Zinger Key Points
- International air traffic rose 9% year-over-year in September, after 11% growth in August, with capacity increasing similarly.
- Boeing secured 63 orders in October, Airbus booked 82, as demand for fleet growth and replacement keeps activity robust.
- Benzinga shares with you top insiders news
The commercial aerospace sector is gaining altitude, driven by surging demand for passenger travel, robust freight activity, and a resurgence in aircraft orders.
According to Goldman Sachs analyst Noah Poponak, CFA, air traffic recovery is exceeding expectations, with growth now outpacing GDP by more than double.
The sector’s strong fundamentals, buoyed by tight supply chains and rising aftermarket revenues, are positioning key aerospace stocks for a significant takeoff.
Here’s what you need to know — and the top stocks analysts say you should have on your radar.
Air Traffic Surpasses Pre-Pandemic Levels
“The overall commercial aerospace market is fundamentally strong,” said Poponak in a note Thursday.
Global passenger traffic continues its remarkable climb as international air traffic jumped 9% year-over-year (yoy) in September, following an 11% yoy increase in August, according to the International Air Transport Association (IATA). Passenger capacity rose in lockstep, up 9% and 10% yoy, respectively.
Goldman Sachs forecasts another 9% yoy gain for October based on airline reports.
Forward airline schedules indicate that global passenger capacity will grow by 6% to 7% year-over-year through November, December, and January, reflecting sustained demand as travel appetite remains strong.
Freight Market Delivers Double-Digit Growth
The recovery isn't limited to passengers. International freight traffic surged 11% yoy in September, following a 12% yoy gain in August, with freight capacity expanding by 8% yoy in both months.
Major cargo players FedEx Corp. FDX and United Parcel Service Inc. UPS also saw gains, with UPS reporting 11% yoy growth and FedEx posting a 3% yoy increase in global air cargo traffic.
Boeing, Airbus Rack Up Orders
Large commercial jet manufacturers are riding the wave of demand. In October alone, Boeing Co. BA secured 63 new orders, while Airbus SE EADSY booked 82 aircraft orders—both with zero cancellations.
“New aircraft order campaigning activity appears to remain robust, for both growth and replacement,” Poponak wrote.
Parked aircraft, which currently make up 11.8% of the total global fleet, remained flat month-over-month, further reflecting high utilization levels as airlines capitalize on the recovery in passenger and freight traffic.
Goldman Sachs' Top Stock Picks
Goldman Sachs’ Poponak highlighted 11 buy-rated stocks that stand to benefit from the industry's resurgence. These include large aircraft manufacturers, component suppliers, and business jet producers.
| Company | Category |
|---|---|
| Woodward Inc. WWD | Aerospace Systems |
| Boeing Co. | Large Aircraft |
| TransDigm Group Inc. TDG | Aircraft Components |
| GE Aerospace GE | Engine Manufacturing |
| HEICO Corp. HEI | Aircraft Parts |
| Howmet Aerospace Inc. HWM | Aerospace Materials |
| Ducommun Inc. DCO | Aerospace Electronics |
| CAE Inc. CAE | Simulation & Training |
| Bombardier Inc. BOMBF | Business Jets |
| Embraer S.A. ERJ | Regional Aircraft |
| Textron Inc. TXT | Business Jets & Helicopters |
Among these, Woodward (WWD) is singled out for its placement on Goldman's “Conviction List,” while Boeing remains a flagship name for its leadership in large commercial jets.
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