Significant contract awards covering systems for the Airbus A350 XWB and Boeing 787 as well as other new aircraft programmes will provide "an excellent long-term platform" for revenue stability over the coming years in B/E Aerospace's commercial aircraft segment, chairman and CEO Amin Khoury predicted today.
B/E was recently selected by Airbus to supply galley systems for the A350. The award, valued at more than $1 billion, is the largest ever received by the cabin interiors specialist. Programme deliveries are scheduled to begin in 2013.
The company also holds contracts to equip the A350 and 787 with passenger oxygen systems as well as numerous agreements with international airlines for products on the 787, Boeing 747-8 and Airbus A380. Further revenue solidity is expected to be driven by major new programmes in the business jet segment.
B/E is not immune to current industry challenges. Deteriorating market conditions recently prompted the firm to lower its financial guidance for the remainder of 2008 and the following two years.
Clearly there are shorter-term issues to deal with, but the longer-term outlook is "very good" due to B/E's strategic position on new aircraft types, said Khoury today during a conference call to discuss B/E's third quarter net profit of $51.8 million.
He points out that while the value of B/E's long-term awards currently totals over $2 billion, only a very small portion has been included in the company's record backlog, which at the end of the quarter stood at approximately $2.9 billion, and includes the addition of backlog associated with B/E's recent acquisition of Honeywell Aerospace's fasteners and hardware business.
The B/E chief points out that deliveries of 787 and A380 aircraft - programmes that have experienced delays - are expected to be "substantially larger" in 2010.
Additionally, notes Khoury, even though airlines are delaying retrofit programmes in the face of the current economic slowdown, B/E's expectations for 2010 and 2011 are driven "to a large extent" by the push out of retrofit programmes to those years.
B/E holds over $115 million in cash on hand and a $350 million undrawn revolver. The company believes it has positioned itself "well for this downturn", says Khoury.
Source: Air Transport Intelligence news
