Overview

Total market size = (total local production + imports) – exports

Aerospace & Defense Market in USD millions (The security market is not reflected in the table but in the written paragraph below.)

U.S. aerospace and defense manufacturers produce the highest trade surplus, year after year, of all manufacturing sectors. According to TradeStats Express, a U.S. Department of Commerce-furnished database showing the latest global patterns of U.S. merchandise trade, the 2024 U.S. aerospace exports to Germany amounted to USD 3.32 billion. The trade surplus was USD 1.19 billion, representing a 39 percent decrease from 2023 (USD 1.95 billion). These figures are in stark contrast to the European Union’s statistics stating U.S. aerospace imports worth USD 1.76 billion. This is due to a different approach in calculating the sale of sub-systems and components.  

Aerospace and defense is complemented by safety and security, an industry spanning across 15 vertical markets with a projected global turnover of USD 154.5 billion in 2025 (according to San Francisco-based Grand View Research, Inc.). Both industries are faring rather well against the backdrop of the multiple crises of war, stagflation, refugee and migration influx, and high energy costs faced by Germany and the European Union (EU). Building on a strong performance in 2023, the German safety and security companies reported growing revenues in 2024. In the aerospace segment, the rebound continued despite geopolitical tensions and the long aftermath of the coronavirus pandemic. Perhaps no other industry has been harder hit overall than aviation, particularly the airline industry. In April 2025, total air passenger traffic in Germany amounted to 18.6 million (18,607,885), down 11.5 percent compared to April 2019 (21,028,177) and up 6.8 percent compared to April 2024 (17,423,649). The increase between April 2021 (2,286,208) and April 2024 (17,423,649) was 662 percent. Domestic air traffic (2,037,475) was down 48 percent from 2019 (3,920,123) and down 1.8 percent from 2024 (2,075,537 – April 2021-24: +495.3 percent); European traffic (12,868,197) was down 4.1 percent from 2019 (13,418,665) and up 7.9 percent from 2024 (11,930,470 – April 2021-24: +707.6 percent); intercontinental traffic (3,663,216) was up 0.8 percent from 2019 (3,635,923) and up 8.4 percent from 2024 (3,378,506 – April 2021-24: +687.1 percent). Due to the long order cycles and a significant backlog in aircraft production, aerospace manufacturing suffered less than aviation.

The following section outlines developments in aerospace manufacturing over the past four years. In April 2021, the German Aerospace Industries Association (BDLI) reported that revenues declined by 24.4 percent, from EUR 41 billion (USD 45.9 billion) in 2019 to EUR 31 billion (USD 35.4 billion) in 2020. In the first half of 2021, we saw a promising take-off and expected a year-on-year growth of approximately 15 percent. In the second half of 2021, the industry was able to initiate a trend reversal and even started to hire again. However, the impact of the coronavirus pandemic persisted. In July 2022, BDLI reported that the “aerospace industry in Germany again suffered the consequences of the coronavirus crisis in 2021.” Sales remained at the same level as in 2020. In May 2023, the association announced that the German aerospace industry was on the road to recovery, with sales of EUR 39 billion (USD 41.1 billion) in 2022, marking an increase of 14.4 percent from the previous year. BDLI added that “this positive development is only partly attributable to increased deliveries of the Airbus aircraft family. The effect of an approximately 12 percent more favorable USD/EUR exchange rate was also significant.”

The recovery continued throughout 2023, with sales of EUR 46 billion (USD 49.7 billion), marking another increase of 18 percent over 2022. In 2024, the German aerospace industry reported revenues of EUR 52 billion (USD 56.3 billion), crossing the 50 billion threshold for the first time and representing an increase of 13 percent over the previous year. Stipulated by the climate targets put forward by the German government, BDLI puts a strong focus on the environmental impact of civil aviation, stressing that the current conditions create a unique opportunity to advance climate-neutral flying. U.S. manufacturers should be well-positioned to benefit from the trend towards more sustainable aviation and gradual market growth in Western Europe, especially Germany.

