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Aviation History
2004
2004-03 - 0024.PDF
BUSINESS OUTLOOK ALEXANDER CAMPBELL/ LONDON Network centric warfare to keep datalink demand high Analyst report says "prohibitive" installation costs likely to restrict actual sales growth lliiMiaHHHH • Stephen Young has taken over as Meggitt's group finance director, succeeding Chris Rickard, who has resigned. Young was formerly group finance director of Thistle Hotels. Meggitt has also added Peter Hill, chief executive of Laird Group, to its board of directors. • Vagn Sorensen, chief execu tive of Austrian Airlines, succeeds British Airways chief executive Rod Eddington as chairman of the Association of European Airlines for 2004. • Patricia McMahon, formerly head of the BAE Systems plant in Greenlawn, New York, has moved to Northrop Grumman as leader of electronic warfare programmes. • Albert Koszarek, chief operating officer of Aeroxchange, will take over from chief executive Terrence Rendleman next month. Eurocopter aims in 2004 to improve its customer service and its rela tionship with suppliers, two of its "less strong points", says chief executive Fabrice Bregier. He never theless predicts that 2004 will be a "good year" for the company. Bregier says customer support is a "high priority " for Eurocopter because of the growing in-service fleet and competition from outside providers. He adds that Eurocopter is increasing its stock of spares to "significantly decrease the time needed to make parts available". This year the group will also set up a purchasing policy to reduce dollar-euro exchange rate risks. The continuing drop in the value of the Swiss International Air Lines has appealed to its shareholders for more funds, as negotiations on an emergency credit line run into their eighth month with no sign of an imminent deal. Since June last year, the airline has been negotiat ing with banks in Switzerland and abroad for a credit line believed to be worth up to SFr500 million ($395 million). This was originally intended, the airline said, to cush- The trend towards network centric warfare will create an insatiable demand in Europe for tactical radios and datalinks, with the only limit being tight national defence budgets, says a report by analyst Frost & Sullivan. As air forces focus more on intel ligence, surveillance and reconnais sance (ISR), the demand for high- bandwidth communications, to allow the data they gather to be used immediately, is likely to soar in the next 10 years, the report says. Although military aircraft num- ion the weaker 2003-4 winter period. In August, the airline said it would need the credit line by the end of 2003, and has since announced a need for more cash. Its appeals to shareholders for additional cash have met with a mixed response. State-owned tele- coms operator Swisscom has agreed to provide support in the form of a loan, as long as other investors join in, and as long as the new loan bers are falling in Europe, the report says, "fortunately, the cost of communications on a platform is exorbitant and...the market is fore cast to remain steady despite a downturn in numbers". Aircraft datalink systems are also in high demand, but here, as well, their extremely high cost will come into play. Frost & Sullivan points out that actual sales growth will be only 3.52% a year, due to the "pro hibitive" cost. While the datalink units themselves are falling in price, the cost of installation and interfac- remains "a fraction of the SFrlOO million" which Swisscom initially invested in Swiss. Other investors have also agreed to join, including 6.8% shareholder AMAG, which agreed to provide SFrlO million. But neither of the two largest private shareholders, Swiss banks Credit Suisse and UBS, have so far offered additional investment. Both are already involved in the talks for the new credit line, with ing remains high, limiting potential sales, the report warns. Hardware installed in the near future is likely to be superseded by more-versatile software-defined radios after 2010, although the technology remains "very immature". The report adds that, while the market is dominated by established military suppliers like Marconi/ Selenia and Thales, commercial suppliers will increasingly chal lenge them, using advances in civilian technology and communi cations to compete. UK banks Barclays and Halifax also believed to be involved. "We are already negotiating on the credit facility. It makes no sense to invest in both sides," UBS says. In its last set of results, for the quarter to 30 September, Swiss announced it had SFr615 million in cash and equivalents, down SFrl57 million over the quarter. The full-year results for 2003 will be released on 23 March. STRATEGY CHRISTINA MACKENZIE / PARIS Eurocopter aims to tackle supplier relations and exchange rate risk BAIL-OUT Swiss appeal to shareholders for more cash gets mixed reaction dollar against the euro has cost us a few tens of millions of euros", he says, but this will not affect the 2003 results, thanks to hedging policies. Eurocopter does not publish finan cial results, as they are incorporated into those of parent EADS. "Within two to three years we ought to be able to balance our dol lar spending with our dollar income," says Bregier, by increas ing supply purchases from countries with currencies tied to the dollar. About a third of Eurocopter's income is in dollars, he says. Eurocopter's profits nevertheless grew about 20% in 2003 on turnover of €2.61 billion ($3.23 billion), a 4% rise on the year before. "We were Bregier: customer support a priority expecting this figure to be lower," says Bregier. Eurocopter sold 293 new civil and military helicopters in 2003 which represents 45% of what Bregier terms the "accessible" market in terms of numbers. This excludes the US military market. Eurocopter also sold 49 secondhand heli copters. The breakdown in the value of total orders between military and civil was exactly 50:50 in 2003. In the civil and parapublic sec tors, where Eurocopter holds a 53% market share in terms of value, Bregier says a "satisfactory recov ery" was made in the second half of 2003 after a slow first half. He expects 10% growth this year. 22 27 JANUARY - 2 FEBRUARY 2004 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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