航空航天与国防：三天内十一位首席执行官——伯恩斯坦战略决策会议的主题

www.bernsteinresearch.com BERNSTEIN TICKER TABLETickerRatingHWMOHIIMLHXOLMTMNOCMBA/.LNOGEOGDMSAF.FPMMTX.GROAIR.FPOBAORTXMSPXEDMO - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage SuspendedHII, LMT, NOC, GD estimate is Reported EPS; HII, LMT, NOC, GD valuation is Reported P/E (x);Source: Bloomberg, Bernstein estimates and analysis.INVESTMENT IMPLICATIONSWe rate Boeing, GE, Howmet, Airbus, L3Harris, and MTU Outperform. We rate Huntington Ingalls, Lockheed Martin, Safran,Northrop Grumann, RTX and General Dynamics Market-Perform.GLOBAL AEROSPACE & DEFENSE DETAILSBoeing should continue to benefit from the production ramp up.One of the most attended fireside chats at ourconference was the session with Boeing’s Kelly Ortberg, as investors look to gain confidence in the company’s recovery. Weexpect Boeing’s momentum to continue, with the key driver being the production ramps on the 737MAX and 787 (see also ourJune 2ndreport, “Boeing: Best Idea in Aerospace & Defense presentation; Plus, commentary by CEO Kelly Ortberg”). Boeing nowappears on track for the 737MAX ramp, which was reinforced by Kelly Ortberg’s comments during the SDC. Ortberg said thatBCA is close to reaching a stable 38/month rate, which it needs to work with the FAA on the next break to 42/month (possiblyby year-end). Ortberg confirmed that they will look to next rate breaks to 47/month and 52/month, with at least six-monthintervals between breaks. Because the company had once been at these higher rates (before 2020), he believes that they willbe easier to achieve in working with the supply chain. He also confirmed the move to increase from 5/month to 7/month for the787 later this year. Following the win of the F-47 award, the outlook for Boeing’s defense business is much more promising.Cash guidance is maintained.Tariffs have become less of a focus.Most companies at the SDC reiterated the guides for tariff impact, which were providedat Q1’25 earnings. But the tone was better, especially with the China tariff levels having come down. Still, we continue to seechanges in tariff-related decisions (e.g., banning of aircraft technologies to China, new steel and aluminum tariffs), making theimpact uncertain. Management at the larger commercial aero companies (BA, GE, RTX) have been in regular dialogue withthe administration and believe that it is understood that tariffs are not beneficial to the aviation industry, which enjoys a hugetrade surplus. For the defense businesses, the tariff impact remains very small, given a heavily domestic supply chain. We haveestimated tariffs to have a contained impact (LSD% of EBIT) for most of the Commercial aerospace stocks within our coverage,and lower for the defense companies. The tariff situation with Europe remains a source of concern, given the potential forretaliatory tariffs.Aftermarket remains strong. Companies that are involved in the commercial aftermarket (GE, RTX, Howmet, ATI) allhighlighted that the outlook remains positive, after the already strong numbers in Q1’25. Despite positive developments atBoeing, capacity for new airplanes at Boeing and Airbus will continue to fall short of demand in the market. This means moreand more life extensions on older aircraft, which is good for the engine aftermarket. We expect to see a continued extension ofhighly profitable shop visits for CFM56 and V2500 engines, with pricing increases adding to revenues for not just GE and RTX,but also for Safran, MTU, Howmet, ATI, MTU, and SARO.Pratt & Whitney (RTX) strike impacting Q2’25. The machinists strike at Pratt & Whitney ended as the union approved anew four-year contract, ending a four-week strike over wages and job security. The strike will result in an impact in Q2’25 dueto lower deliveries of GTF and F-135 engines. CEO Chris Calio said at the conference that cash flow should be breakeven tonegative in the quarter (vs. consensus $1.4bn). The impact should be recovered in the following quarters. There should alsobeen some cash impact at MTU in Q2’25, who is involved in the GTF program and potentially for Airbus on short-term deliveries.US Defense budgets. All companies commented on the lack of visibility on US defense spending, but confirmed that theoutlook is positive, assuming the reconciliation bill is spent early on. The skinny budget is for approximately $890bn in 2026,although that could reach the $1 trillion level depending on timing of spending in the reconciliation bill (assuming it passes).The defense companies have described dialogs with the administration as support of higher defense spending, with particularpriorities in nuclear deterrence, missile defense, space, and shipbuilding. There remains some concerns about the impact ofDOGE on service-related contracts. Those were thought to be most focused on consulting type contracts.Golden Dome. The major primes all view the Golden Dome as an important opportunity. All participating players havementioned the project as an opportun