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A Bombardier Q400 airplane is being assembled at the Bombardier aircraft manufacturing facility in Toronto in this 2010 file photo.

MARK BLINCH/Reuters

Continued economic uncertainty in Europe is hampering the recovery of Canada's aerospace sector, says a new report.

Profits in 2011 fell from a high of $710-million in 2010 and they are expected to slip again in 2012 and 2013, according to the Conference Board of Canada.

By the end of next year, profits are projected to be slightly above $500-million, a decline of 30 per cent since 2010.

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After a year of positive growth, new orders are slowing, revenue declined early in the year and production is still weak, according to the findings in the Conference Board of Canada's fall edition of its industrial outlook.

"The aerospace industry is still coping with the lingering effects of the 2008-09 recession. And while new orders indicate that the industry is showing signs of recovery, the financial turmoil in Europe is creating uncertainty and making the comeback difficult," says Maxim Armstrong, senior economist at the Conference Board.

Modest growth in global demand is delaying the need to expand air transportation capacities or replace aircraft, says the report.

The launch delay of Bombardier Inc.'s new C Series jet by six months is also having an impact on the speed of the recovery in Canada, the study finds.

Even the emerging countries – where much of the demand for new aircraft is expected to come from – there are constraints such as lack of infrastructure and training of professionals, and slowing economies, the report cautions.

On a more positive note, the market for business jets is recovering well, as the recent big order from NetJets for Bombardier aircraft indicates, the report continues.

This year, revenues in the aerospace sector are forecast to come down from last year.

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"Despite the gains recorded last year, sales remain well below their peak. In the first half of this year, sales were 22 per cent lower than they were in the second half of 2008," says the study.

Join the conversation on Canada's competitiveness by following Canada Competes on Twitter:@CanadaCompetes

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