FLUG REVUE update: Week ending March 25, 2001

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UPDATE

Week ending March 25, 2001

+++ Mir splashes down in Pacific +++ A340-600 rolls out +++ Loss for EADS +++ CargoLifter to get GE engines +++ News in brief +++

Mir splashes down in Pacific
Absturz der Mir wie geplant

The Russian space station Mir plunged into the South Pacific at 7:59 a.m. on March 23 in a real non-event. Russian mission control firing its engine three times to guide its descent to Earth, the Russian Aerospace Agency said. The world's first manned space station splashed down in an area east of New Zealand centering on 40 degrees south latitude and 160 degrees west longitude -- northeast of where it was initially scheduled to fall to Earth, the agency said. The 135-ton Mir passed over Japan at around 2:30 p.m. Japan time (8:30 a.m. Moscow time) at a height of 163 kilometers before falling into the South Pacific and no damage from falling debris was reported.

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A340-600 rolls out
Vorstellung der A340-600

At a roll-out ceremony held in Toulouse on March 23, Airbus presented its longest and largest airliner yet: the high capacity, long range A340-600. Customers, suppliers and media from all over the world attended the ceremony, which focussed on Airbus' guiding philosophy in terms of performance and operating efficiency, innovation, passenger comfort, customer consultation and family commonality.
The first new aircraft to be "revealed" in the third millennium, the A340-600 was launched in December 1997 alongside its sister aircraft, the ultra-long range A340-500. Designed in close collaboration with airlines - many of whom were present at the ceremony - these two airliners will further extend the attraction of the market-leading A330/A340 Family. Longer, larger, farther, faster, higher, quieter and smoother, the A340-500/-600 take advantage of the latest proven technologies to deliver the ultimate in long range air travel. Both new versions are powered by Trent 500 engines from Rolls-Royce. With 127 firm orders and commitments from eleven customers, the A340-500/-600 are clear leaders in their category, with 59 per cent of the market at the end of 2000. The A340-600 will make its first flight in late April 2001 and will enter airline service in mid-2002.

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Loss for EADS
EADS im Jahr 2000 mit Verlust

At its Annual Press Conference in Amsterdam on March 19, the EADS reported pro forma EBIT of EUR 1.4 billion for the full year 2000. This is an increase of 11 % compared to the 1999 pro forma figure of EUR 1.26 billion, adjusted for the financial gain of EUR 182 million from the disposal of Sextant in 1999. This 2000 EBIT figure already includes a EUR 152 million deduction for restructuring costs relating to the Defence and Civil Systems division, EADS headquarters, and the Space division. For the same reasons as in 1999, EADS recorded a negative net income of EUR -909 million including a net financial loss of EUR -1.4 billion due to the impact of a higher US-Dollar exchange rate at year-end 2000 compared to 1999 and the accounting principles applied to hedging positions stemming from hedging procedures used before the merger. As in 1999, this effect has no impact on the cash position of EADS. From 2001 onwards, new accounting rules (International Accounting Standards / IAS 39) will enable EADS to allocate nearly all of those hedges to the corresponding underlying commercial contracts, with the effect of dramatically reducing the volatility of the net income due to varying year-end Dollar exchange rates.
Since the merger in July 2000, the corporate functions of the three founding companies have been combined. Initially, processes and systems were merged in order to unify the new company. Now that the corporate entity is established and this first step completed, the numbers of the headquarters staff, as well as its functions and roles, will be streamlined. With a focus on improving efficiency, EADS intends to significantly reduce corporate headcount, by moving some functions to the operating units and outsourcing or reducing others. The implementation of this restructuring will start immediately and be completed by the year 2002.
The EADS Board of Directors will propose a dividend of EUR 0.50 per share for the business year 2000. Shareholders will have to vote on this proposal at the Annual General Meeting in Amsterdam on May 10, 2001.
As already reported, EADS pro forma group revenues for 2000 increased by 7.3 % to EUR 24.2 billion (1999: EUR 22.6 billion). The record order intake achieved in 2000 amounted to EUR 49.1 billion, up 50 %, showing the exceptional performance of the company. At year-end 2000, the order book reached the record level of EUR 132 billion, an increase of 29 % compared to the 1999 pro forma figure. This order book represents more than five years of business activity.
At the end of 2000, EADS had a net cash position of more than EUR 2 billion, an increase of about EUR 3 billion from 1999. This increase is due in equal parts to the free cash flow improvement and to the capital increase.

