The war in Ukraine, budgetary shockwaves among major states, rising Indo-Pacific tensions, a strong yet fragile rebound in civil air transport, accelerated technological sovereignty programs, and the war for talent: since January 2025, the aerospace and defense ecosystem has been rapidly evolving. These dynamics, combined with the decarbonization imperative, are creating a new playing field for industrial and institutional decision-makers.
Maximilien de Boyer, Practice Director for Aerospace, Defense & Security at NAOS International, identifies four structural trends likely to have a lasting impact on the value chain and HR strategies across the sector.
1. Budgetary rearmament: A Historic shift
NATO Allies’ decision to endorse a spending target of 5% of GDP — including 3.5% for “hard” military capabilities — marks the most significant shift since the end of the Cold War.
This comes on top of the now-standard 2% threshold, which has been reached or surpassed by all members.
Across the Atlantic, the 2025 National Defense Authorization Act allocates $9.9 billion to the Pacific Deterrence Initiative (PDI), highlighting the priority given to deterrence against China.
“The message is clear: the power competition is being waged as much on financial statements as it is on the battlefield,” says Maximilien de Boyer.
In this Indo-Pacific “rebalancing” logic, the AUKUS pact remains a major strategic lever. However, its near-term future is uncertain: Washington has announced a 30-day review of the program, notably around the submarine component — the backbone of the trilateral partnership — raising concerns among U.S. and Australian lawmakers about its operational and political viability.
It is worth noting that the French ambassador to Australia announced on July 13 that French-Australian defense cooperation has “resumed” following the fallout from the massive canceled French submarine deal in 2021.
Export markets for naval and submarine equipment are preparing for a wave of accelerated tenders to secure the nuclear propulsion supply chain.
2. Air Transport rebound: Between revival and bottlenecks
Airbus has secured European certification for the A321XLR, opening up the highly coveted “single aisle long range” segment.
The manufacturer still targets 820 deliveries in 2025 but warns airlines that some delays may extend through 2028 due to ongoing shortages in engines and parts. Airbus specifically points to Safran Aircraft Engines, accusing it of failing to deliver engines on time — a tension the company has highlighted in several public statements.
At Boeing, senior management has confirmed a certification timeline “by the end of 2025” for the 737 MAX-7 and 737 MAX-10. However, the company is facing an unprecedented “brain drain,” with the average engineer tenure dropping from 16.4 to 12.6 years in a decade. Boeing also faces scrutiny following the crash of an Air India Boeing 787 in India on June 12, 2025 — an accident that reignited criticism about safety and damaged its reputation.
On the fuel front, the simultaneous introduction of European and UK SAF (Sustainable Aviation Fuel) mandates in 2025 is causing costs to skyrocket: +100% in added expense, or $1.2 billion for one million tons, according to IATA.
“Carriers are caught between climate imperatives and P&L impact; the equation will be unworkable without a compensation mechanism,” warns Maximilien de Boyer.
While waiting for biofuels, Expliseat — a Paris-based French company — is developing ultra-light aircraft seats made of titanium and composites, enabling a 30% reduction in seat weight and a 3–6% drop in CO₂ emissions per passenger.
On the supply chain side, Constellium reports improving visibility for aerospace aluminum, thanks to Airbus’s recovery plans — but Airbus cautions that bottlenecks will persist for three more years.
3. Technological sovereignty: Next-Gen programs and space-defense
The French-German-Spanish FCAS program is entering a new zone of turbulence: Airbus and Dassault are struggling to agree on phase 1B of the sixth-generation fighter jet, delaying a key milestone originally set for 2026.
This was evident at the Paris Air Show: the FCAS mock-up received far less attention than the Rafale F5, which was prominently featured at the Dassault Aviation outdoor exhibit.
Meanwhile, the military drone market is already valued at $11.2 billion and is expected to double by 2034, driven by swarm capabilities and AI autonomy. Acquisition strategies combining “drones + anti-drone systems” are becoming standard in five-year defense plans. The Thales–KNDS France partnership is notable.
At the show, French manufacturer Parrot made a strong impression with the launch of its sovereign micro-UAVs ANAFI UKR and the AI autopilot CHUCK 3.0.
Also gaining attention were promising startups like Alta Ares, which is developing real-time onboard visual recognition AI for its drones, capable of detecting vehicles and infrastructure without cloud connectivity.
In the space sector, Ariane 6 completed its second flight on March 6, 2025, and is preparing for commercial launch operations in August — positioning Europe in the mid-capacity launch segment with optimized costs.
This success, combined with hypersonic surveillance constellations tested by the U.S. MDA, increases the strategic value of low Earth orbit.
Meanwhile, French startup Latitude, based in Reims, is gaining traction with its Zephyr launcher for SmallSats. Backed by the France 2030 plan and a $30M Series B funding round, it is building a 25,000 m² factory on a former AstraZeneca site to produce turbopumps and avionics in-house and prepare for launches starting in 2026 — establishing itself as an agile, sovereign player in low orbit access.
4. Human capital: The Keystone of industrial and climate ambitions
To strengthen the link between academia and industry, the Pégase Chaire — the first French chaire dedicated to the economics and management of air transport and aerospace — is affiliated with Montpellier Business School and serves as a key point of contact with the sector.
Deloitte surveys confirm that the shortage of engineers and cyber profiles remains the top challenge, cited by 72% of aerospace and defense executives. At industry shows, Farnborough 2024 already spotlighted the talent war between traditional aircraft manufacturers and electric propulsion startups.
The HR challenge is further complicated by an ESG (environmental, social, and governance) imperative: without dedicated expertise in Sustainable Aviation Fuel, solid-state batteries, or hydrogen, the industry risks missing its decarbonization targets and facing penalties under new European taxonomies.
Social tensions, amplified by digital transformation and concerns around generative AI, are prompting leadership teams to adopt retention strategies combining upskilling, pay equity, and international mobility — areas where direct approaches and talent mapping can be game-changers.
Conclusion: Between acceleration and volatility
The first half of 2025 confirms that aerospace and defense have entered a hyper-competitive super-cycle. Record budgets, intense geopolitical pressure, costly environmental transition, and talent shortages are simultaneously rewriting the rules. Executive teams can no longer sequence their priorities: supply chain control, skill security, regulatory foresight, and product innovation must now advance in parallel.
For players who can detect these early signals, 2025 offers a unique strategic window.
As Maximilien de Boyer concludes: “In an environment where every delay costs cash, the competitive advantage lies with organizations that can align human capital, industrial capital, and carbon capital.”