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UPDATE 
Week ending July 26, 1998
+++ Matra and Aerospatiale merge +++ European aerospace industry climbs back +++ Earnings drop at Boeing +++ China successfully launches European Satellite +++ Honeywell acquires Dasa airport systems +++ More Asian airlines attempt to stall aircraft delivery +++ First production T-6A Texan II takes to the air +++ News in brief +++

Matra and Aerospatiale merge
Fusion von Aérospatiale und Matra angekündigt

In a surprise coup, Lagardère and the French Government on June 23 announced that they have reached agreement to bring together the activities of Aerospatiale and Matra Hautes Technologies through the contribution of Matra Hautes Technologies to Aerospatiale. The new group will be the leading European company in its industry and will rank as number four in the world after the three American companies Lockheed Martin, Boeing and Raytheon with a consolidated annual turnover in excess of FF 80 billion and employing some 56,000 people.
The businesses contributed by Lagardère will be 100 per cent of Matra Hautes Technologies, the company which contains all of the defence and space activities of Lagardère (being 50 per cent of Matra BAe Dynamics, 100 per cent of Matra Systèmes & Information, 100 per cent of Matra Défense Equipements et Systèmes, 51 per cent of Matra Marconi Space) together with 50 per cent of Matra Nortel Communications.
The new group will be publicly quoted and the introduction of the company to the stock market will provide the opportunity for employees to acquire a substantial number of shares. In addition, the French Government will hold a "golden" share.The principles agreed for the shareholding structure of the new group are the following: Aerospatiale will be privatised and the majority of its shares will be held by the private sector; based on the valuation of its businesses, together with any cash adjustments, Lagardère will hold between 30 and 33 per cent. of the enlarged group in its capacity as the preferred industrial partner and will be the largest private shareholder of the new group; and as defence and aerospace consolidation occurs in Europe, other private sector companies may join as shareholders.
Meanwhile, British Aerospace and Dasa continue their talks on closer collaboration, though reports that these will lead to a merger soon have been denied by company spokesmen.

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European aerospace industry climbs back
Wieder Spitzenresultate für Europas Luft- und Raumfahrtindustrie

According to AECMA, 1997 shows a European Aerospace Industry back at the 1990 peak performance in turnover terms. After an increase in 1996 of nearly 15%, the industry's turnover grew in 1997 by 17%, a combined growth from 1995-1997 of over one third arriving at 55.3 billion ECU. European employment remained stable at 377,500. Whilst having again achieved the peak turnover of 1990, the industry today is fundamentally different from that of 1990. Having gone through years of down-sizing, rationalisation and business re-engineering, the industry today is sharply focused on global competition. Profitability, which is necessary for the survival of any industry, has returned to the sector.
Exports at 32 billion ECU represent 60% of turnover, resulting in a strong positive trade balance for Europe in the Aerospace sector of 18 billion ECU.. The order intake in 1997 was strong, 25% higher than turnover. Initial indications for 1998 show further growth of turnover, as production rates on the civil side are still increasing. If the situation does not deteriorate further, the Asian crisis will only have limited impact on the aerospace business in Europe.
The long term perspectives of the sector look to be promising, with an overall growth annually of 2 to 3% being projected for the next 20 years. Aerospace business is subject to cyclical development, but even there, all indicators point to the present high level of business being maintained at least in Europe through the initial years of the next century.

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Earnings drop at Boeing
Sinkende Gewinne bei Boeing

Boeing, citing reduced commercial aircraft profit margins, says its second quarter net income sank almost 46 percent to $258 million, from $476 million during the same period last year. Sales rose 7 percent to $13.39 billion from $12.34 billion a year ago. Analysts on Wall Street who track the company, were expecting Boeing to report a net income of 33 cents a share. Phil Condit, Boeing chairman and CEO said the second quarter earnings were lower because of reduced commercial aircraft profit margins, including charges totaling $78 million after-tax relating to the planned termination of the MD-11 program and additional late delivery costs associated with Next-Generation 737 aircraft. Boeing said the higher sales were principally due to the increased level of commercial aircraft deliveries. A total of 247 jet aircraft were delivered, compared with 183 in the first half of 1997.
Although commercial aircraft deliveries and sales were higher, the overall profit margin for the commercial aircraft segment was significantly lower due to the model mix of deliveries, production inefficiencies associated with the rapid increase in the commercial aircraft production rates, continued pricing pressures and lower price-escalation trends, the company said. With regard to model mix, most of the sales increase was attributable to the new 777 and Next-Generation 737 programs. Boeing noted new commercial aircraft programs have lower operating profit margins due to higher unit production costs in the early years of a program. Additionally, because of production inefficiencies, extensive changes resulting from flight test and certification requirements, and lower revenue due to the mix of models and lower price escalation, the Next- Generation 737 program has been in a loss position based on the initial program accounting quantity of 400 units. Condit noted that significant progress has been made on the production recovery plan for the Next-Generation 737 program.

