Significant debt ($24 billion), representing 134% of capitalization, exposes the company to economic downturns and potential rating agency downgrades. Variable interest rates on a portion of the debt increase risk of higher debt service costs. Cyclical sales to aircraft manufacturers, dependence on key customers, and potential cost overruns on fixed-price contracts are also risks. Litigation, environmental liabilities, and cybersecurity threats pose further financial risks.
Financial Upside
Strong aftermarket revenue stream from a large installed base of aircraft components mitigates some risks. Acquisitions, particularly of proprietary aerospace businesses, are a growth strategy. Improved commercial aerospace industry performance, including increased flight hours and OEM production, contributes to sales growth. Higher U.S. government defense spending also boosts sales.
