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Aviation History
2004
2004-09 - 1439.PDF
BUSINESS RESULTS ANDREW DOYLE/ LONDON Strong half supports bullish giants Results from Boeing and EADS back upbeat civil aerospace predictions, but space continues to cause concern Boeing and EADS have under pinned their bullish predictions of a civil aerospace recovery with strong financial performances in the first half of 2004, but neither can foresee any recovery in the depressed commercial space sector. EADS warns that surging first- half profits at its Airbus division will be tempered by fewer deliver ies of more lucrative widebodied airliners in the second half. A 58% increase in earnings before interest and taxes (EBIT) at Airbus during the first six months of 2004, to €982 million ($1.2 billion), helped EADS lift overall EBIT by 66% to €985 million. Airbus revealed at last month's Famborough air show plans for a production ramp-up to meet rapidly rising demand (Flight International, 27 July-2 August). A €56 million profit at the Aeronautics division was cancelled Ring: stands by forecast out by red ink at Space and Defence and Security Systems. EADS chief financial officer Hans Peter Ring is sticking by his forecast that all divisions except Space will achieve their targeted 10% EBIT margins by 2006. Ring says the defence businesses traditionally post stronger performances in the second half as governments tend to close contracts before the turn of the year. UK foot-dragging over the sec ond tranche of Eurofighter Typhoon procurement continues to give cause for concern, but Ring is confident a deal will be struck in time to prevent a production hia tus (Flight International, 27 July-2 August). "We honestly do not expect that we would run into that situation," he says, "but it would really become very serious if we further delay the whole process." The heavily restructured Space division finally broke even in the second quarter but "will remain under pressure in terms of margin", says Ring. Based on its first-half perfor mance, EADS is raising its full-year EBIT forecast from €1.93 billion to €2.1 billion. Boeing meanwhile managed to turn in a $1.47 billion first-half operating profit, compared with a $695 million deficit for the same period last year. Integrated Defence Systems (IDS) posted strong growth in revenues and operating margin and saw its backlog boosted after winning the US Navy's $3.9 billion Multi-mission Maritime Aircraft programme. Loss-making Launch and Orbital Systems, part of IDS, saw second quarter revenue decline 13% due to "continued weakness in commer cial space markets". Boeing Commercial Airplanes handed over 151 aircraft in the first half, six more than the same period last year, but revenues dropped 4% because of a higher proportion of nanowbody deliveries. ACQUISITION Finmeccanica seals GKN agreement Finmeccanica has signed a final agreement with GKN for the acquisition of the UK company's 50% stake in AgustaWestland. The €1.56 billion ($1.89 bil lion) deal remains conditional, on approval by GKN's share holders and on achieving the necessary regulatory clear ances, and includes €52 million to be held in an escrow account, to be repaid to Finmeccanica if the Future Lynx contract is not awarded to AgustaWestland by the UK Ministry of Defence. Completion of the transaction is expected by the end of the year. Finmeccanica chairman and chief executive Pier Francesco Guargalini says the deal "fits per fectly into our strategy to internationalise our exposure to defence budgets and to increase selectively the dimensions of our core aerospace and defence business". STRATEGY GRAHAM WARWICK / WASHINGTON DC BAE's Platform promises solutions as it strides to transatlantic goal Formed a year ago, BAE Systems' Platform Solutions sector is making progress towards its target of becoming a truly transatlantic busi ness. That progress is paced by the ability of military customers in the UK and USA to see clear benefits from co-operation and relax tech nology controls. Platform Solutions was formed to bring the capabilities of BAE's UK and US avionics businesses to bear on opportunities on both sides of the Atlantic, to the extent allowed by each country's technol ogy transfer restrictions. The opportunity to form Platform Solutions came when undertakings attached to BAE's 1999 merger with GEC-Marconi lapsed. "We looked at different models to get the best value out of the business," says Dean McCumi- skey, vice-president, business devel opment. "It is a different model to BAE itself." Rather than place the UK com pany's Edinburgh, Plymouth and Rochester avionics operations into the planned EuroSystems joint venture with Italy's Finmeccanica, BAE decided to put them under the umbrella of its North American subsidiary. "We have revolu tionised part of the organisation by having a piece of the UK report to the USA," says McCumiskey. "The reason is growth." Platform Solutions has annual sales of $1.1-1.2 billion, divided roughly equally between the UK and USA, where growth is highest. The former Marconi Avionics site in Rochester is "almost a North America-facing business", says McCumiskey, because of its head- up display and other sales, but "also has a large incumbency on the [Eurofighter] Typhoon". Through its UK and US arms, Platform Solutions has the lion's share of the military fly-by-wire market, the former Lear Astronics, Lockheed Martin and Marconi Avionics flight controls businesses now under one management. BAE's task now is to break down the barri ers between the UK and US markets. Platform Solutions is looking for programmes that benefit from bringing technologies together from both sides of the Atlantic. One such programme with "huge poten tial" is a US Air Force project to test a day/night all-weather landing sys tem for transport and rotorcraft on a Boeing C-17. This combines a US millimetre-wave imaging radar and a UK helmet-mounted display. "It plays to the strength of each side," says McCumiskey, who believes co-operative programmes will lead to greater UK-US technol ogy exchange. "We believe any thing non-classified should be accessible. But there has to be a clear benefit or things will stay where they are." 20 3-9 AUGUST 2004 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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