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China successfully launches European Satellite
Sinosat mit Long March gestartet

On July 18, China successfully launched the Sinosat-1 telecommunications satellite manufactured mainly by Aerospatiale of France at 17:20 (Beijing time) from the Xichang Satellite Launch Center. The satellite was carried into orbit by the Long March 3B rocket,
marking the first time China has launched a telecommunications satellite produced in a European country with the Long March rocket family. This was the 53rd launch of a Chinese-made Long March rocket. The satellite and the rocket separated 1,495 seconds after launching. Twenty minutes later, initial data from the Xi'an Satellite Monitoring and Control Center indicated that the Sinosat-1 had entered its predetermined geosynchronous orbit at a perigee of 600 km, apogee of 35, 946 km, and bank angle of 19 degrees.
Aerospatiale will be responsible for monitoring and controlling the satellite, which will be positioned at 110.5 east longitude above the equator. The commercial launch service contract was signed in July 1996 between the China Great Wall Industry Corporation and a Germany-based space technology company. The Sinosat-1 is the first commercial telecommunications satellite managed by the Sino Satellite Communications Company Ltd. of China.

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Honeywell acquires Dasa airport systems
Dasa Flughafenbereich geht an Honeywell

Honeywell Inc. has acquired Daimler-Benz Aerospace AG's Airport Systems, an international supplier of airport lighting products and systems, airport information management systems and project services. The Germany-based acquisition includes a lighting business, a visual docking system, airport information management products, a Global Positioning System (GPS)-based landing system and a project management office. The acquisition involves approximately 120 employees and no reduction in workforce is anticipated. The acquisition will strengthen Honeywell Airport Systems, which designs, develops, manufactures and services products for landing aircraft, tracking airport ground vehicles and lighting for airfield and obstructions. Honeywell Airport Systems was formed two years ago as a growth initiative within Space and Aviation Control's (S&AC) Business and Commuter Aviation Systems division. S&AC is the world's leading supplier of avionics for the commercial, military and space markets.

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More Asian airlines attempt to stall aircraft delivery
Auch SIA und Korean Airlines wollen Auslieferungen verschieben

Two more financially troubled Asian airlines are attempting to defer the delivery of new aircraft whilst the region's economic crisis continues. Singapore Airlines wishes to put back the delivery of five aircraft, four Boeing and one Airbus, until 2001. Korean Airlines has an even larger order and wants to delay its purchase of five Airbus and six Boeing aircraft. Engine makers Rolls-Royce, General Electric and Pratt & Whitney will also see their contribution to the production orders held up.

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First production T-6A Texan II takes to the air
Erstflug des T-6-Trainers

The first production T-6A Texan II primary training has made its maiden flight at Wichita. With experimental test pilot Bob Newsom at the controls, the turboprop trainer lifted off the runway at 85 knots, powered by the 1100-horsepower Pratt & Whitney Canada PT6A-68 engine. In the first flight profile, the Texan II reached an altitude of 13,000 feet, and flawlessly conducted a series of flight tests and systems checks.
The U.S. Air Force and U.S. Navy will train all new pilots in the Texan II. The Air Force will activate the aircraft in April 1999 at Randolph AFB, and the Navy in 2002 at NAS Whiting. The Joint Primary Aircraft Training System (JPATS) program calls for more than 700 Texan II aircraft to be built through the year 2014.

