{{item.videoDuration}}
{{item.title}}
{{item.text}}
{{item.videoDuration}}
{{item.text}}
Key takeaways:
- The aerospace and defense industry surpassed $1 trillion in annual revenue for the first time, fueled by record demand across commercial aviation, defense, and space.
- Demand continues to outpace capacity, driving commercial aircraft and defense backlogs to historic highs and intensifying pressure on supply chains, production, and workforce readiness.
- Geopolitical conflict, trade uncertainty, and accelerating technological innovation are reshaping the industry, creating both new risks and significant growth opportunities for A&D leaders.
The aerospace and defense industry made history in 2025. For the first time, both the top 100 A&D companies’ collective revenue and the commercial aircraft backlog crossed the $1 trillion dollar mark. Defense demand has never been higher. And in April 2026, crewed exploration returned to the moon for the first time in over 50 years. Yet alongside the records come real and mounting pressures: jet fuel disruption, tariff exposure, supply chain constraints, and a workforce still catching up to demand.
Based on data from the top 100 A&D companies by revenue, this report delivers a holistic assessment of the industry’s 2025 performance and what leaders should expect and prepare for in 2026 and beyond.
Five forces shaping A&D in 2026
1. Industry-wide operating profit grew 46% in 2025, and the industry is not slowing down
The gains were driven by a major production recovery, strong aftermarket growth among the leading engine manufacturers, and broad gains across the rest of the top 100. Across the board, the industry is delivering results that reflect its strategic importance to the global economy.
2. A&D deal value hit $29 billion in 2025, with a strong focus on defense tech and supply chain security
M&A activity in 2025 was marked by a high volume of significant deals and a clear strategic logic: securing digital transformation, strengthening supply networks, and advancing defense capabilities. Deal activity in commercial aviation reflected continued consolidation among carriers adapting to shifting competitive dynamics. And proposed changes to EU merger regulations could dramatically reshape the European A&D M&A landscape in the years ahead.
3. The commercial aircraft backlog has reached nearly 15,000 units and is still growing
Passenger travel hit a new record in 2025 and order activity pushed the commercial aircraft backlog to historic levels, representing years of production at current rates. Both major commercial OEMs are targeting double-digit delivery increases in 2026. The binding constraints remain supply chain performance and workforce capacity, and closing that gap is the industry’s most urgent operational challenge.
4. The defense backlog has grown more than 50% in three years and shows no signs of peaking
Global tensions in Ukraine and the Middle East have driven defense procurement to record levels, with the defense backlog growing sharply for the third consecutive year. US and European defense revenues both grew strongly, and a proposed US defense budget that would set a new record signals that demand will likely remain elevated. New initiatives to expand the defense industrial base are also reshaping the competitive landscape.
5. Orbital launches set a new global record in 2025, and in 2026, humans returned to the moon
In April 2026, humans returned to the moon for the first time in over 50 years, a milestone that reflects both the ambition and the capability of today’s A&D industry. Meanwhile, orbital launch activity continues to set records year after year. The convergence of national security imperatives and commercial opportunity is accelerating investment and innovation across the sector.
What this means for A&D leaders
The industry’s historic 2025 performance is a reason for confidence but not complacency. Record revenue and backlogs only translate into sustained value if companies can build, deliver, and sustain at scale. The leaders pulling ahead in 2026 are:
- Hardening supply chains against tariff exposure and geopolitical disruption
- Investing in production ramp-up capability to capture backlog value
- Aligning workforce strategy to long-term delivery commitments
- Positioning for the next wave of defense modernization and space expansion
- Managing margin pressure from fuel, labor, and program risk with discipline
In a market where demand is not the constraint, execution is the differentiator.
Download the full report
Explore what’s driving the industry’s record performance, where the pressure points are, and what the outlook signals for the year ahead.
{{filterContent.facetedTitle}}
{{contentList.loadingText}}
{{contentList.loadingText}}
Follow us
