Canada’s aerospace industry is expected to post a modest profit of $620 million in 2009, despite declining demand for business jets, according a report from the Conference Board of Canada.

“Although the aerospace industry is being affected by the recession, it is currently faring better than many other industries,” said Valerie Poulin, economist. “However, the industry’s customers are beginning to rethink or even cancel orders due to a decline in air travel and their difficulties raising credit to pay for new jets. The next 12 months will shape the industry’s longer-term well-being.”

Despite recent cancellations, the backlog of orders, which is equivalent to nearly two years of production, is still just below the industry all-time high. Industry production is expected to slow in the next two years, but output will still outperform the rest of the manufacturing sector. After an increase of more than 10% in 2008, production growth is expected to slow to 1.7% this year and decline slightly in 2010.

Profits fell to $592 million in 2008 and should remain relatively stable over the next two years. Profit levels are expected to grow steadily beginning in 2011. However, profit margins remain slim-they fell to a low of 2.7% in 2008-and expected to average only three% annually over the next five years.

IE