The world’s top 25 most valuable aerospace and defence brands could lose over US$22.8 billion worth of brand value as a result of the COVID-19 pandemic. Brand Finance’s analysis shows that the aerospace and defence sector is a heavily impacted industry globally and could face a potential 20% loss in brand value.
Looking beyond the aerospace and defence sector, the value of the 500 most valuable brands in the world, ranked in the Brand Finance Global 500 2020 league table, could fall by an estimated US$1 trillion as a result of the Coronavirus outbreak.
Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on 1st January 2020. The likely impact on brand value was estimated for each sector. The industries have been classified into three categories – limited impact (minimal brand value loss or potential brand value growth), moderate impact (up to 10% brand value loss), and heavy impact (up to 20% brand value loss) – based on the level of brand value loss observed for each sector in the first quarter of 2020.
The COVID-19 crisis presents a dangerous threat to aerospace and defence brands around the world, which stand to lose 20% of overall brand value. On the aerospace side of the industry, brands are fighting to negotiate the virtual standstill of global aviation and, with the future uncertain, the true damage to the sector in the long run is unknown. Conversely, defence brands are likely to fare better, as demand is protected by contracts allocated and secured prior to the pandemic, which are more often than not crucial in a given nation’s defence strategy.Savio D'Souza, Valuation Director, Brand Finance
Boeing has retained the title of the world’s most valuable aerospace and defence brand despite its brand value declining a significant 29% to US$22.7 billion. The brand continues to be in a state of crisis following the fatal crashes involving the Boeing 737 MAX. Boeing quickly turned from a company of safety first to one laden with a reputation for cover-ups, and its future is now on the line. The fallout from these crashes has been felt sector wide and across Boeing’s supply chain.
The turbulence for Boeing shows no signs of easing with jet orders continuing to nosedive and with the ramifications of COVID-19 hitting the aerospace sector hard.
Lockheed Martin is the fastest growing brand in this year’s ranking posting a 15% brand value growth to US$12.6 billion. The American global security and aerospace brand generates approximately 70% of its annual revenue from US Government contracts, and last year was awarded a further two worth over US$30 billion – a significant contribution to the brand’s solid financial performance in 2019.
Lockheed Martin’s former CEO (as of June 2020), Marillyn Hewson, topped Brand Finance’s Brand Guardianship Index 2020 – a ranking that rates CEOs to capture how well they measure up as brand managers. Marillyn Hewson has been at Lockheed Martin for 37 years, her whole career, and was CEO for the last 7 years, presiding over a 14% increase in Enterprise Value. Hewson has led the charge for the defence brand’s position as a leader in security, aerospace, and technology. Hewson remains the Executive Chairman.
In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, customer familiarity, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value. According to these criteria, Safran (up 2% to US$6.4 billion) is the world’s strongest aerospace and defence brand with a Brand Strength Index (BSI) score of 84.5 out of 100 and a corresponding AAA brand strength rating.
The brand prides itself on its CSR activities as it strives towards building high-tech solutions to contribute towards a more sustainable and safer world. With a commitment to cover 12 out of the 17 UN Sustainable Development Goals, the brand is truly showcasing its positive moves to combat the major challenge of climate change.
The brand has been negotiating industry wide complications that have arisen from the grounding of the Boeing 737 MAX – issues that have further been exacerbated by coronavirus – resulting in Safran’s activity and profitability taking a hit in Q2 this year. With its COVID-19 Adaption Plan currently in motion the brand will be hoping that its robust model will be enough to tackle these unpresented times head-on.