Funding Growth in Aerospace

A report by ATI and PwC

The aerospace sector is becoming familiar with disruption. After a decade of growth, since 2018 the industry has faced recalled orders, demand volatility, supply chain disruption and a rapidly rising cost base as the effects of aircraft recalls, COVID-19 and then an increasingly unstable geopolitical and economic environment have taken hold.

Revenue from global product deliveries more than halved from £89 billion in 2018 to £42 billion in 2020, while job losses from the industry ran into the tens of thousands and many established players within the aerospace supply chain found themselves filing for bankruptcy.

The subsequent rebound, with revenue expected to reach £61 billion in 2022, has been a major test of the industry’s resilience and agility. While grappling with these challenges, aerospace companies have also been preparing for the sector’s most significant transformation since the jet age.

This transformation is driven by the need to achieve Net Zero in aviation by 2050, which will require the development of more efficient and, in some cases, radically different aircraft types.

Capturing this market opportunity will require unprecedented levels of investment into aerospace. However, the sector faces several hurdles in relation to private financing, including a funding gap for companies within the ‘growth economy’.

In addition, the zero-carbon technologies required to deliver this growth are currently at very low levels of technology readiness. Achieving technology maturity and market readiness will need high levels of investment if the sector is to achieve its Net Zero ambitions.

Realising the UK’s aerospace market potential will require investment now, and there is a clear appetite among ‘growth economy’ companies to invest in the R&D, product development and scaling that will enable them to generate growth. For the right profile of patient investor, this represents an opportunity for significant long-term returns in a space that has traditionally been little understood and therefore underinvested by private finance.

This report outlines the major growth opportunities within aerospace to 2050, and summarises the key sources of funding available to UK companies. In undertaking research for this report, PwC and the ATI identified a number of challenges that must be overcome to unlock the growth opportunity for the UK, including a private funding gap for growth economy businesses that will impact aerospace start-ups and SMEs.

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Matthew Alabaster

Matthew Alabaster

Energy, Utilities & Resources Deals Leader, Partner, PwC United Kingdom

Tel: +44 (0)7866 727124

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