A good way of getting market exposure in Germany—and beyond—is through trade show participation. Trade shows are significant for making first inroads into any market and Germany has plenty of them. It hosts the world’s third-largest trade show for aerospace and defense (ILA Berlin), the world’s largest trade show for aircraft cabin interiors (Aircraft Interiors Expo), and Europe’s largest trade show for general aviation (AERO). The major safety and security shows that are relevant for the German market are held in Essen (Security Essen) and Düsseldorf (A+A), but also in London (DSEI) and Paris (Milipol). All of the above-mentioned events are ideal platforms for U.S. companies to meet with potential buyers and partners, either virtually or in person. 

Leading Sub-Sectors

Aerospace and Defense Market

Germany has the third-largest aerospace and defense market in Europe, with 2024 revenues at EUR 52 billion or USD 56.3 billion, following the UK at GBP 100 billion or USD 127.8 billion (including land defense systems) and France at EUR 77.7 billion or USD 84.1 billion. Some three quarters or USD 37.7 billion of the German production are exported. In 2024, France received more than a sixth of the German exports with USD 6 billion. To a large degree, these exports are attributable to Airbus intra-company trade as part of their geographically dispersed production model with several major sites in Germany and France. Regarding the overall development, BDLI president Dr. Schöllhorn stated the following: “Germany is facing extraordinary challenges that the aerospace industry is ready to tackle, including growing security and defense requirements, the new space race, and pioneering civil aviation. It is therefore important that we establish the right framework. Our companies have made advance investments; now politics must follow suit. We are calling on the German government to proclaim a new German-European industrial policy that enables security and prosperity for our community. Our industry is an important driver of innovation that has an impact on many other areas of the economy and society.” The 2024 revenues were distributed as follows: civil aviation, EUR 39 billion or USD 42.2 billion vs. EUR 33 billion or USD 35.7 billion in 2023; military aviation, EUR 10 billion or USD 10.8 billion vs. EUR 10 billion or USD 10.8 in 2023 (unchanged); space systems, EUR 3 billion or USD 3.2 billion vs. EUR 3 billion or USD 3.2 billion in 2023 (unchanged). 

Security Market

The following section outlines developments in the security market. According to the Federal Association of the German Security Industry (BDSW) in Bad Homburg, the German safety and security market generated a turnover worth EUR 31.3 billion or USD 33.8 billion in 2023. The figures for 2024 were not available at the time of this writing. In last year’s update, the figure reported for the same period was EUR 20.1 billion (USD 21.76 billion), resulting in a difference of more than EUR 11 billion (USD 11.91 billion). The difference arose because the BDSW has added several sub-segments to its annual report. The 2023 revenues break down as follows: security services, EUR 13.4 billion or USD 14.5 billion (42.8%); IT security, EUR 9.2 billion or USD 9.95 billion (29.4%); electronic security technology, EUR 5.3 billion or USD 5.74 billion (16.9%); locks and fittings, EUR 1.4 billion or USD 1.52 billion (4.5%); mechanical exterior security, EUR 900 million or USD 974 million (2.9%); stationary extinguishing systems, EUR 800 million or USD 865.9 million (2.6%); and safes, EUR 300 million or USD 324.7 million (1%). In 2022, the turnover was EUR 17.8 billion, for the first time exceeding the EUR 17.2 billion reported for 2017. The latter figure was published at the “Security Essen” trade show in August 2018.The ongoing rebound seems rather significant considering the strong revenue development in some of the sub-markets since the onset of the coronavirus pandemic in early 2020. It is safe to assume that the industry saw modest but steady growth until then, mostly due to ongoing upgrades of the German internal security and migration enforcement infrastructure and an increased need for security services. In 2023, the security services market accounted for almost half of the overall market and grew by 20.8 percent to EUR 13.4 billion or USD 14.5 billion, from EUR 11.1 billion or USD 11.7 billion in 2022. 

