Murdo Morrison: September 2010 Archives

With just over two weeks to go to NBAA in Atlanta, there are mixed signs about the strength of the business aviation recovery. The downturn has been longer and deeper than most manufacturers and experts predicted two years ago, with some segments - particularly at the lighter end - stubbornly refusing to show signs of life.

A lot of this has to do with the state of the secondhand market. The output boom of the mid to late 2000s - much of it fuelled by speculative purchasing and charter and fractional start-up ventures - has led to a glut of used aircraft on the market searching for buyers. This has meant that, despite the slow economic recovery, manufacturers such as Cessna have been unable to increase production, fearing that pushing more new equipment onto the market will simply depress residuals further and widen the gap between list prices and those of nearly-new aircraft.

But there are signs of returning confidence. Bombardier - less affected than Cessna because its larger jets, which have longer lead times and are produced in smaller volumes, have been more resilient to the downturn. Its Global and Challenger ranges also have a broader appeal in regions that have come out of the global doldrums faster than Europe and North America, including Asia and the Middle East.

Now comes confirmation that the Canadian company will revamp its Global range at NBAA. At the smaller end, the former Grob SPn - cancelled when its main investor pulled out in 2008 - could be back in business, with news that turboprop specialist Daher Socata is evaluating the composite light jet with a view to using the design to launch its own jet programme. There has also been Turkish interest in reviving production of the Eclipse 500.

As always NBAA will be a barometer of how robust the recovery is. Flight International's 12 October issue will have a 30-page business aviation special, which will include an in-service report on operator experience of the Embraer Phenom 100, a cutaway celebrating the Gulfstream business jet family, a flight test of the Cessna Citation CJ4 and features on avionics, upset training, in-flight entertainment and much more.

The latest issue of Flight International (28 September) includes our report on Swiss aerospace. We visited state-owned aerospace and defence champion Ruag, business aviation services giant Jet Aviation and tool machining manufacturer Starragheckert among others. We also look at the state of Switzerland's airborne forces following the country's decision to shelve its fighter replacement contest. Read about what makes the Alpine nation's industry tick here.

Dassault has given its Falcon 900 trijet extra legs with its latest 900LX version. In production now and replacing the 900EX, Flight International will be running a cutaway of the aircraft in our 30 November pre-MEBA Middle East business aviation special.

I was at Dassault's headquarters and design centre in the Paris suburb of St Cloud last week to talk to some of the engineers behind the programme - the main feature of which is the addition of Aviation Partners winglets. Our 30 November issue will include the accompanying technical description, as well as a flight test by Peter Collins.

Our test pilot Peter Collins may be used to flying highly-sophisticated fast jets from his days in the military. But in this week's issue he takes a pootle over the Alps in one of the oldest general aviation types still in production, the Pilatus PC-6.

This PC-6 though is a long way from the piston-powered utility which first flew over half a century ago. With the piston engine long replaced by a Pratt & Whitney PT6A-27 turboprop and the latest version equipped with the latest Garmin flightdeck, the land-and-take-off-almost-anywhere Turbo Porter is an easy-to-fly and extremely versatile beast, Collins concludes.

Read more about what he thought here or buy this week's issue for the full picture-packed report.

I went for the first time to the Business and General Aviation Day at Marshall Airport Cambridge on Tuesday and was very impressed with what is a great networking opportunity for mostly brokers and suppliers in the UK business aviation community. Although the exhibition - in one of the Marshall hangars - was modest, the impressive static, with an Embraer Lineage 1000 and two Phenom 100s, as well as a couple of Cessna Mustangs, a Gulfstream 200 and a few helicopters, gave the impression of a mini-EBACE.

Thanks to FlairJet, I had the opportunity to make the 20min flight from Oxford to Cambridge on a Phenom 100 (see my story about rivalry between the two Oxbridge airports here). It was the first time I'd flown on the very light jet - the Oxford-based operator's third - and I was very impressed with the cabin and ramp appeal of the Brazilian jet. There is plenty room in the four-seat passenger area, as well as an extra/lavatory seat (although it would have to be an acute emergency before I considered using the facility just a curtain's width from an industry colleague or complete stranger, though I suppose like the parachute on the Cirrus SR-22 it's just good to know it's there).

I also had the chance to sit in the Mustang. Though also positioned as a VLJ, the Citation is considerably more cramped than the Phenom, and has a bulkhead where the 100's lav is. The Mustang's smaller windows don't help. Although the Mustang has one of the greatest brands in general aviation behind it and has done incredibly well with owner flyers in North America particularly, I do think that the Phenom 100 is an aircraft more suited to the charter market, especially in Europe. Flairjet, the first European operator of both the Phenom 100 and its bigger sister, the 300, appears to be doing well. However, the European air taxi charter market is a very precarious place to be at the moment, particularly at the lighter end. Although things are getting better, banks and other corporates are still wary of being seen to "flaunt" it in private jets and the surge of middle managers, professionals and upscale leisure flyers that the evangelists of the new VLJ/air taxi sector were predicting would emerge three years ago as a new market for lower-end business jets have not quite materialised.