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CargoLifter to get GE engines
GE-Antrieb für CargoLifter

CargoLifter Development GmbH has selected GE Aircraft Engines (GEAE) as the exclusive supplier of engines for a new fleet of airships now under development. The potential value of the engine and maintenance agreement to GEAE is worth more than $500 million. Based in Brand, Germany, CargoLifter selected GEAE's CT7-8 turboshaft engine to power the eight-engine CL160 Airship. The agreement with GEAE also includes a 10-year, engine maintenance contract. CargoLifter plans initially to manufacture at least 50 CL160 Airships. The helium-filled Airship, which is 260 meters in length, is designed to carry oversized cargo weighing more than 160 tons at a maximum height of 2,000 meters non-stop over several thousand kilometers. The first engine deliveries are expected to begin in 2002, which will be followed by the first flight of the CL160 prototype. CargoLifter anticipates an Airship production schedule to continue throughout this decade and beyond.

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NEWS IN BRIEF / KURZMELDUNGEN

The Saab-BAE SYSTEMS Gripen team, which is working to develop industrial partnerships in the Czech Republic to support the Gripen new-generation multi-role fighter, has provided important support for the acquisition of the Skoda Electrical Machinery Division of Skoda Energo by FKI Rotating Machines Division, part of FKI plc, the UK engineering group. Steve Jackman, vice president economic strategy at BAE SYSTEMS said: "Our partnership with FKI to support this investment in the Czech Republic will generate millions of dollars in export revenues and secure hundreds of engineering jobs in Plzen. This is another first class example of our ongoing pre-contract offset programme for the Czech Republic. It was as a direct result of our "Partnerships for Prosperity" tour of nine Czech cities, including Plzen, last summer that we were able to assist FKI."
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Metallic foams have enormous potential as structural and functional materials in lightweight designs. One of the new projects of the SAAB-BAE SYSTEMS Gripen AB's industrial cooperation in connection with a future Gripen fighter aircraft contract is focusing on this new material. The Austrian partner in the project is Alulight International GmbH. The ambition of Alulight is to develop and manufacture customer specific and advanced high tech aluminum products. Research into potential uses for metal foams in the automobile industry and other industrial areas and the optimization of the materials and manufacturing processes are within the scope of this project. Metallic foam is at a density level of just 15 to 20 % of the solid metal offering excellent specific properties such as vibration and sound damping, high strength and stiffness, and thermal and electrical properties. Metal foams also have a low environmental impact. The primary goal of the project is to forge alliances between Alulight and Swedish, British, and international industry with a demand for lightweight metal with specific characteristics of aluminum and other metallic foams. So far great interest for metallic foam has been seen in the Swedish automotive area but aerospace applications could prove to be the next important field.
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Assembly of the first operational F-22 Raptor fighter began during a short ceremony attended by U.S. Air Force officials from Tyndall AFB, Fla. - the future home of this particular next-generation aircraft. "We're pleased to begin this, the 20th mid-fuselage we've built since the program began in 1991," Gary Keith, Lockheed Martin Aeronautics deputy program manager for the F-22 said during the event. "With each one, we've learned how to build them more quickly and more cost effectively." Assembly of the mid-fuselage for Raptor 4018, as this F-22 is designated, will take approximately 11 months. Once completed, it will be delivered to Lockheed Martin Aeronautics' Marietta, Ga., facility, where the aircraft's forward fuselage, wings, aft fuselage, and vertical and horizontal tails will be attached and its F119 engines will later be installed. First flight and delivery of Raptor 4018 to Tyndall AFB are tentatively scheduled for early 2003.
