Volvo Aero is focusing on component manufacture and after-sales services in an attempt to counter an expected downturn in business in the second half of this year.

Chief executive Fred Bodin says "2002 will be much, much tougher [than last year]", when the company recorded SKr11.7 billion ($1.2 billion) in sales and a SKr653 million operating profit. Component manufacture made up 38.5% of the business, aviation services 29%, engine services 21%, military engines 9% and land and marine gas turbines 2.5%.

First-quarter results were good "because components are still being made for engines ordered before 11 September", but he expects the downturn to make an impact in the last quarter. Sales in the first quarter were 5% down on the same period in 2001, at SKr2.49 billion.

Bodin says only 80% of aircraft capacity is being used "so there is less need for parts or overhaul". Airlines are using aircraft until they need overhaul, parking them and using another aircraft. "This means there is a build-up of future maintenance needs and it is causing us tremendous problems because there are lots of empty slots in our workshop," Bodin says. Volvo is the second biggest engine overhauler after Germany's MTU, he adds.

Military engines only account for 9% of sales, down by over 80% in the past 30 years, but Bodin says "we hope to supply components to any future joint European fighter".

Source: Flight International