Policy Objectives and Challenges

The following section also outlines the strategic considerations of the German government. Aerospace stands out in this aspect. With the formation of the new German coalition government between the center-right Christian Democrats (CDU/CSU) and the center-left Social Democrats (SPD) in May 2025, the Federal Ministry of Economic Affairs and Climate Action (BMWK) has been renamed into the Federal Ministry of Economic Affairs and Energy (BMWE). It is likely that the BMWE will retain the responsibility for aerospace. The space segment now falls under the umbrella of the newly established Federal Ministry of Research, Technology and Space (BMFTR). Both ministries are currently being reorganized. The new org charts are not available yet. Organizational changes may occur well into third quarter of 2025. The BMWE is led by Federal Minister Katherina Reiche (CDU/CSU). The BMFTR is led by Federal Minister Dorothee Bär (CDU/CSU). The BMWE lists aerospace as a key industry with high growth rates and a strong industrial core in Germany. The revised and updated “2020 Technology Strategy of the German Aerospace Industry” builds on BMWE’s earlier “Aerospace Strategy”, underlining the particular importance of the aerospace sector for Germany as an industrial country both technologically and economically. It was adopted by Germany’s former three-party coalition government between the Social Democrats, the Greens, and the Free Democrats in December 2021. Besides aiming at increased competitiveness, the aerospace sector promises to make significant contributions to overarching societal goals, mainly with regards to the aspirational target of achieving climate neutrality by 2050, developing sustainable aviation fuels (SAFs), reducing the noise footprint, and improving the environmental record of aircraft. During the last legislative period, the BMWE/BMWK updated the Aerospace Research Program (LuFo)—a grant program for aerospace research and technology projects—and issued another call for applications in April 2022. The sixth phase of LuFo (LuFo VI) ended in April 2024. LuFo Climate VII-1 was launched on April 19, 2024, marking the start of the seventh phase which includes a total of three funding calls for innovative technology projects in Germany until 2030. The budget for LuFo is earmarked at EUR 300 or roughly USD 324 million per year, making it the central funding program for industry-led civil research and development projects in Germany. Compared to previous funding periods, LuFo VII again places a strong focus on reducing the overall energy demand and the environmental impact of aviation as well as on reducing non-carbon effects. The BMWE/BMWK stressed that in the future, there will be an even bigger emphasis on climate-neutral aviation.  

Thes announcements were in line with the joint paper on “Climate-neutral Aviation” that was published by German government in June 2022, stating that Germany “aims to be CO2-neutral by 2045” and defining that the “aerospace industry must contribute to reducing CO2 emissions and to enabling climate-neutral flying.” Federal Minister Reiche’s predecessor Robert Habeck commented: “We must set the course for climate neutrality in aviation now. Development cycles in aviation are long. That’s why we must switch gear now. We are therefore deliberately accelerating the ramp-up of sustainable aviation fuels and directing the aviation research program more strongly towards the target of climate-neutral flying. Overall, it is clear that climate-neutral aviation is a difficult task, and we can only make progress together.” It remains to be seen to what extent these goals can be achieved or reconciled with the economic and technological realities of commercial aviation. The new German government may change the goals and the direction of the aerospace policy substantially.