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In the early morning of March 14, 2001, the X-40A glided to the runway at Edwards Air Force Base in California, its nose wheel set down smoothly, and the test vehicle rolled to a gentle stop, but no pilot exited the craft, for there was no pilot. The X-40A flew itself, guided by its on-board systems. "It was truly a beautiful sight, and cause for celebration," said Susan Turner, NASA's X-37 program manager at Marshall Space Flight Center in Huntsville, Ala. The X-40A's free flight and landing was conducted as part of the X-37 program, intended to reduce the risk of flight testing the X-37, not from 15,000 feet like the X-40A, but from low Earth orbit. The X-37 is an experimental re-entry vehicle that will enable NASA to test advanced technologies in the harsh environment of space and in returning through Earth's atmosphere. This first successful test of the X-40A by NASA was a big step forward for the X-37 program. Its primary objective was to validate the vehicle's Computed Air Data Systems (CADS), which also will be used in the flight control system of the X-37.
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Northrop Grumman Corporation's Integrated Systems Sector (ISS) has been awarded a $45 million cost-plus-award-fee contract from the U.S. Air Force for the Engineering and Manufacturing Development (EMD) phase of the Global Hawk unmanned reconnaissance system program. Major initial tasks to be conducted include planning of logistics activities and implementation of the Global Air Navigation System/Global Air Traffic Management/Traffic Collision Avoidance System, which will enable worldwide operations. Work under the contract begins this month and is scheduled for completion in February 2003. The Global Hawk program successfully completed its Milestone II decision in a Defense Acquisition Board review on Feb. 16, 2001. Completion of Milestone II allowed the program to enter the EMD phase.
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The Space Shuttle Discovery landed at NASA's Kennedy Space Center in Florida 11:31 p.m. (Pacific time) Tuesday (March 20) when weather improved to permit a Florida landing. NASA's Dryden Flight Research Center on Edwards Air Force Base, Calif., had been alerted to prepare for Discovery's mission STS-102 to arrive at Dryden 1 a.m. Wednesday because of the potential for a weather problem in Florida. The decision to land at Florida was made by NASA mission control at about 9:50 p.m. Tuesday (Pacific time), with the shuttle's de-orbit engine burn started at 10:26 p.m. Mission STS-102 carried the second crew to inhabit the International Space Station, and brought home the first crew after more than four months in orbit. Landing in Florida saves about $1 million in cross-country transportation costs, and can also shorten the turnaround time needed to prepare the shuttle for its next space flight.
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Bombardier Aerospace announced that the Global Express ultra long-range business jet has received Reduced Vertical Separation Minimum (RVSM) approval from Transport Canada (TC), the U.S. Federal Aviation Administration (FAA) and Europe's Joint Aviation Authorities (JAA). Approvals from Transport Canada and the JAA were granted on January 16, 2001, followed by the FAA on January 29, 2001. "We are very pleased with the resounding endorsements from all three aviation authorities," commented David Orcutt, vice-president and general manager, customer support, Bombardier Aerospace, Business Aircraft. "This is an important milestone for the Global Express, resulting from hard work and a strong collaboration with regulatory authorities."
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The U.S. Army has authorized Boeing to begin procuring long-lead items for 35 Egyptian Army AH-64A Apaches that will be upgraded to the next-generation AH-64D Apache configuration. The foreign military sales contract with Egypt is expected to be finalized in the coming weeks. Deliveries are scheduled to begin in 2003. Egypt initially announced its intention to upgrade its helicopters late last year. The total value of the program - including aircraft, ordnance, spares, training and support - is anticipated to be approximately $400 million.
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Following a formal invitation from the four Eurofighter nations (Germany, Italy, Spain and the UK) to The Netherlands to join the Eurofighter programme a visit of great significance is taking place on March 21 and 22. The State Secretary of Defence of The Netherlands, Mr. Henk van Hoof, is today and tomorrow at the EADS facilities in Augsburg and the Eurofighter factory in Manching, Germany. In an unprecedented move, the four State Secretaries of the Eurofighter nations (Germany-Dr. Stützle; Italy-LtGen Garriba, representing Mr. Minniti; Spain-Mr. Moreno and UK-Sir Robert Walmsley representing Baroness Symons of Vernham Dean) are joining the visit. They will host discussions with the Netherlands party and demonstrate their joint commitment to The Netherlands as a Eurofighter partner. The partnership concept for The Netherlands is built on the existing Eurofighter programm "partnership of equals" principle. The Netherlands are offered full partnership in the design of Eurofighter Tranche 3, due to enter service in 2010, with the participation of the Netherlands' industry in the development and production of the aircraft.
