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Aviation History
2001
2001 - 0289.PDF
Mixed fortunes for US primes GRAHAM WARWICK/WASHINGTON DC CHRIS JASPER/LONDON SEEMINGLY unburdened by the post-merger woes afflicting some US aerospace and defence primes, General Dynamics (GD) and Northrop Grumman have reported strong profits for las t year. Lockheed Martin and Raytheon posted mixed results, but Textron saw improved profits from its air craft operations. Boeing, which earlier reported slightly depressed profits on lower sales, is meanwhile reported by Business Week to be considering closure of its 737/757 lines in Renton, Seattle, and their reloca tion to the plant in Everett. Boeing says "looking at our facilities is key to our competitiveness." Lockheed reported a net loss of $519 million for the year, after unusual items, while Raytheon saw income from continuing opera tions slip to $498 million. After losses on discontinued operations, Raytheon's net income dropped to $141 million. Only General Dy namics saw sales increase signifi cantly, to $10.4 billion, mainly via acquisitions. Net earnings were $901 million. Revenues at Lockheed and Raytheon slipped slightly to $25.3 billion and $16.9 billion respec tively, largely because of divesti tures over the year, while Northrop sales were flat at $7.6 billion, although it managed a 30% increase in net profit. The good news for the industry was in cashflow and debt reduction. Lockheed generated a record $1.8 billion in free cash flow and expects to achieve the same over the next two years combined. The company reduced its merger-bloated debt- to-capital ratio to 54%, from 64% in 1999. Northrop Grumman and GD generated almost $1 billion apiece in cash from operations, while Raytheon managed $527 million and saw its debt-to-capital ratio nudge up to 47.9%. GD's fig ure is less than 12%. All four companies ended 2000 with higher backlogs, and with US defence spending due to rise 2-3 % this year, all expect higher earnings. Despite its net loss, Lockheed says it achieved its financial goals last year, improving cashflow, reducing debt and obtaining fair value for its divestitures. Its Space Systems and Aeronautics segments continue to face challenges, how ever. Raytheon says it also met tar gets, highlighting the strong cashflow generated by its Electr onics Systems defence business. Top 6 US primary aerospace manufacturers: Turnover 2000 vs 1999 51.321 -WjJjV Boeing Lockheed Martin Raytheon Northrop Grumman General Dynamics Textron 25,329 25,530 m 16,895 17,201 7,618 7,616 5,420' : 4,331 ^ftt J& •I 2000 ($ m) KS 1999 (S m) Year change (%) Boeing Lockheed Martin Raytheon Northrop Grumman General Dynamics' ?^_4JD19_ •«- 0 10 20 30 40 Profits 2000 (top 6 by turnover) Notes: I includes only Aerospace (Gulfstream) and Information Systems and Technology divisions. 2 Includes only Aircraft (Cessna, Bell Helicopter) division 50 60 70 Textron < -Cjj. -CP-C i££L«X 286 I 3,058 f2,1282 11,2053 519 8J77 1,625 iStr -fiir -tf|r -fSr ^r .QE1. H®. fiNBBNen _5P,_r-iJ2i8 6 1,098<l 975 5 1,329 1,262 Notes: 1 Group figures. 2 Includes non-recurring items. 3 Earnings before interest and taxes. 4 includes pension income. 5 Before accounting change. 6 After restructuring charge. 7 Stated as segment income. • Operating profit ($m) SJ Pre-tax profit ($m) I I Net profit ($m) Year change (%) -1,000 -500 0 500 1,000 1,500 2,000 2,500 3,000 3,50 Source: Manufacturers/Flight Internationa Raytheon Aircraft, which is rumoured to be up for sale, increased deliveries, but fell short of its cashflow target. In contrast, the star performer at GD was Gulfstream Aerospace, which saw earnings grow 2 3 % and operating margins increase to 20%. Northrop believes divesti tures and cashflow leave it well- positioned for its planned merger with Litton, restructured to allow Litton shareholders to take Northrop stock instead of cash. • British European and Aloha leading candidates for Avro RJ-X buy MAX KINGSLEY-JONES EMMA KELLY/LONDON BRITISH EUROPEAN and Aloha Airlines have emerged as the leading candidates to boost the prospects for BAE Systems' Avro RJ-X programme. The two airlines have a combined requirement for over 40 aircraft. British Airways regional City- Flyer Express holds six options for the aircraft, which remain current despite BAJS recently issued region al jet request forproposals, says the manufacturer. BAE has yet to sign a major order ftar the Honeywell AS97 7-powered derivative of the four-engined Avro RJ, launched last March. To date, BAE has secured firm orders for only two aircraft from Druk Air of Bhutan. Exeter, UK-based British European operates 16 examples of the RJ's predecessor, the BAe 146. The airline confirms that it is in talks with BAE regarding the acquisition of sufficient RJ-Xs to replace most or all these aircraft, beginning next year. "We have 'booked' some slots among the first tranche of RJ-85Xs and RJ-1 OOXs," says British European's director of strategy David Attenburrow. "There are still some things to finalise, but we hope to make a final decision in around a month," he adds. Attenburrow cautions that an RJ-X order is not a foregone conclusion, and the airline has sev eral fall back options including the acquisition of second-hand Avro RJs, although he says that "these would not give us the operational and maintenance cost savings that the new aircraft offers." Attenburrow says that discus sions have also been held with Fairchild Dornier and Embraer regarding the 728JET and ERJ-170/190. The airline is also studying 100-120 seaters such as the Boeing 717 and A3 20 family. Hawaiian airline Aloha is under stood to have discussed a deal for up to 24 RJ-Xs to replace its Boeing 7 3 7-2 00s on inter-island services, and is interested in a "QC" cargo door equipped version of the air craft. The airline is also studying the 717 which rival Hawaiian Air has ordered, and acknowledges that it has an on-going regional fleet re-equipment selection. BAE confirms that the airline has been evaluating the RJ-X for some time. Although Aloha is considered a lead contender for an RJ-X order, industry observers sug gest that the carrier has other oper ational priorities at the moment, including monitoring Hawaiian Air's success with the 717. The first flight of the RJ-X from BAE's Woodford, Manchester plant, is due at the end of February, "although this could slip by a few weeks," warns BAE. Deliveries are due to begin in December. • FLIGHT INTERNATIONAL 30 January - 5 February 2001
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