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Honeywell reports sales gains and downplays effect of 737 issues

US aerospace giant Honeywell has reported strong gains in first quarter 2019 aerospace sales, with executives predicting little impact from Boeing’s reduction of 737 Max production.

“Based on our customer’s current production schedules, we do not expect a significant impact in our 2019 results,” Honeywell chief financial officer Greg Lewis says of Boeing on 18 April.

“We have numerous systems” on the 737 Max, adds chief executive Darius Adamczyk. “But… the impact for us is negligible, certainly for Q2 and given that just about everybody expects a resolution.”

“We do expect that delivery of these planes and the production rates to resume in the second half of this year,” Adamczyk adds.

Seattle-based Boeing reduced 737 Max production in mid-April to 42 aircraft monthly, a 19% cut from the previous 52 aircraft-monthly rate. The company slashed production following the global 737 Max grounding.

In the first quarter, Honeywell’s sales of equipment for new commercial aircraft increased 9% year-on-year to $759 million, while commercial aviation aftermarket sales jumped 7% to $1.4 billion.

Honeywell’s space and aerospace defence sales surged 12% to $1.2 billion.

CFO Lewis attributes gains to increased shipments of products to business jet makers Gulfstream, Dassault Aviation and Textron.

He notes particularly strong demand for avionics used in the cockpits of Dassault F900 and F200 business jets, and for engines used in the Textron Citation Latitude jet. Honeywell makes the Latitude’s auxiliary power unit.

Additionally, the US government’s mandate that aircraft have ADS-B location systems by 2020 drove increased demand for ADS-B equipment, Lewis adds.

Despite those areas of strength, Honeywell’s 2018 divestiture of an engine turbocharger division pushed down its total first quarter aerospace sales 16% in one year, to $3.3 billion. The aerospace unit posted a profit of $838 million in the first quarter, down 6% from the same period last year.

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