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Bombardier Aerospace announced the signing of a Letter of Intent (LOI) with Phoenix-based Mesa Air Group for up to 80 Bombardier CRJ regional jet aircraft. The anticipated deal calls for the U.S. regional carrier to purchase 20 70-seat CRJ700 and 20 86-seat CRJ900 aircraft plus 40 options. The firm aircraft portion of the transaction would be worth approximately U.S.$1.2 billion (Cdn.$1.9 billion). Deliveries of the firm aircraft would begin in the first quarter of 2002 for the 70-seat models and the first quarter of 2003 for the 86-seat CRJs. A definitive agreement confirming the order is expected to be signed shortly. "We are delighted to become the North American launch customer for the CRJ900 aircraft,'' said Jonathan Ornstein, chairman and chief executive officer of Mesa Air Group. "We believe that the new aircraft will precisely match the blended operating, financial and performance needs of both America West and Mesa. This reaffirms our commitment to Bombardier and its family of regional aircraft,'' he said.
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EVA Air of Taiwan is set to become a new operator of Airbus aircraft having firmed up commitments announced in January 2001 for the acquisition of eight A330-200 wide-body aircraft. The contract with Airbus covers a firm order for two aircraft with a further six aircraft being acquired under a lease agreement with GE Capital Aviation Services (GECAS). Deliveries of the aircraft will begin in early 2003 and continue through to 2005. The A330-200s, offering increased cabin comfort, cargo capacity and lower operating costs, will replace eight order generation 767s, currently in service on regional and medium-to-long range routes. EVA Air has selected General Electric CF6-80E1A3 engines to power the twin-engine A330-200s.
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The EUROJET consortium, comprising FiatAvio (Italy), ITP (Spain), MTU Aero Engines (Germany) and Rolls-Royce plc (UK), has received the Technical Certificate for the production standard MK101 EJ200 engine from NETMA -- NATO EF2000 and Tornado Management Agency. The Technical Certificate is awarded after successfully completing the bench and flight certification programme on the production standard engine that powers the Eurofighter aircraft. Production engine deliveries to the four national airframe manufacturers will begin shortly from the four EUROJET partner companies, each of which have already conducted acceptance tests on production engines built on their respective assembly lines.
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SR Technics America Inc., a subsidiary of the SR Technics Group, is inaugurating its new facility today in Palmdale, California. SR Technics will convert more than 50 DC-10 aircraft into modern MD-10 dedicated freighters in Palmdale. The first MD-10 was recently delivered to FedEx. Within a period of only nine months SR Technics managed to find a suitable infrastructure in Palmdale, to establish SR Technics Palmdale, Inc. and to begin with the conversion work. In the near record time of seven months, the first DC-10 was outfitted with a new two-man cockpit - replacing the aircraft's original three-man version - having the most modern technology, including Boeing's Advanced Common Flightdeck (ACF), and new wiring throughout the entire aircraft. In mid-March of 2001 the first rebuilt machine was delivered to Boeing, who will conduct test flights on the aircraft, before handing it over to FedEx.
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The airlines of the Austrian Airlines Group achieved a 4.1 % increase in total passenger numbers in February 2001. Approximately 545,000 passengers were carried on scheduled and charter services. In the face of a slight (2.3 %) decline in available seat kilometres on scheduled services, revenue passenger kilometres increased by 1.1 %, so that the passenger load factor rose by 2.2 percentage points to 66.2 %.