With regards to airline subsidies, it’s noteworthy that German flag carrier Lufthansa fully paid back the EUR 9 billion (USD 10.3 billion) in loans and silent participations it received in June 2020 through the German government’s Economic Stabilization Fund (ESF). In September 2021, the German government informed Lufthansa that ESF’s remaining interest in the company had been sold. In November 2021, ESF’s Silent Participation II of EUR 1.0 billion (USD 1.18 billion) was repaid and the undrawn remaining part of Silent Participation I of EUR 3 (USD 3.54) billion was terminated. Similar measures were taken in France (Air France, KLM), Ireland, Spain, and the UK (IAG: Aer Lingus, British Airways, Iberia, Level, Vueling). These measures mainly helped to stabilize the European air transport industry. While European aviation has been especially hard hit by the coronavirus pandemic in 2020 and 2021, it is demonstrating impressive resilience since 2022. According to CAPA, “the continent’s capacity recovery has more or less absorbed both the Omicron variant and the war in Ukraine.” So far, the impact on aviation could be contained because most European economies are not significantly exposed to Russia and Ukraine. IATA reported in March 2022, that the closure of Ukrainian airspace has put a halt to the “movements by air of roughly 3.3 percent of total air passenger traffic in Europe, and to 0.8 percent of total traffic globally, as per 2021.” In December 2023, IATA elaborated in its “Global Outlook for Air Transport” that “2023 has been a year when air transportation very nearly returned to its pre-pandemic pace of activity, and a year of renewed financial profitability for the industry. In many ways, 2023 is likely to be a local sweet spot for the industry, as the same pace of growth and financial recovery is unlikely to be matched in 2024 and beyond.” In December 2024, IATA expected that “airlines will benefit from lower crude oil prices as long as jet fuel prices decline in parallel.” Due to the recent developments in the Middle East, oil prices are rising again, and airlines may have to adjust with fuel costs representing 30 percent of their total costs. In the second half of 2024, Lufthansa’s share price increased at least partly due to favorable changes in fuel prices. In 2024, Lufthansa’s fuel expenses decreased by roughly 2 percent to EUR 7.8 billion or USD 8.4 billion (from EUR 7.9 billion or USD 8.5 billion in the previous year). This year, the airline may see an increase again.

In April 2025, Lufthansa reported strong bookings for the first quarter of 2025 and predicted robust demand for the summer. Group revenue increased by 10 percent to EUR 10.1 billion or USD 10.97 billion, from EUR 7.4 billion or USD 8 billion in Q1 2024. The number of passengers saw a slight decline from 24.4 million in Q1 2024 to 24.3 million in Q1 2025. Yields rose by 0.4 percent on average year-on-year driven by consistently high demand. Unit costs (CASK) excluding fuel and emissions expenses rose by 3.1 percent due to general cost increases. Unit revenues (RASK) were 2.7 percent higher than in 2024, partly due to significantly lower compensation payments to passengers compared to the strike-hit first quarter of the previous year. Correspondingly, Lufthansa Group posted an operating loss (adjusted EBIT) of EUR 722 million or USD 784 million, describing it as a significant improvement compared to a loss of EUR 849 million or USD 919 million in Q1 2024. For the full year, Lufthansa expects the global demand for air travel to stay strong. Lufthansa’s CEO Carsten Spohr commented: “Global demand for air travel continues to grow. Despite all the geopolitical uncertainties, we therefore remain on course for growth, are optimistic about the summer, and are sticking to our positive outlook for 2025.” Nevertheless, Lufthansa’s outlook states that macroeconomic uncertainties are making it difficult to forecast the coming quarters accurately.

Best prospects for U.S. aerospace and defense manufacturers with interest in the German market exist in the following segments: commercial aircraft, business jets, turboprops, helicopters, UAVs, structures, propulsion systems, subsystems for aerospace vehicles; military aircraft, air defense systems; spacecraft, launch systems, communications systems; access control, identity management, integrated systems, security services. The main vertical markets for safety and security are airport security, smart borders, telecommunications and critical infrastructure, and police modernization.

U.S. companies should be aware of the EAR and ITAR regulatory provisions and the respective provisions on the European side, both on the EU and on the national level. The U.S. Commercial Service closely monitors any regulatory changes and supports U.S. companies by conducting frequent and active outreach to the relevant authorities in Germany, such as the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw) in Koblenz, Rhineland-Palatinate. We also follow the latest aerospace, defense and security-related policy developments and discussions in Germany. On an international level, we gain insights from organizations like the Aerospace, Security and Defense Industries Association of Europe (ASD), the Aerospace Industries Association (AIA), and Homeland Security Research (HSR) to understand their positions on transatlantic trade issues and communicate U.S. objectives.

In several tenders before 2022, the Bundeswehr and state police forces imposed non-ITAR/EAR/PESCO clauses on prospective bidders, asking them to attest that their products do not fall under the respective regimes. This excluded many U.S.-designed and U.S.-made defense goods but hasn’t happened lately.

