The Zacks Aerospace-Defense Equipment industry is experiencing growth driven by strategic mergers and acquisitions (M&A) and rising air travel demand. Leading companies, such as HEICO Corporation, ATI Inc., and AAR Corp., are expanding their operations through notable acquisitions, enhancing their capabilities in the competitive defense and aerospace sectors. HEICO recently acquired 80% of Cook Defence Systems, while AAR completed its acquisition of Aircraft Reconfig Technologies. Despite these advancements, airlines face challenges from supply-chain disruptions, higher operational costs, and a shortage of aircraft, which has created an estimated shortage of about 5,600 planes.
According to the International Air Transport Association (IATA), global air passenger demand is projected to grow by 2.1% year-over-year in 2026, with a high global passenger load factor of 85.2%. However, persistent supply-chain issues are inflating operating costs for airlines, as spare parts become more expensive and harder to procure. As of May 2026, the total order backlog for aircraft reached 18,100, representing nearly 60% of the active fleet, prompting concerns about limited production capacity in the aerospace and defense sector.
Through fiscal 2026, HEICO reported a 23% increase in net sales, reaching $1.41 billion, while ATI’s aerospace and defense sales rose 34%. Analysts expect ATI’s sales to grow 12.9% year-over-year, while HEICO is projected to achieve a 19.9% increase. The Aerospace-Defense Equipment industry currently holds a Zacks Industry Rank of #50, reflecting its position within the top 20% among over 247 industries, bolstered by anticipated revenue growth amidst current challenges.
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