Oscar Schwenk, president of Switzerland's Pilatus Aircraft, renowned for developing a range of successful turboprop trainers, says: "We're small, but small is beautiful."
Military trainers have always been Pilatus' speciality, but, with ever-tighter profit margins, the company is working hard to diversify further into civil products. With a record year in 1995, and the prospect of similar success this year, Schwenk's policies in the four years since he took the presidency appear to be paying off.
"When I joined, we were making a living almost exclusively from government-only business, apart from the civil/military Turbo-Porter utility aircraft. Now, with real hopes for the PC-12 family, we're approaching a 50/50 civil/military split". Sales in 1995 totalled SFr350 million ($278 million) and similar figures are expected this year.
Pilatus introduced the 11-seat PC-12 utility single in 1989, and achieved US certification for the aircraft in July 1994. Despite its claimed superior performance and low operating costs, orders for the PC-12 have been slow to materialise. This seems about to change, with sufficient demand to justify production of 36 aircraft this year and 50 in 1997.
"We took a risk with the PC-12 because, to be a real success, it needed single-engined IFR [instrument-flight-rules] certification," says Schwenk. This has been achieved with the Australian and Canadian authorities, and FAA approval is said to be imminent. Europe's Joint Aviation Authorities are being "slow" in following, he adds, but he downplays the impact. "Although there is a market in Europe, it is not one of the most important," he says.
The 1995 selection of the Beech/ Raytheon PC-9 MkII by the US Air Force/Navy for the Joint Primary Aircraft Training System (JPATS) competition has solidified Pilatus' financial position in the medium term, says Schwenk. "It was proof that the turboprop concept was the right answer, even though everyone was saying that it had to be a jet," he adds. He was "sad", however, that last-minute pressure from US manufacturers meant that the plan for Swiss-based production of some of the 711-aircraft requirement had to be abandoned. "Now, all we will get is royalties...but I'm dedicating that money to research and development, and it will provide a basis for many new ideas in the pipeline".
Schwenk is optimistic that the relationship formed with Raytheon will bear further fruit, saying: "We're looking at where we can go from here, and are discussing how to penetrate the market with our product. I've had very positive meetings with [Raytheon president] Art Wegner". The Pilatus chief emphasises, however, that the original PC-9 retains its place as a strong market contender. "I believe there is a market for both aircraft," he adds.
Prospects for the existing PC-7 and PC-9 turboprop-trainers remain good, although Schwenk declines to be specific. "We're still building the South African and Saudi aircraft, and we're hoping for a significant order from the Far East," he says.
He hints that "...we also have some very good connections in the Middle East". Thailand's follow-on order for 34 PC-9s was a major boost, but Schwenk is not complacent: "The competition is extremely tough. The JPats order showed that the future depends on being able to offer an unbeatable combination of price and direct operating cost," he says.
Despite its 37-year ancestry, the market for the ultra-short take-off and landing PC-6 Turbo-Porter seems to be re-asserting itself. "The PC-6 was around before helicopters became attractive", says Schwenk. "Now, we are getting some of our old customers back because of its low operating costs," he adds. The Turbo-Porter can be used to carry out virtually the same surveillance work as that of a helicopter, at a fraction of the purchase and operating costs. "We don't see any need to change the concept. It's a worldbeater," says Schwenk.
High production costs in Switzerland have been countered by shifting some of the work abroad, where labour costs are lower and manual building techniques are more appropriate for low production rates. Letov, in the Czech Republic, has been building "green" PC-6s for three years, while Portugal's Ogma has been producing PC-12s. "It's been a great success", says Schwenk.
Pilatus retains all of its manufacturing capabilities, however: "We've invested a lot of money in new equipment for automated manufacture, so we're very cost-competitive on a lot of parts," he adds.
The company has also been looking at using some of its cash to acquire airframe-building rivals. Schwenk admits that it has held preliminary discussions with Daimler-Benz Aerospace of Germany over the acquisition of Dornier - now likely to be purchased by Fairchild Aircraft - and looked seriously at purchasing Piaggio's Italian Avanti operation. In 1994 Pilatus failed in a bid to buy Piper Aircraft of the USA.
Pilatus remains totally committed to remaining in the military-training business, says Schwenk: "We're busy investing in aircraft, training packages and training aids, tactics, maintenance and so on. We're also convinced that simulation will become more important as a way of reducing costs. We have some very interesting ideas on that," he concludes.