Talk about taking flight. Closing in on almost a two-year high, a major Dow component is leading the aerospace and defense industry as investors take an optimistic outlook on the sector and related exchange traded funds (ETFs).

The Standard & Poor’s Aerospace & Defense Index increased to a yearly high on Thursday as aircraft maker Boeing Co. (NYSE: BA) was on track for its highest close since June 2008, reports Karen Jacobs for Reuters.

Commercial aerospace companies have been gaining strength recently on news that passenger traffic is on the climb. Wayne Plucker, a senior industry analyst at Frost & Sullivan, believes that carriers will likely want to acquire more efficient airplanes to offset the increasing costs of oil prices. [Aerospace and Defense ETFs Benefit from Diversification.]

Boeing’s stock surged 30% this year and defense industry leader Lockheed Martin Corp (NYSE: LMT) jumped 14%. Other aerospace and defense company’s like suppliers Goodrich Corp (NYSE: GR) and L-3 Communications Holdings Inc (NYSE: LLL) have shown improvements.