Another factor that has an impact on domestic and foreign firms in almost every sector is Germany’s weak economic rebound. The German economy recovered slightly in the first quarter of 2025 against the backdrop of geopolitical tensions, revived consumer spending, and high but stable energy costs. According to the Federal Statistical Office (DESTATIS), Germany’s Q1 2025 GDP of EUR 1,086.9 billion or USD 1,181 billion grew by 0.4 percent compared to Q4 2024—price, seasonally and calendar adjusted—after decreasing by 0.2 percent from Q3 to Q4 2024. DESTATIS’ President Ruth Brand attributed the growth to the “surprisingly good economic development in March.” She added that “in particular, the manufacturing sector and exports developed better than initially expected.” A detailed analysis of the underlying reasons would exceed the scope of this report. 

Opportunities

Opportunities include fighter aircraft targeting pods for the German Air Force to fill an operational capability gap on the Eurofighter Typhoon; the Digitization of Land-based Operations (D-LBO) radio program for the German MOD; UASs/UAVs; integrated command and control system upgrades; as well as radars to detect, track, and engage sophisticated ballistic missiles for the next-generation F-127 anti-air warfare frigate fleet program. Earlier this decade, the Bundeswehr’s EUR 100 billion (USD 108.2 billion) special fund promised to be the biggest opportunity. The special fund was announced by then-Chancellor Scholz in February 2022 and approved by the German parliament in June 2022.

The announcement of the special fund was triggered by Russia’s invasion of Ukraine, which led Germany to reassess the state of its armed forces. It comes on top of record defense budgets of EUR 50.4 billion (USD 55.9 billion) in 2022, EUR 50.1 billion (USD 54.3 billion) in 2023, EUR 52 billion (USD 56.2 billion) in 2024, and will be spent until 2026, bringing Germany closer to NATO’s 2 percent GDP spending target. The lion’s share is designated for air force procurements, collectively known as “Dimension Air”, with approximately EUR 33.4 billion (USD 36.2 billion) slated for the procurement of H-47 Chinook heavy transport helicopters, jointly offered by Boeing and Airbus Helicopters, and F-35 Lightning II fighter jets offered by Lockheed Martin. The F-35s will allow Germany to continue in the NATO nuclear deterrence mission without a gap when the Tornados reach the end of their service life in 2030. They are already in service with the UK, the Netherlands, Italy, and others, and thus provide unique potential for cooperation with NATO allies. The German MOD plans to develop a Eurofighter variant to fulfill the electronic warfare role. The Future Combat Air System (FCAS), jointly developed by France, Germany and Spain, will replace the Eurofighter from 2040. The second-largest position, some EUR 20.7 billion (USD 22.4 billion) are earmarked for investments in the “Dimension Command Capability and Digitalization”; followed by EUR 16.6 billion (USD 18 billion) for land defense systems or “Dimension Land”, e.g., the Puma infantry fighting vehicle (IFV); followed by EUR 8.8 billion (USD 9.5 billion) for naval systems or “Dimension Sea”, e.g., K130 corvettes, F126 frigates, and HDW Class 212CD submarines.

Despite the seemingly large amount, it quickly became clear that the special fund will not suffice to upgrade the German armed forces or in the long term. In April 2022, ifo researcher Florian Dorn argued that “this one-time special fund will by no means be sufficient to completely make up for the funding shortfall of recent years, to eliminate all deficiencies in the short term, and to sustainably reorganize the Bundeswehr. In addition, more efficient structures would have to be put in place for using those funds.” Before the 2023 NATO Summit in Vilnius, Lithuania, he added that only little more than half of the special fund can be used for buying new equipment, while 33 percent compensate for savings in the core defense budget, and 8 percent are spent on interest. This assessment may seem exaggerated, but it is accurate. After deducting inflation, the German defense budget has decreased in 2023, and it will do so again in 2024. Without raising defense spending to adequate levels—up to EUR 80 billion or roughly USD 86 billion annually—Germany risks putting the 2 percent target in jeopardy. Initially, the special fund received scrutiny from members of the Social Democratic Party (SPD), who argued that some of the money should be used on civil projects, reviving the idea of a “peace dividend”. In light of the ongoing war in Ukraine, such criticism has subsided quickly, but it may resume in the future.