It's not often that you get to see a prang in "slow motion" real time, but that's exactly what happened at the end of the show when exhibitors were manouevering out of the static display. The organisers - equipped with the first remote controlled robotic tug I've seen - were doing a great job of marshalling the aircraft out of what was a very tight space in front of the Marshall business aviation centre. But one truck driver, pulling a temporary cabin, clearly misjudged the height of his load and pinged the blade of an EC-135 belonging to Capital Air Services (pictured), right in front of managing director Michael Hampton, who was not best amused. The blade wobbled for some time. Not had it confirmed, but I suspect the helicopter would have been grounded pending an inspection.

I'm not the biggest fan of the new font, but EADS's rebranding is long overdue. I've written an analysis on the rationale behind the new identity in the 28 September issue of Flight International. This is it:

The branding experts, at last, have triumphed over the politicians. For the first decade of its existence, EADS, or European Aeronautics Defence and Space, laboured under a logo that was as much the product of its politically arranged marriage as its cumbersome name. An amalgam of the logos of its two main heritage companies, the Franco-German-Spanish concern came into being with a brand that had little in common with those of its two best-known businesses, Airbus and Eurocopter.
EADS's image makeover - unveiled on 17 September - sees the group itself and all four of its divisions get a common typeface, and one of them, EADS Defence & Security, a new name, Cassidian. It is much more than a cosmetic exercise. It is a symbolic step in the evolution of EADS from a loose grouping of autonomous businesses with power bases in individual countries into a unified enterprise with a single strategy and chain of command to chief executive Louis Gallois. He will be hoping to finally lay to rest the cross-Rhine tensions that bedevilled the Airbus A380 programme in 2006 and led to the resignation of several top executives, as well as the long-held sceptical view that EADS has been little more than a holding company for its national and divisional assets.
Airbus, Astrium, Eurocopter and the newly-named Cassidian have different coloured logos but are all written in the same 3D, futuristic font and carry the subtitle "an EADS company". It is a big departure particularly for Airbus and Eurocopter, both of which had long-established, and very different, logos. For years, the all-powerful bosses of Airbus and the other divisions used to report only at arms length to EADS chief executives. With this change, Gallois and his executive board are saying firmly to investors they run the show.
EADS has wrestled with its brand image since it was formed in August 2000. The lack of clarity over its identity was a symptom of a much bigger malaise in its corporate structure. Its biggest division Airbus was 20% owned by BAE Systems. EADS itself had two chief executives, each representing one of its two big shareholders, who sat in separate head offices in Paris and Munich, nominally responsible for different chunks of the business. Its Spanish activities were still known as EADS Casa, and its various assets in its four home nations were distinct legal entities.
The A380 crisis - a consequence of the Toulouse and Hamburg centres of Airbus failing to communicate - coupled with a need to slash costs as a result of the weak dollar, sparked a move by the major shareholders, Lagardere of France and Germany's Daimler, to sort the problem once and for all. Gallois was appointed the first single EADS chief executive in 2007 with all four divisional chief executives, including Tom Enders of Airbus, and other chief officers reporting to him. The semi-independent EADS Casa - responsible for military transports and assembling the A400M as well as some Airbus structures - was absorbed into Airbus. Rather than simply consolidate divisional finances, EADS's chief financial officer was given a bigger role in cost control across the entire company.
It was a massive cultural change which probably helped EADS ride out relatively unscathed last year's crises around the A400M programme and the sharp downturn in commercial aircraft orders. The rebranding - details of which EADS managed to keep under wraps - is the final act in the reinvention of Europe's biggest aerospace company as it enters its second decade. The EADS that the 66-year-old Gallois will hand over to his successor is a very different beast to the disfunctional business he inherited three years ago.

First the E-Jets, then its business aircraft family, now a burgeoning defence business centred on the KC-390 transport. Once again Brazil's Embraer appears to have hit upon a winning strategy. Over the past 20 years or so, Embraer has transformed itself from a cheap and cheerful aircraft builder which no one took terribly seriously into a formidable player on the world stage, and each time it has got its tactics right.

Its E-Jets range became the leading brand of regional aircraft because it entered the market just when the lifting of scope clauses made it more economical for US airlines to fly larger, longer-range commuter jets, and customers were demanding a more comfortable in-flight experience. It broke into the business jet sector just as that was growing again in the mid-2000s, developing a family of value-oriented large cabin jets based on its regional aircraft. Its Legacy and Lineage variants appealed to less brand conscious customers in emerging markets who valued cabin comfort and size over range and performance.

