Mueller points to “a stabilized production outlook and cost saving program, and to a company that’s well positioned (strategy, employment, R&D skills) for the future.”
2. New Defense. Andreana Izotov points to SNC, Anduril, Kratos, and others: “The government is trying to expand its manufacturing base, and especially in an environment where drones are all the rage, small agile defense companies are going to get more and more money.” Dylan Volanth singles out Anduril:“In 2024 it was difficult to view any webpage or read any article on defense without seeing Anduril (or Palantir) featured in the story, or in an advertisement. Beyond all the buzz, it was a banner year for Anduril, with records of 53 new awards and $644.6M in obligations, up from 49 and $233.3M respectively in 2023.” Max Weber is impressed by Anduril’s work with CUAS, CCAs, UUVs, space tech, rocket motors, and CCAs, but cautions that “Its ability to deliver on all of these fronts simultaneously remains to be proven.”
3. Workers and Unions. Glenn McDonald: “Unions at Boeing, Spirit, Textron, and others pushed through substantial wage increases. Suppliers that must compete in the same local labor markets as these OEMs will inevitably have to raise their wages.”
4. EU Defense Companies. Klaus points out that BAE Systems, Rheinmetall, MTU, Rolls-Royce, Safran, Thales and Leonardo are well-positioned for government funding for future defense programs, largely due to increased demand for non-US weapons sources.
5. Capital Intensive Suppliers, with high entry barriers, such as castings and forgings. Jonas Murby points out they “Suddenly have leverage after years of price pressure.”
6. Boeing. Glenn counts them as a winner: “I’m being a contrarian, but winner is a relative term. Boeing has a new CEO, a new labor agreement, and more realism about focusing on their core.”
7. Military aircraft sustainment providers. Kevin Klempner: “As aging platforms see extended service lives (H-60, F-15, F-16, C-17, C-130, CH-53, etc.) there has been increased demand for sustainment activities.” Klaus agrees, noting that “Geopolitical tensions are also increasing utilization levels.”
8. Cirrus. Alex Strehlow: “They delivered their 10,000th SR22 and 600th VisionJet in 2024 and remain a popular option for flight schools and private operators.” But, she cautions, “Chinese ownership may pose headwinds in the near future, so worth keeping an eye on.”
9. Shared business aircraft companies. Kevin Michaels notes that flight department hours have declined, “while utilization by fractional operators and aircraft management companies has skyrocketed.” It helps that billionaires were the big societal winner last year, as Alex points out.
10. SpaceX…again. Max: “Really don’t want to say the same winner for the third year in a row, but SpaceX seems unstoppable right now. They’re dominant in the industry and have a $350B+ speculative evaluation. They’ve gained even larger market shares this year than last for both commercial launch, government launch, and for satellite coverage.”
And now, the Losers:
1. Boeing. Mike Stengel counted them as more of a loser last year (“I don’t even know where to start”) but he did point out “Kelly Ortberg taking the reins was a welcome change.” Boeing makes Klaus’s loser list too. Max points out that Boeing Defense & Space had a particularly rotten 2024: “Bad looks all around when the news discusses ‘stranded’ astronauts on a daily basis.”
2. Early Round AAM Investors. Glenn notes that “Volocopter and Lilium have filed for varying degrees of insolvency. While some AAM companies have the technology, certification processes, and deep pocketed investors to see their aircraft through to certification, we saw the first waves of significant attrition in the AAM startup ranks in 2024.” Klaus agrees: “Reality bites and program certification needs more capital than anticipated.”
3. M&A For Middle/High Tier Defense Companies. Andreana opines: “The era of consolidation is taking a break as DoD searches for options. I’m sure this is cyclical, and I do foresee a wave of 3/4 Tier consolidation especially in AI, UAS, and C-UAS.”
4. The FAA. Jonas points to the agency “losing some of its credibility after having certified what was a clearly chaotic MAX production process.”
5. US Low-Cost Carriers. Mike notes that they’re “struggling to rein in costs with expensive crews, engine recalls (e.g., GTF), delayed deliveries, and lack of premium cabins to help pass on higher costs. Who would’ve thought five years ago that Spirit would be in bankruptcy?!”
6. Pilot Training Providers. Mike: “Delays in new aircraft deliveries really took the wind out of the sails of airline pilot training providers. After two gangbuster years in 2022 and 2023, US airlines hired 50-60% fewer pilots in 2024 than the prior year. On the bright side, hiring at airlines appears poised to pick back up in 2025, which will create a cascade effect for training as pilots change carriers and the attrition generates training demand for their replacements.”
Here’s some good news: there are more winners than losers this year. Perhaps my colleagues’ optimism is starting to influence me. But then there was the first month of 2025, which might just point to a lopsided list of horrors in early 2026. Let’s hope for better times.
Yours, ‘Til I Return To My Regularly Scheduled Opinions,
Richard Aboulafia