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NEWS IN BRIEF / KURZMELDUNGEN

British Aerospace has successfully flown the first flight of a Tornado equipped with AMRAAM (Advanced Medium Range Air-to-Air Missile) with no effect to the aircrafts handling. Modification of the RAF F3s is now under way at RAF st. Athan under the 125 million Pound Capability Sustainment Programme, which will greatly enhance the jets capabilities. The will be able to carry both AMRAAM and the Matra BAe Dynamics ASRAAM. Testing of AMRRAM and ASRAAM integration on the F3 will continue throughout the summer with initial introduction into service scheduled for later this year.
+++
Eurofighter EF2000 prototype DA7 has for the first time jettisoned a 1000 litre fuel tank. The tank was released from the right hand centre wing station at a speed of 350 kts at 5000 ft over the Decimomannu range in Sardinia. According to the company, prototypes DA 1 and DA2 are now in a major lay-up to fit EJ200 engines and other new systems. Total flight time has reached 630 hrs in 750 flights.
+++
Philippine Airlines (PAL), which has already incurred staggering financial losses over the last five years, said that it is facing a worsening financial situation in the new fiscal year. In its preliminary financial statements for April and May 1998, the first two months of the current fiscal year, the PAL said that it suffered a net loss of 391.6 million pesos (9.6 million U.S. dollars). The figure is nearly four times the 101.2 million pesos (2.5 million dollars) loss incurred in the same period last year. The deficit did not include the financial results for the month of June, which is expected to be much worse because of the massive disruption in PAL's operations caused by the illegal pilots' strike starting June 5. The strike, which lasted for 22 days and led to an extensive downsizing of PAL operations, cost the flag carrier some 150 million pesos (3.4 million dollars) per day in lost revenue and additional expenses.
+++
Gulfstream Aerospace Corporation and Kimberly-Clark Corporation have announced they have signed a definitive agreement for Gulfstream to acquire K-C Aviation, a leading provider of business aviation services, from Kimberly-Clark for $250 million in cash. K-C Aviation is the largest independent completion center for corporate aircraft in North America, with annual revenues of approximately $200 million. Specializing in custom work, it also has extensive refurbishment and maintenance operations focused on the high-end of the corporate aviation market. Gulfstream said the acquisition will substantially increase its aircraft completion capacity, support its rapidly growing service business, and give it strong refurbishment capabilities. K-C Aviation's facilities in Texas, Wisconsin, and Massachusetts will also complement Gulfstream's current facilities in Georgia and California to give the Company a nationwide network, increasing convenience and response capability for customers.
+++
Samsung Aerospace has announced a $300-million deal to build main helicopter bodies for U.S.-based Bell Helicopter Textron. Samsung will complete the delivery of 740 fuselages, used to build the Bell 427 helicopters, by the year 2013. A Samsung statement said the company was scheduled to produce an additional 460 finished SB-427 helicopters for sale in South Korea and China. The statement added the project would increase sales by $1.5 million.
+++
At the age of 92, Henri Ziegler has died. He was the first managing director of Airbus Industrie until his retirement in 1975 and is regarded as one of the founding fathers of the European consortium, having been the drivin force behind the A300B design, which was launched in May 1969.
+++
In May and June, the Centre d'Etude de la Navigation Aérienne (CENA) achieved a significant milestone within the joint European Programme fo Harmonised Air Traffic Managment Research in Eurocontrol (PHARE). CENA successfully completed their part of the PHARE Demonstration 3 (PD/3): a large scale ATC simulation exercise aimed at demonstrating the feasibility of air/ground integrated airport departure and enroute air traffic control.
+++
Europes airlines had an excellent year in 1997, with total operating profits quadrupling to a record 1,8 billion US-Dollars, the AEA (Association of European Airlines) has said. International traffic grew by 10,1 per cent, with load factors reaching new highs.
+++
Jet Aviation Handling AG has concluded a deal with British Airways to act as Handling Agent for BA, CitFlyer Express and British Regional Airlines at the Zurich and Geneva airports from November. This will lead to 200 more jobs at the company, as the number of flights handled will rise by 6000 a year.
+++
Frankfurt Airport (20 per cent), in cooperation with Nord/LB (ten per cent) has taken a stake in the Hannover airport, beating a group of BAA and Harpen AG. The stakes were put up for sale by the city and the Lower Saxony state, which want to place more of their holding on the stock market after the year 2000.
+++
Lufthansa and Air New Zealand now offer code share flights from Frankfurt via Singapore to Auckland and Christchurch.
+++

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Previous updates are still available:
Die News der letzten Wochen sind weiter abrufbar:

*July 19, 1998 *July 12, 1998

*June 28, 1998 *June 21, 1998 *June 14, 1998 *June 7, 1998

*May 31, 1998 *May 24, 1998 *May 17, 1998 *May 10, 1998 *May 3, 1998

*April 26, 1998 *April 19, 1998 *April 5, 1998

*January to March 1998 *January to December 1997 *September to December 1996

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Last updated July 24, 1998
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