Now with the KC-390, Embraer has tapped a widening gap in the market again. Every self-respecting country these days wants a small fleet of transport/tanker aircraft, primarily to meet humanitarian commitments abroad and project force beyond its borders. When the choice is between ageing US and Russian types, and the relatively small transports and large and expensive A400M on offer from Airbus Military, it is clear to see the appeal of the KC-390, which sits in a very practical and affordable niche. Without the burden of Europe's complex A400M industrial infrastructure, Embraer has the added advantage of being able to offer attractive workshare packages to countries such as Portugal and the Czech Republic that have modest, but under-used domestic aerospace sectors. It's a winning formula that should see the KC-390 win more orders beyond the very healthy 54 it has potentially secured from five nations.

Went to a Battle of Britain 70th anniversary commemorative dinner as a guest of Lockheed Martin last week, and stirring stuff it was too. RAF bands and actors reading out extracts from wartime diaries to Churchill's speeches, and all in the splendid surroundings of London's Guildhall, the 800-year old home of the City's fathers, which somehow survived the Blitz along with its neighbour St Paul's Cathedral. Our debt to the Few remains immense, but also, lest it be forgotten, to the Many: from the crews of Bomber Command to the Royal Navy to the anti-aircraft gunners and the Home Guard, to the long-suffering populations of London and the other bombed cities. Their courage and stoicism helped to keep Britain going through its darkest hour.

I'm delighted Second World War history - and particularly the home front - remains a key part of the history curriculum in UK schools. My children, who are learning about the Battle of Britain and the Blitz, had grandparents who lived through it and played - in a small way - a part in Hitler's downfall (my father as an army driver in the Normandy landings and my mother who, as a schoolgirl, gave up her bedroom to child evacuees from the city). Events 70 years ago directly shaped the lives my children live today and we owe our comfortable and free existence to the sacrifice of those who stood up to Germany in 1940.

 As anyone who watches the news or has lived through a natural disaster knows, there is only so much that can be done to tame Mother Nature at her fiercest.

But when the ash cloud from Iceland's Eyjafjallajokull virtually closed down Europe's airspace for a week earlier this year, it was regulators who got the blame for being over-cautious and generally disfunctional in coordinating their response to the problem.

How much have we learned from that experience and what happens when  Eyjafjallajokull or one of her equally volatile neighbours decides to blow their top again? My colleague David Learmount spent last week at a conference on the effects on the volcano on aviation and came away with some slightly downbeat conclusions.

Our knowledge of the effects of volcanic ash remains an inexact science, he says in a Comment piece in this week's issue. Secondly, allowing airlines to take their own decisions whether to fly through low-level volcanic ash, based on available data, as they do with extreme weather, would require a massive mindset change among regulators from pure risk aversion to risk management. Not very likely.

See our 21 September issue for the full story and leader piece or read it here.

As anyone who watches the news or has lived through a natural disaster knows, there is only so much that anyone can do to tame Mother Nature at her most fierce. However, the chaos that descended on European aviation earlier this year as a result of the ash cloud from the Icelandic volcano was blamed as much on the region's overcautious and disfunctional air traffic regulators as the natural phenomenon itself.

What lessons has Europe learned and what happens when Eyjafjallajokull (or one of her equally stroppy neighbours) decides to blow her top again, as many vulcanologists suspect she will in the next decade? My colleague David Learmount spent last week at a conference in Iceland on the repercussions to aviation of the volcanic eruption and has come away with the conclusion that studying volcanic risk remains an inexact science, and that allowing airlines to make their own decisions whether to fly based on available data (as they do with extreme weather) would require a huge mindset change among the authorities from risk aversion to risk management.

Read our story and David's views in our Comment piece in the 21 September issue of Flight International or online here. 

The rather ornate surroundings of the National Liberal Club in Whitehall, London was the scene for the inaugural breakfast launch this morning of Flight International's Top 100 ranking of global aerospace companies. The survey, now in its 13th year, is produced with PricewaterhouseCoopers and the firm's global head of aerospace and defence Neil Hampson hosted the event, which attracted an audience of around 30 opinion formers from industry, banking, private finance and the legal sector.

The survey is published in Flight International this week and can be viewed on flightglobal.com here.

Here's the release that went out with the publication of the survey today:

Following a year of stable revenue and growth, but sharply declining profits in the aerospace and defence industry, Boeing has leapfrogged EADS to reclaim its place as the biggest aerospace manufacturer. This is according to the latest Top 100 survey compiled by PricewaterhouseCoopers LLP ('PwC') in association with 'Flight International' magazine.

