WASHINGTON (Reuters) – Declines in U.S. and European defense spending are putting heavy pressure on thousands of small and mid-sized companies that together build about 70 percent of major weapons systems, top defense and industry officials warned this week.

They forecast a new wave of consolidation as smaller companies adjust to more austere times, but say some may exit the arms business completely, which could result in bottlenecks and strains in the supply chain for years.

July 25 (Reuters) – Delta Air Lines and US Airways
Group topped Wall Street’s second-quarter profit
estimates on Wednesday on strong passenger revenue, sending the
major U.S. carriers’ shares higher.

Delta reported a net loss after it took charges for fuel
hedge contracts and staff buyouts, but said it expected a profit
for the third quarter.

By Karen Jacobs

(Reuters) – Rockwell Collins Inc (COL.N: Quote, Profile, Research, Stock Buzz), a supplier of avionics and other electronic systems for planes, cut its full-year forecast citing concern about a slowing economy, and its shares fell more than 4 percent.

The economic recovery is not proving to be as robust as hoped, and there are worries about China and Europe, the company’s chief executive, Clay Jones said.

July 19 (Reuters) – Southwest Airlines Co beat
analysts’ estimates with a 42 percent rise in quarterly profit
on Thursday, helped by higher fares and robust demand despite a
fragile U.S. economy.

Analysts said Southwest, which is looking to maintain its
dwindling low-cost advantage against rivals that have
restructured, made progress in controlling costs.

By Karen Jacobs

(Reuters) – Southwest Airlines Co topped Wall Street estimates with a 42 percent rise in quarterly profit on Thursday, helped by higher fares, and said demand was solid despite the fragile economy.

U.S. airlines have merged, raised ticket prices and shown discipline in cutting back flights to match demand to return to stability over the past two years.

By Karen Jacobs

(Reuters) – Strong demand from business and leisure travelers will help U.S. hotels and airlines produce solid revenue and profit in the second and third quarters.

But aside from that bright spot, Europe’s economic woes and possible slowing growth in China and India could make for a murkier travel outlook. Those factors, combined with investor nervousness over the result of the upcoming U.S. presidential election, are spurring worries that business and leisure consumers could curb their travel a bit farther down the road.

FARNBOROUGH, England (Reuters) – Irish lessor Avolon placed a $2.3 billion provisional order for up to 30 Boeing jetliners on Wednesday, picking a moment when many airlines are slowing orders and prices are under pressure to expand its own fleet on hopes of an economic recovery.

Boeing Co is leading Airbus in deals at a subdued Farnborough Airshow, the aerospace industry’s showcase event, where there are signs a faltering global economy is finally catching up with demand for new aircraft.

FARNBOROUGH, England (Reuters) – Canada’s Bombardier said on Wednesday it hopes for a sales boost from first flight of its CSeries single-aisle plane that it still hopes to make by year-end, despite concerns among industry analysts that the maiden flight could slip into 2013.

“For now, we’re still driving very hard for first flight at the end of this year,” Guy Hachey, president and chief operating officer for Bombardier Aerospace, said in an interview during the Farnborough Airshow.

FARNBOROUGH, England, July 11 (Reuters) – While planemakers
are vaunting record order backlogs to draw attention from the
dearth of new deals at the Farnborough Airshow, their ability to
meet the demand on time rests on their suppliers, and it is far
from certain they will be able to cope.

U.S.-based Boeing and European rival Airbus
have orders for over 8,000 aircraft, enough to keep them busy
for the next six years, even without any new deals, and analysts
predict the industry must increase production rates by a huge 45
percent in volume by 2015 to cope with the demand.

FARNBOROUGH, England (Reuters) – Rockwell Collins, stung by U.S. program cuts, said on Tuesday it expected most of its defense portfolio would remain intact as it considers trimming its government business.

While there could be changes that result in the exploration of strategic alternatives for some parts of the defense business, Chief Executive Clay Jones said he expected most of the defense portfolio to be deemed core to the company.