NEW YORK (July 16, 2026) – Developing the next generation of commercial aircraft provides an opportunity for the global aerospace industry to reset business strategies that have held back production and investment, according to a new study.
The twin challenges of executing on a backlog of 17,000 commercial jets and meeting soaring military demand can be leveraged to redefine the relationship among industry stakeholders, according to AlixPartners' annual Aerospace & Defense Outlook.
AI-enabled tools are being deployed to refocus industry on cost discipline and move beyond just managing supply chain challenges, creating new opportunities for operators and an expanding base of private-sector investors.
Key highlights of the Outlook include:
- Engine OEMs and aircraft lessors still dominate industry profits
- The bill for tackling GTF and Leap engine challenges continues to climb
- Component repair is the breakout MRO segment
- Land systems offer a profit opportunity that exceeds missiles
- Space sovereignty has driven dozens of countries to plan satellite constellations
Engine makers, aircraft lessors, and maintenance shops continue to be the main beneficiaries of rising profits, but providers of specialist materials are becoming increasingly important gatekeepers of production and capacity. The trio generated more than 90% of the industry profit pool in 2025.
Consolidation continues apace across the industry, attracting fresh investors and fostering new types of public-private partnerships. The allure of service-based businesses contrasts with the pressure on segments such as aerostructures, which remain chokepoints for commercial and military production.
Record commercial and military backlogs provide an opportunity for industry realignment in segments ranging from rocket motors to cabin systems, revisiting contracts to improve resilience and profitability. The next phase is selecting survivors who can deliver rate and quality while investing in nextgen technologies, said the four-part Outlook, which covers commercial, defense, sustainment, and space.
Meeting passenger and cargo demand, as well as military readiness, requires investment in parts and system qualification now, as well as a more stable system of global certification. "Quality and on-time delivery isn't optional, and reshaping your supply chain to be more resilient and also more competitive is a must," said Eric Bernardini, head of the Aerospace, Defense & Aviation practice at AlixPartners.
AI has become core to commercial aerospace and defense systems, tackling challenges from the design of nextgen aircraft to the durability issues that have hobbled the latest airframe and engine families. "Services remain the industry's profit engine and AI-enabled tools are emerging as the next lever to transform the value chain," said Stefan Ohl, Global Co-lead of Aerospace, Defense & Aviation.
Rearmament has become a structural, multi-year industrial cycle, with record defense order books facing the same capacity and execution constraints as the commercial side of the industry. Trust, traceability, and human control remain central design principles as AI moves into safety-critical and defense-adjacent systems.
Drones, autonomy, missiles, militarized space, and AI enablement dominate the consensus view of military modernization. However, land systems will be the leading performer in economic profit and growth, according to the Outlook.
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