As the commercial aerospace sector looks towards 2025, experts are expressing optimism about merger and acquisition (M&A) activity. Bruce Andrews, a partner at Alderman & Company, highlights that EY forecasts a 10% increase in M&A activity across all industries, with private equity firms expected to see a 16% rise and strategic buyers an 8% increase [c25d19ed].
Despite a challenging backdrop, where M&A volume in commercial aviation dropped by 21% in 2022 and a staggering 37% in 2023, the current environment suggests a potential rebound. The Transportation Security Administration (TSA) reported a record of 3.1 million travelers on December 1, 2024, surpassing the previous record of 3.01 million set on July 7, 2024. This surge in travel may indicate a recovery in consumer confidence and spending [c25d19ed].
Additionally, the 30-day Secured Overnight Financing Rate (SOFR) has decreased from 5.35% to below 4.6%, which could facilitate more favorable financing conditions for M&A transactions [c25d19ed]. However, potential risks remain, including reduced consumer spending and increased trade friction due to tariffs, which could impact overall economic stability [c25d19ed].
Overall, while challenges persist, the outlook for M&A activity in the commercial aerospace sector appears to have more upside potential than downside, suggesting a cautiously optimistic environment for investors and companies alike as they navigate the upcoming year [c25d19ed].