Commercial Aircraft Sales

737 Is Reliable:

Boeing’s new ‘new generation’ series of 737 jetliners set some records in 1991, among them one pertaining to numbers delivered (215) and another concerning dispatch reliability.

In 1991, the 737-300/400/500 series recorded an average dispatch reliability of 99. 1%, the best in the industry according to the manufacturer. An ‘on time’ departure is defined as one which occurs within 15 minutes of the scheduled departure time. Delays which occur due to problems with the aircraft are taken into account when determining the reliability percentage, and those caused by weather, traffic or other influences unrelated to the aircraft are not.

 Recession Blues:

The recession continues to have an effect on the world aerospace market.

Rolls-Royce, for example, has recorded a 13% drop in aero engines sales in 1991 compared with the previous year, resulting in a $6m (about $A13. 7m) loss for its aerospace business, which accounts for 60% of the group’s turnover.

Rolls-Royce’s overall pre tax profit for the year was $51m ($A116. 8m) compared with $176m ($403m) in 1990. Overall turnover was down by about 15% to $2. 03bn ($4. 65bn). The company’s civil engine orderbook is about $9-4bn, or around 80% of total engine orders, a figure which reflects the general downturn in military spending.

Rolls-Royce says that although annual engine deliveries have doubled in the last five years from around 200 to 400, the spares business which usually quickly follows has not appeared due to the increasing reliability of engines. The result of all this is the loss of a further 3,000 jobs this year in addition to the 7,000 which were shed in 1990.

Despite doubling its profits from commercial aircraft activities in 1991 and an apparently healthy order backlog, Saab has also warned that more orders are needed to maintain full production in the 1993-94 period and beyond.

At the beginning of this year Saab’s firm. order backlog comprised 92 340s and 46 2000s, 14% down on the situation in January 1991. In 1991, Saab received orders for 38 340s but delivered 60, while the new 2000 regional turboprop booked only five new firm orders. Including options, the Saab 2000 orderbook stands at 194, but the company needs some of these to be converted to firm orders in the face of recession induced postponements of orders and deliveries by many airlines. The ‘buyer’s market’ which exists is also forcing prices – and therefore profitability down. The first Saab 2000 delivery is scheduled to take place in the second half of next year.

Another European aerospace manufacturer which has had its share of troubles in recent years is Fokker, although in its case the problems are receding and the future looks good. Fokker was close to financial collapse in 1987, but for the first time in five years it has announced a shareholders’ following a strong 1991.

During the year, sales increased by 19% over 1990 and operating profit improved tenfold. The good result is seen as a prelude to a planned $US250m share issue to help finance the soon to be launched Fokker 70 twinjet regional airliner. The Dutch government has a 38. 1% stake in Fokker, an investment made in 1987 to bale the company out.

Fokker delivered 43 F100 jetliners and 21 F50s in 1991 and received new orders for 17 and 21 respectively. The F100 net figure drops to nine, however, when cancellations are taken into account, a major problem with most manufacturers during 1991 due to the effects of the recession. Despite this, the F100 order backlog stood at a healthy 145 at the beginning of 1992.

The French aerospace industry is also suffering from the combined effects of recession and a reduction in military spending. Turnover fell by 2. 2% in 1991 and is expected to drop by a further 9% next year and 12% in 1994. The result of this will be the loss of 25% of the industry’s business in just four years.

Other figures emphasise the problems: in 1991 export military deliveries were down 33% and the order book was 219% lower at the end of the year than it was 12 months earlier. Additionally, 6,000 job losses are expected this year and for the first time, civil exceeded military sales in 1990.

A similar scenario applies to US manufacturers as well, with 1991 sales of civil aircraft, engines and parts exceeding military sales by a margin of 10%. Civil sales have topped the military twice before (in 1979 and 1980), but not by anywhere like 1991’s wide margin.