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Aerospace cruising at high velocity: projections for aircraft production are so robust that even the threat of substitution by new space-age composites isn't dampening the spirits of aluminum and titanium suppliers.

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WITH DEMAND SOARING in both the commercial and military sectors, aircraft manufacturers will enjoy record sales of new planes in the next several years--taking metal suppliers along for the ride.

The only gray clouds on the aerospace horizon are the much-publicized delays of two high-profile commercial aircraft programs: the Airbus 380 and the Boeing 787 Dreamliner. So far, say aluminum and titanium suppliers, the delays have not hurt much.

"Demand has dropped a little, but it's still going strong vs. historical levels. It just isn't at the same frantic pace it was running six to eight months ago," says Bill Sales, senior vice president for nonferrous operations at Reliance Steel & Aluminum Co., Los Angeles.

"The aerospace market is the best it has ever been," asserts Richard Aboulafia, vice president of the Teal Group, Fairfax, Va. "This is the first time in 25 years that I've seen it this strong in both the commercial and military aerospace sectors. It is unprecedented."

Matt Grimison, spokesperson for the Aerospace Industries Association of America in Arlington, Va., was just as glowing in his assessment of the market. "It's going like gangbusters. This is very uncommon. Usually when one sector is strong, the other is down or flat. But both [commercial and military] are on high peaks, and it looks like this demand will be sustained for a while."

Aboulafia predicts this expansion could last another seven to eight years, maybe even longer. Much of the demand is coming from airlines in emerging markets such as India, China and the Middle East as the economy globalizes and standards of living improve.

In this favorable business environment, even the domestic airlines can make money, he says. "The U.S. airlines finally have their heads above water. They aren't quite ordering new planes yet, but it is a good sign that they are now focusing on profits."

Given the age of their current fleets--an average of 35 years old--it is likely U.S. carriers will join their international counterparts and start placing orders for aircraft in the next two to three years, Grimison says.

Domestic carriers are starting to make sufficient returns to invest in new airplanes and to add new routes both inside and outside of the United States, agrees Bob Mraz, vice president of sales and marketing for TW Metals Inc, Exton, Pa.

Growth in the commercial aerospace market, which is by far the largest segment of the aerospace industry, has been "astounding," says Aboulafia. "I think it will peak in 2010-11 with $83 billion in deliveries, up from a low of $40 billion in...

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