Global aerospace and defense business reached record levels in 2011, up from $22 billion in 2010 to $44 billion, despite fears it could turn out to be a bad year overall for the industry, latest data indicated.

Most fears were based on reports of a decline in defense acquisitions, which did happen but was more than offset by an aerospace boom that seems set to continue this year.

U.S.-affiliated transactions dominated activity and cross-border deals showed a significant increase.

Government cutbacks and the allied withdrawal from Iraq and reduction in military commitments in Afghanistan gave rise to warnings last year that the defense industry was headed for a downturn but the high level of aerospace transactions has weighed in to produce upbeat results.

Findings of the industry's surprise performance came in Mission Control, a quarterly PwC US analysis of mergers and acquisition activities in the aerospace and defense industries worldwide. The report used data from the fourth quarter figures and overall figures for the year.

"We saw a wide-ranging mix of deals in 2011 as global aerospace and defense M&A activity reached record levels," said Scott Thompson, U.S. aerospace and defense leader at PwC.

"Larger deals became more common, driven by sales of slower-growth defense businesses and private equity exits, while smaller deals drove the bulk of deal volume as major players with ample liquidity focused on acquiring growth," Thompson said.

The aggregate deal value during the year reached $43.7 billion supported by 341 deals, compared to total deal value of $21.9 billion and 332 deals in 2010.

The 2011 record surpassed the level of transactions reached in 2007 of $42 billion.

It was a year marked by mega deals in excess of $1 billion each, one of those for a total value of $16 billion.

A big increase in aerospace deals contrasted with a decrease in defense contracts.

Both aerospace and defense manufacturers are looking to markets in Asia and Latin America for a continued growth in orders. Asian and Latin American countries, including many in peacetime conditions, are busy modernizing their forces and fleets, activities that are set continue this year.

Government cutbacks in Western countries will continue to take their toll, however.

"The uncertain outlook is causing defense contractors to further globalize in the face of growing competition for a shrinking pool of business. These trends will play a major role in deal activity as the year unfolds," Thompson said.

However, competition in the industry is growing too, as several countries continue multibillion-dollar investments to modernize their own aviation and defense industries and enter the markets on competitive terms.

Many nations, including China, India and Brazil, are trying to take advantage of the changing conditions and develop their own industries to compete with established rivals.