- Commercial aerospace sector has proven resilient to escalating tariff headwinds
- GE Aerospace, RTX, Airbus, and Boeing all held firm on guidance in 1Q25
- With supply chain bottlenecks progressively easing, total passenger aircraft deliveries to rise
- While engine OEM fundamentals remain solid, earnings momentum may plateau
Related Insights
The commercial aerospace sector has demonstrated exceptional resilience against escalating tariff headwinds, supported by its structural advantages and diversified global supply chains. As one of the few US manufacturing sectors with a consistent trade surplus, generating USD83bn in 2024, the industry benefits from strong policy support and strategic economic importance. Companies have mitigated tariff exposure through supplier re-sourcing, duty drawback schemes, use of foreign trade zones, and pricing flexibility embedded in long-term service agreements. Diplomatic carve-outs have further reinforced this resilience. China excluded engines, nacelles, and landing gear from its retaliatory list, while the US–UK trade agreement explicitly exempted British aerospace parts. US aerospace firms also stand to benefit from further trade diplomacy. President Trump’s recent visit to the Middle East resulted in over USD115bn of new commercial orders for Boeing aircraft and GE Aerospace engines.
1Q25 results affirmed the sector’s ability to absorb tariff headwinds without altering full-year earnings trajectories. GE Aerospace delivered a solid 1Q25 on spare parts strength, and reaffirmed its guidance despite embedding tariffs, supported by robust aftermarket demand and commercial levers. RTX also maintained its guidance, though tariffs were excluded from its base case, with management expressing confidence in its ability to offset any impact. Airbus outperformed in 1Q25 as stronger defence profitability and favourable FX offset delivery softness, and it reaffirmed its 2025 guidance, anticipating an immaterial impact from tariffs. Boeing’s 1Q25 cash burn came in better than expected, and the OEM exceeded its internal timeline by reaching its target production rate of 38 B737-MAX in May, reflecting progress in stabilising its narrowbody output. Across the sector, 70% of companies either maintained or raised guidance post results, having already factored in the impact of tariffs, while the remainder indicated confidence in their mitigation strategies.
Aircraft OEMs appear well positioned to lead sector earnings growth in 2025, supported by improving production stability and easing supply bottlenecks. Despite a sluggish start to the year, Airbus is still expected to ramp up deliveries in 2025 as a projected 15–20% increase in LEAP engine output alleviates one of its most critical constraints. Boeing is similarly poised to dramatically lift volumes, backed by better quality control processes and the integration of Spirit Aerosystems. By contrast, engine OEM earnings momentum may slow as pricing and utilisation tailwinds plateau, and a higher mix of lower-margin original equipment deliveries weighs on profitability. With production normalising and trade policy risk contained, earnings leadership is likely to shift from engines back to airframes.
Figure 1: Historical and projected commercial passenger aircraft deliveries
Source: Airbus, Boeing, DBS
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