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Moody's upgrades global aerospace, defense outlook on hopes of uptick in travel demand

Aug 27 (Reuters) - Moody’s Investors Service raised its outlook for the global aerospace and defense sector to “stable” from “negative” on Thursday, saying a slow recovery in airline passenger numbers could help the market improve from its second-quarter trough.

The rating agency said it expects the sector, which was hammered by the coronavirus crisis, to recover over the next 12 to 18 months.

However, Moody’s said it expects large commercial aircraft production to be around 30% to 40% lower than 2019 levels in 2021, with new aircraft build rates partly depending on the resumption of planemaker Boeing’s 737 MAX production.

Commercial aircraft demand will be weak well into 2023, the agency said, as Boeing and rival Airbus were forced to cut production due to the impact of the COVID-19 pandemic. (bit.ly/2Qxs1zu)

“If airline passenger volumes don’t start to improve meaningfully in 2021,we are likely to see further aircraft production rate cuts,” said Jonathan Root, senior vice president at Moody’s Investors Service.

The agency also expects the pandemic to drive multi-year weakness in the aftermarket and business jet segments.

Reporting by Sanjana Shivdas in Bengaluru; Editing by Ramakrishnan M.

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