In January 2024, the Bonn-based defense publication European Security & Defense (ESD) noted in a well-informed article (The Bundeswehr special fund – a year and a half later) that only a few projects in the special fund are genuinely new while the majority are transfers from Section 14 of the core defense budget. The article highlighted that the armaments investment part of the budget has declined continuously since 2022 and that the special fund is playing an increasingly important role in achieving NATO’s 2 percent target. In 2024, some EUR 19.8 billion (USD 21.4 billion) from the special fund were added to the defense budget, bringing the overall defense expenditures to EUR 71.8 billion (USD 77.7 billion). Under the 2025 budget draft that was proposed on July 5, 2024, Germany’s coalition government agreed to keep German defense spending above the NATO 2 percent target, with an additional EUR 30 billion (USD 32.6 billion) to finance a massive military overhaul. The mid-term financial planning foresees a total of EUR 80 billion (USD 87 billion at current exchange rates) by 2028. Leading up to the decision, Federal Minster of Defense Boris Pistorius complained that his ministry will receive “significantly less” in 2025 budget funding than he had sought for plans to boost annual defense spending by EUR 6.7 billion (USD 7.25 billion).

As of mid-June 2025, Germany’s federal budget for 2025 has yet to be firmed up and approved. The new German government aims for a speedy adoption at the end of the month. Federal Minister of Defense, Boris Pistorius (SPD), plans to spend up to EUR 60 billion (USD 65.2 billion) on defense, considerably more than in the 2025 draft budgetary plan from September 2024. On June 17, 2025, Federal Minister of Finance, Lars Klingbeil (SPD), signaled that he is willing to spend up to 3.5 percent of the GDP on defense in the coming years. This comes on top of a remark by Federal Minister of Foreign Affairs, Johann Wadephul (CDU/CSU), at the informal meeting of NATO foreign ministers in Antalya, Turkey, on May 15, 2025, that he accepts in principle the demand that NATO member states increase defense spending to 5 percent of GDP. With the combined expenditures from defense budget and the special fund, Germany currently spends just over 2 percent on defense. Each additional percentage point would mean further annual expenditure of EUR 45 billion (USD 48.9 billion).

Germany’s renewed commitment to defense was preceded by a landmark constitutional reform in March 2025, which was passed with a two-thirds majority in the old Bundestag with support from the CDU/CSU and the SPD. It includes a special fund of EUR 500 billion (USD 543 billion at current exchange rates) for the modernization of infrastructure and stipulates that defense spending above 1 percent of the GDP will not be subject to the national fiscal rule, the ‘debt brake’, restricting annual structural deficits to 0.35% of GDP. The proposed fund has a duration of 12 years and is intended to boost investment in Germany’s critical sectors such as transport, hospitals, energy, education, and digital infrastructure. The U.S. Commercial Service will keep track of the developments with regards to defense and infrastructure spending. 

Resources

Trade Events

• Space Tech Expo Europe – Bremen, November 18-20, 2025 (Space)
• 15th Aviation Forum – Hamburg, December 10-11, 2025 (Civil Aviation)
• DSEI – London, September 9-12, 2025 (Defense)
• inter airport Europe – Munich, October 7-9, 2025 (Airport Equipment)
• A+A – Düsseldorf, November 4-7, 2025 (Safety & Security)
• Milipol – Paris, November 18-21, 2025 (Defense)
• Aircraft Interiors Expo – Hamburg, April 14-16, 2026 (Aircraft Interiors)
• AERO – Friedrichshafen, April 22-25, 2026 (General Aviation, Business Aviation)  
• ILA Berlin – Berlin, June 10-14, 2026 (Aerospace & Defense)
• Security Essen – Essen, September 22-25, 2026 (Safety & Security)

Other Web Resources

German Aerospace Industries Association (BDLI)

Federal Association of the Security Industry (BDSW)

European Association for Unmanned Aviation (UAV DACH)

German Airport Technology & Equipment (GATE Alliance)

Bavarian Aerospace Cluster (bavAIRia)

German Helicopter Association (DHV)