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Aviation History
2002
2002 - 3092.PDF
BUSINESS RESULTS GRAHAM WARWICK / WASHINGTON DC Boeing aims low for 2003 forecast Manufacturer riding slump better than some, with more job losses at Honeywell and falling revenues at Pratt & Whitney Boeing has revised its commercial aircraft delivery forecast for next year to the lower end of previous projections as US airlines defer more orders. The company expects to deliver between 275 and 285 airlin ers next year, narrowing its previous forecast of 275-300, and estimates similar deliveries in 2004. With Airbus forecasting 300 deliveries next year, this confirms that 2003 will see Europe outstrip the USA in airliner deliveries for the first time. With 295 deliveries in the first nine months, Boeing expects to achieve its year-end goal of 380 commercial aircraft. "The delivery forecast is essentially sold out for 2002 and approximately 95% sold for 2003 at the lower end of the range," the company says. Gross orders for 184 aircraft were booked in the first nine months, 18 in the third quarter. The commercial downturn hit several companies. United Tech nologies' Pratt & Whitney division saw revenues fall 1% and operating profit 7% as spares and small engine deliveries slowed, while lower after-market volume at Hamilton Sundstrand dragged Flight Systems segment profits down 4% despite 19% higher revenues on increased deliveries of Sikorsky helicopters. Honeywell is to shed another 3,000-5,000 aerospace jobs by year- end, despite turning around from last year's $308 million third-quar ter net loss to post net income of $412 million. Revenues slipped to $5.6 billion and Honeywell has lowered expectations for the full year. Aerospace revenues were down 7% despite strong defence sales and an increase in business-jet engine maintenance on higher fractional-ownership flying. Boeing is still forecasting rev enues of around $54 billion for the year, but has reduced its outlook for next year from $52 billion to $50 billion - more than half of which will come, for the first time, from defence. Operating margin and cashflow projections have also been revised downwards for next year. Boeing remains profitable despite sharply reduced commer cial aircraft deliveries, reporting third-quarter net earnings of $375 million on revenues of $12.7 billion, down from $713 million and $13.7 billion, respectively, for the same period last year. The downturn at Boeing Commercial Airplanes, where deliveries fell from 120 aircraft a year ago to 73, was offset by increased defence rev enues and earnings on higher C-17, F-15 and Joint Direct Attack Munition deliveries. The company took several charges in the quarter, including $250 million to strengthen financ ing arm Boeing Capital's reserves and revalue investments; $100 mil lion for increased development costs on the 737 airborne early warning and control programme; and $100 million to write down investment in the stalled Teledesic satellite communications venture. Northrop Grumman's third quarter was hit by a $65 million charge to cover development of the integrated electronic-warfare sys tem for the United Arab Emirates' Lockheed Martin F-16 Block 60. The company also booked a $208 million loss on disposal of its Component Technologies sector. These held net income from con tinuing operations flat at $141 mil lion, on third-quarter revenues up 24% to $4.2 billion. General Dynamics performed well, despite Gulfstream falling short of revenue expectations on lower business-aircraft deliveries. Textron's aircraft sector revenues were up slightly on higher sales at Cessna and at Bell, where profitability also improved. ACQUISITION EC approves TRW sale The European Commission (EC) has cleared Northrop Grumman's planned $7.8 billion purchase of TRW, despite efforts by Lockheed Martin to block the deal. The takeover is still under review in the USA, where Northrop Grumman has given the Department of Justice more time to complete its review although the legal deadline for antitrust action has expired. Lockheed Martin claims a Northrop Grumman takeover of TRW's defence and space busi ness will reduce competition for satellite communications and sensor payloads. But the US Department of Defense supports the merger, and the EC has ruled the deal will have marginal effect in Europe. Northrop Grumman still expects to close the deal by year-end, boosting annual revenues to $26 billion. SHARE EXCHANGE Alitalia and Air France come near to agreeing share exchange terms Alitalia and Air France are making progress towards their long- planned share exchange. Corres pondence between Alitalia's man aging director, Francesco Mengozzi, and Air France's president, Jean- Cyril Spinetta, means the swap between the two SkyTeam partners should be completed by the end of the year, according to Alitalia pres ident Fausto Cereti. The airlines will now only exchange 2% of their shares, however, not 3% as previously stated. Given the different capitalisa tion of the two airlines - €2.09 bil lion ($2.06 billion) for Air France and €929 million for Alitalia at cur rent stock exchange prices - a share swap on equal terms seems unlikely. The preferred solution is believed to be an exchange of equal shares, with Alitalia making up the difference in cash. The other option, involving Air France acquiring a greater stake in Alitalia than vice versa, would not have pleased Alitalia shareholders. exchange is the Sanpaolo-Imi group, which holds 2.1% of Alitalia after buying the unsold 22% of an Alitalia capital increase Alitalia's financial adviser on the which it guaranteed. A share swap between Alitalia and Air France on equal terms is unlikely 20 22-28 OCTOBER 2002 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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