Q1/26 Review; Quarter Supports Long-term Upside

Research evidence excerpt

Q1/26 Review; Quarter Supports Long-term Upside

TD Cowen Magellan Aerospace Corp.

Global Research May 11, 2026

Outlook

Magellan's Industry Overview

• Commercial:

o Characterizes the commercial aerospace outlook as cautiously

optimistic, supported by aircraft delivery trends at Airbus and Boeing.

o Commercial aircraft order backlogs remain historically elevated, with a

combined Boeing and Airbus backlog of 15,750 aircraft as of Q1/26,

dominated by narrowbody platforms (A220, A320, 737).

o Aircraft deliveries continue to be constrained by supply chain

limitations, particularly engine availability, which restricted Airbus

deliveries despite operational improvements.

o While demand fundamentals remain constructive, production rate

increases are expected to be uneven given ongoing supplier

bottlenecks.

• Defence:

o Outlook remains strong, supported by heightened geopolitical tensions

and global rearmament initiatives.

o Governments are increasingly prioritizing fleet modernization, missile

defence, autonomous systems, and advanced defence technologies,

driving sustained defence demand.

o Global defence spending continues to rise, reflecting structural demand

rather than short-term budgetary cycles.

o In Canada, the government committed over $9 billion in FY25-26

defence funding and achieved the NATO 2% of GDP defence spending

target in fiscal 2025-26.

o Management expects defence spending momentum to support growth

into 2026 and beyond.

• Structural demand tailwinds from large OEM backlogs and defence rearmament

are being offset by operational constraints, including raw material availability

and skilled labour shortages.

• Geopolitical risks and trade and tariff uncertainties continue to pose risks to

supply chain efficiency, cost structures, and delivery timing.