...The Russia-Ukraine conflict has resulted in some of NATO's top spenders hiking defense budgets. Leading NATO members continue to urge other members to increase their spending toward the 2% of GDP target. However, this will not result in a short-term windfall for aerospace and defense (A&D) companies because it can take years for funds to pass from the point of political approval, through budget allocation, and the tendering process, then to companies that win contracts. Airbus continues to raise narrowbody production rates. The company targets producing 65 per month by summer 2023 (production fell about 40 per month in the worst of the pandemic) and the plan is to raise this to 75 per month through 2025. Widebody production remains muted, and cargo has peaked. We do not expect long-haul international travel demand or demand for wide body planes to recover to pre-pandemic levels until at least 2024. The demand for cargo rose during the pandemic, but we believe this has peaked....
