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Aviation History
2000
2000 - 0027.PDF
core expertise in aerospace manufacturing at the primary level is overwhelmingly that of sys tems integration. Paradoxically, manufacturers are moving away from "making" and focusing on "integrating" to turn a profit. Significandy, it was BAe's systems capability that was most advanced by the MES deal. Saab's planned merger with Celsius will improve it further - making the new "BAE Systems" tag logical. Although the focus may be on housekeeping at primary level, merger activity will continue down the aerospace hierarchy. As primes retreat from metal-bashing and become systems inte grators, first and second tier players are them selves presented with opportunities to be had via consolidation. First tier suppliers need to offer subassemblies that primes can bolt-on intact - hence AlliedSignal's initial opposition to a BFGoodrich-Coltec merger making possi ble combined landing gear/brake offerings. AlliedSignal, in turn, pulled off the biggest deal of the supplier-level consolidation so apparent in 1999 by teaming with Honeywell and boosting its avionics abilities. The trend will continue, although less dramatically, in 2000, while down die hierarchy- away from the household names - die number of mergers is likely to increase as a ripple effect takes hold. A development that all observers expect next year is the restructuring of Airbus. The four- « partner path to single corporate entity (SCE) status was rendered redundant by the Dasa- CASA and Dasa-Aerospatiale Matra deals, so that the transformation of the consortium is now a matter to be solved by EADS and BAE. The patJi to an SCE should now be smoother, but hurdles remain. BAE's 20% holding in die business makes it a junior partner, but having decided to remain in civil manufacture despite its defence bent, the UK company wants to secure a larger holding to reflect the value of its wing operation. Should that aim be thwarted, it is possible that BAE could exit Airbus, selling its stake to become a "super-contractor". Militarily, Europe needs to tackle outstand ing fighter questions. Eurofighter is the key project, but with ownership split between BAE and EADS, control of Alenia's stake could be vital. Two other fighter offerings - the Saab/ BAE Gripen and Dassault's Rafale -complicate matters further, especially with Dassault ques tioning its Aerospatiale link, post-EADS. In the longer term the Joint Strike Fighter programme (see defence forecast p29) will have major implications for manufacturers, with engineering, manufacturing and development selections due in 2001. J AIRLINES Global alliance- forming is nearing its endgame CHRIS JASPER/LONDON THE DOMINANT trend in the airline industry in 1999 was the continuing expansion of global alliances, taking place against a background of varying financial performance: the USA faring well, Asia begin ning to recover from its slump, but Europe suffering a downturn. Over the next 12 months alliance-forming will continue as the process reaches its endgame, most major carriers having commit ted to one alliance or another, while Asia looks set to continue its financial rebound and some European airlines are on course for a sharp fall in profits. The Star Alliance and oneworld are still rel atively new constructs, yet seem to have been around for many years, so successful have the two major alliances been in sweeping all before them. Lufthansa/United Airlines-led Star's membership is now well into double figures, shattering a cap on numbers the alliance had set, and it has relaxed its opposition to investing in potential new recruits. Oneworld, led by British Airways and American Airlines, has also added members, so that other planned alliances trail in the wake of the big two. The alliance forming around KLM of the Netherlands, Alitalia and Northwest and Con tinental Airlines of the USA, dubbed "Wings", has moved some way down the path to going global. KLM and Alitalia have launched plans for operating almost as a single airline in some respects, and Northwest should be brought into the alliance on the same basis next year. Continental remains a problem for the alliance, however, with US regulators having scuppered plans closer links with Northwest. Wings must in any case commit to a full launch in 2000 or risk being left behind. The impact of rising fuel prices Source: Filton Future Projects Office. British Aerospace Note: Fuel as a percentage "of direct operating cost, based on A300-600R mid-range Airbus aircraft, l.OOOnm sector FLIGHT GARETH BURGESS t GRAHAM PARRISH 99 Today s fuel prices Fuel price increased 25% Interest — Insurance . 2.3% I— Depreciation Interest 2.3% 5.9% Depreciation 5.7% Fuel 17.1% ,_ 3.2% 12.0% 30.9% Fuel 20.5% 7.3% 8.2% 6.5% 6.5% Airframe Cabincrew maintenance Cockpit crew Navigation charges Engine Landing fees maintenanc 11.5% 29.7% 7.0% 6.1% 7.9% 6.2% Airframe Cabin crew maintenance Cockpit crew Navigation charges Engine Landing fees maintenanc FLIGHT INTERNATIONAL 22 December - 3 January 2000 25
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