Boeing re-gained its position at the top of the rankings as rising sales of its commercial and military aircraft coincided with declines in both areas for its European rivals. Boeing delivered 481 aircraft in 2009, which was a steep increase on 2008's figure of 375 and its defence, space and security division generated some $10bn more revenue than EADS' equivalent businesses.

The survey, which is based on company returns for the previous financial year, showed a 17.3% decrease in collective profits following five years of growth. Sales showed a moderate growth of 0.6% on the previous year, but this is also a much smaller rate compared to 7.1% in 2008 and 13% in 2007.

Neil Hampson, partner and global aerospace and defence leader at PricewaterhouseCoopers LLP, commented:

"Clearly, last year was a challenging year for the global aerospace industry with reduced passenger and air freight demand leading to a dramatic decline in new aircraft orders as airlines looked to preserve cash. These factors, combined with much publicised, widespread programme delays and cost overruns in both military and commercial programmes, has meant the impact on revenues has been quite dramatic - this is the first decline in profits we have seen in five years."

"However, as global economies recover, we expect to see a return to airline demand growth. Globalisation is driving growth in the aerospace and defence industry and as these companies expand their global footprints, a race to capitalise on rising opportunities has begun. The companies that win the race will be those who are able to overcome the new competitive threats and complex operational challenges that doing business on a global scale presents."

Total sales for the Top 100 in 2009 were $558bn, with North American companies accounting for 63% of this total ($352bn) and 49% of the Top 100 companies by number. European companies make up 38% of the Top 100 by number and brought in $177bn worth of sales. The rest of the world is still considerably behind these two regions with combined sales of only $29bn, representing 5% of the total.

Within the Top 100 companies, the defence sector remained relatively robust with revenue growth of 4%. This is an improvement on 2008 when defence growth was below that of civil aerospace and is partly as a result of a shift in defence strategy away from large military platforms towards more intelligence-based and intelligence-support programmes. However, as the commercial market stabilises in 2010, the defence market faces uncertainty with increasing pressure on US and UK defence budgets along with all public sector spending.

Neil Hampson continues:

"The release of the recent US defence review and US defence budget has eliminated some of the uncertainty surrounding upcoming spending priorities enabling strategic decisions to be made around increasing exposure to support activities and unmanned aircraft.

Flight International has been publishing our unique aircraft cutaway drawings since the 1930s and most of the world's truly iconic civil, military and corporate types have been captured in pen and ink beneath their skin over the years. You can browse the full archive of drawings on our web site and buy them from our new revamped Flightglobal Imagestore.

The magazine itself that continues to publish the latest cutaways, some of them all-new aircraft, others latest versions of established types, all of which are accompanied by a technical description or programme update. Our 12 October business aviation/NBAA preview issue has a special poster depicting the family of Gulfstream aircraft.

In 23 November we have the latest version of the venerable Bell OH-58 military helicopter, the armed reconnaisance Kiowa Warrior, followed by Dassault's newest Falcon business jet, the 900LX, in our 30 November preview issue for the Middle East Business Aviation show.

It's a strong end of the year for cutaways with the NATO Alliance Ground Surveillance variant of the Northrop Gumman Global Hawk in our second last issue of the year, 14 December. Rounding off 2010 in our festive issue is another Bell rotorcraft, the US Marine Corps AH-1Z attack helicopter.

Just been to Switzerland to visit some of the country's aerospace companies - large and small - for our forthcoming country special, including RUAG, Acutronic, Sauter Bachmann and Starragheckert.

Driving around the north of the country from Zurich in the late summer, it's easy to imagine yourself in some chocolate box paradise of Heidi-style farmhouses on verdant slopes below snow-capped mountains and expensive lakeside retreats for the super-rich. But amid this Sound of Music landscape are reminders that Switzerland is also an industrial, and industrious, country. Scattered among the small towns deep in Alpine valleys are factories producing some of the best precision-engineered components and equipment for the world's aerospace sector.

Switzerland has never had a heavy-industrial "rustbelt" as such for a number of reasons. One is geography: outside the handful of big cities, most towns in Switzerland are in  the valleys between mountains, which in the days before highways and tunnels were largely self-sufficient and reliant on. Switzerland's defence doctrine has also for hundreds of years been based on having a citizen's militia ready to mobilise in hours. This meant having military assets - together with the infrastructure to support them - scattered around the country, the better to mount a guerilla-style defence of the homeland in the event of invasion. Tanks and aircraft are literally stored inside mountains.

All this has had an impact on the shape of the country's aerospace sector, which - like Switzerland's other industries from watchmaking to confectionery  - brands itself on precision rather than price, and quality over quantity.

Find out more in our report in our 28 September issue.