Rudyard Kipling once wrote “If you can keep your head while all around are losing theirs…” and the line could be used to describe the business approach of Terry Twigger, chief executive of Meggitt plc, one of Britain’s fastest growing aerospace companies.

Many executives in the commercial aviation business are already starting to lose their heads, caught up in a doomsday scenario of a sector in freefall, dogged by revenue and cost pressures through high oil prices and fewer people flying. But Twigger is remaining calm – he believes the gloom is currently overstated and that the industry analysts may have got it wrong.

“Of course an oil price of $142 hurts the airlines, and of course there are aircraft being taken out of the fleets as airlines cut capacity, but let’s get it into perspective. It is not terminal,” he says. “We have looked at previous downturns and the worst was post 9/11, when 7% of the world fleet, some 1,100 aircraft, were taken out of service. If that happened again now the impact on our business would be in the region of £15 million ($30m). Now nobody wants to lose £15m off their sales – but on our 2008 sales of £1.1 billion it hardly makes an impact.”

 Terry Twigger

Twigger is annoyed that the analysts who mark down aerospace stock are not looking at the bigger picture. “There are lots of great things happening in this industry and they are happening with Meggitt,” he says.

Certainly the company comes to Farnborough in excellent shape, with the aerospace division having last year generated an 71% rise in underlying operating profit to £158m million ($319m) on a 48% increase in revenues to £528m, thanks to six month contribution from its K&F acquisition..  Civil aerospace revenues increased by 43% and were almost half of the group’s full-year revenues of £878m – a figure that was up by 31% on 2006.

And it is this balance that Twigger believes is keeping the company strong. “Half of our business in civil aviation, 38% is military and the other 12% is a fast-growing side of our business where we are applying the systems and technologies we have developed in aerospace for ground-based industrial application such as power generation and pumping. The same demands for reliability and predictability apply.”

Even in the civil aviation business Meggitt has developed balance with a rapidly growing demand for its products and technologies to the business aviation sector. “This is a resilient part of the industry,” Twigger says. “There is great growth and backlogs are growing. We are seeing the same in the regional market with demand for the new 70-90 seat jets and for turboprops. Meanwhile we see the older 50-seat regional jets going to new markets in the developing world. We are on nearly all aircraft flying so even with this large reduction in the 50-seat fleets we see our involvement grow by 5–6% because of the mix.”

The latest success in the business aviation sector has been the contract award by Gulfstream for both the advanced wheel and braking system on the new Gulfstream G650 ultra-long-range business jet and the engine sensing and ignition package that has enabled Gulfstream to consolidate the sensing systems through a single integrator. Meggitt’s capabilities in sensor and control has long been a cornerstone of the company but an aggressive acquisition programme has seen the Bournemouth, southern England- based business grow the technology development to a “top of the tree” position. “We spend about 8% of our turnover each year on R&D,” says Twigger with some pride. “About 25% of that comes from customers – mainly military – but the rest is out of the Meggitt pockets. But we are a technology company and we need to invest this sort of money to work with customers and refresh our portfolio.”

 G650
 © Gulfstream

Many of the company’s latest ideas will be on display at the Meggitt stand (Hall 3/C8, Chalet C13-14) at Farnborough. They include an electro-thermal ice protection system that removes the need for bleed air leading to greater fuel conservation on the more electric aircraft; new engine monitoring systems that will appear on both the A380 and the Boeing 787 aircraft, and which should provide the most detailed image of engine condition ever provided.

Last year’s $1.8bn acquisition of K&F Industries was applauded by the markets as it brought the braking business together with the Dunlop Aerospace Braking Systems which was acquired by Meggitt in 2004. The two companies have merged into what is being shown at Farnborough as the Meggitt Aircraft Braking Systems.

But it is some of the other parts of that acquisition that is also being viewed with interest. K&F owned the Engineered Fabrics Corporation and that company has been developing suites of fuel tanks for the central fuselage of both fixed wing and rotary military aircraft. These tanks will self-seal within two minutes of damage from 50 calibre bullets enabling the craft and the crew to return to a place of safety without losing fuel. The technology also provides rugged crashworthy fuel tanks in nitrile for combat helicopters. These will not rupture in spite of high impact damage and allows the occupants to escape the aircraft without the danger from fuel leakage and combustion.
With yet another balancing act from Meggitt, business is matched between US activities and the rest of the world with the company making steady inroads into Asia with a manufacturing business in China that is the envy of others.

“We didn’t look at joint ventures,” says Twigger. “We wanted a wholly owned subsidiary and we have local Chinese management in place”. The plant in Xiamen began operations in 2004 has already doubled in size and Twigger is looking at a further 50% increase. “We are manufacturing commercial sensors for the industrial non-aerospace applications and these are products for the Chinese market too. This is not about low-cost manufacture. It is about developing a manufacturing base to support a market.”

The company is also investing in Mexico where it inherited a plant in the K&F acquisition and Twigger sees greater opportunities. “We are developing smart engineering for extreme environments and we are responding to an industry need for critical mass and easier access to more of what our increasingly connected businesses have to offer,” he says. “It is an ambition we are underpinning with consistently high levels of service and common ways of doing business.”

Source: Flight Daily News