US defence budget cuts expected to be unveiled this week have not dampened the aerospace industry's enthusiasm in its financial performance, with most manufacturers increasing their revenue forecasts for this year based on continuing strong military sales and recovering commercial business.

Boeing has boosted its revenue forecast to $58 billion for this year, up from $52.5 billion for 2004, and to $62-63 billion for 2006. But growth in the company's defence business is expected to slow from 11% last year to around 7% this year and next as the US defence cuts take effect.

Lockheed Martin also expects any cuts to have their effect in 2006 and beyond, and is projecting increased revenues of $36-37.5 billion this year, up from $35.5 billion in 2004 - an almost 12% increase over a year earlier. Northrop Grumman expects its revenue growth - 13% last year, to $29.9 billion - to moderate to around 5% this year. After a revenue increase of almost 12% last year, to $20.2 billion, Raytheon is projecting single-digit growth this year, to $21.5-22 billion.

Despite the good news, the 2004 results were marred by a number of fourth-quarter charges.

Northrop Grumman took a $42 million change on its radar programme for the Boeing 737 airborne early warning and control aircraft to cover the redesign and retrofit of antenna elements after testing revealed performance did not meet predications.

Raytheon, meanwhile, took a $55 million charge on an unspecified international programme as a result of a qualification test failure. As previously announced, Boeing took fourth-quarter charges totalling $555 million to terminate production of the 717 airliner and write off expenses incurred on the 767 tanker programme.

Excluding acquisitive General Dynamics and L-3 Communications, most of the revenue growth recorded last year and forecast for this year is organic. Boeing, Lockheed Martin and the other major defence contractors are talking in terms of niche, bolt-on acquisitions, mostly in government information technology, rather than major mergers.

GRAHAM WARWICK / WASHINGTON DC

Source: Flight International