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To cope with its remarkable growth, Algiers-based Khalifa Airways will acquire 18 latest generation Airbus aircraft, including the new ultra-long range A340-500, which can fly further than any other planned or in-service airliner. The deal covers three four-engine A340-500s, five widebody twin-engine A330-200s and ten single-aisle A320s. Deliveries of all these aircraft are scheduled to begin in 2004. Khalifa Airways will start incorporating the A320 in its fleet as early as next month with two leased aircraft.
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Having accomplished the initial phase of combining the corporate functions of the three founding companies, EADS Headquarters will now be streamlined to concentrate on tasks as a strategic shaper of the company. The furture Headquarters functions are mainly tofocus on controlling, allocation of financial resources, strategy, coordination of best practises exchange and management of human resources. Therefore purely monitoring and service activities can be reduced or transferred to the operative units. A resolution on this orientation of Headquarters towards the strategic role has been passed by the Executive Committee and approved by the EADS Board of Directors. The employees' representatives and the HQ staff have been informed this week about the principles of this plan. The future EADS Headquarters would require between 430 and 530 staff. This is the result of a study conducted by McKinsey, the management consultants. Up to now, HQ represents roughly 1,100 staff.
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Boeing and Airbus will share their progress and vision for permanent bar code identification with airlines, aviation suppliers, third-party maintenance providers and military logistics interests at two global commercial aviation supplier symposiums later this year. Both Global Aviation Bar Code Forums will be held in conjunction with Frontline Solutions Expo with the first to be held in Amsterdam, Netherlands, in October, and the second in Chicago in November. Airline customers of both Boeing and Airbus asked the airplane manufacturers to implement bar coding on parts that are included in an airplane's readiness log, which is typically a listing of serialized components that are on the airplane at time of delivery. Boeing and Airbus have agreed to require the Air Transport Association's (ATA) SPEC 2000 Permanent Bar Code Identification as a standard practice.
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On March 21 Boeing announced several major changes to its corporate architecture: elevating three senior business unit executives to chief executive officers, setting plans for a new, leaner corporate center focused on shareholder value and moving its headquarters to a new location. We are continuing the transformation of this company to focus on creating value for our shareholders," said Phil Condit, Boeing chairman and chief executive officer. "A key element of this transformation is establishing a corporate architecture that continues the attention on operational performance improvements and invests capital wisely in new growth opportunities. Simply put, we intend to run Boeing as a business that has the flexibility to move capital and talent to the opportunities that maximize shareholder value." Boeing also will establish a new, lean corporate center focused on shareholder value. "We intend to take a more global view of opportunities to increase shareholder value," Condit said. "Our lean corporate staff will focus on new business opportunities for Boeing while our business unit leaders focus on continuing operational improvements. Boeing has a wealth of opportunities in our new definition of the aerospace industry. Our new corporate architecture will help us capture them." Boeing is seeking to locate its new headquarters in a culturally diverse city that: offers ready access to global markets, provides a strong pro-business environment, and allows easy access to major Boeing operations and customers. Boeing has three metropolitan areas under consideration for its world headquarters: Chicago, Dallas/Ft. Worth and Denver. The company hopes to have site selection made by early summer and have an operational center in its new headquarters by fall. Boeing expects that the new corporatecenter will have less than half the 1,000 employees currently working in the Seattle location.
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On March 18, 2001 a Sea Launch Zenit-3SL rocket successfully lifted off from the Odyssey Launch Platform on the Equator at 2:33 p.m. PST, placing the XM-2 digital audio radio satellite into Geosynchronous Transfer Orbit (GTO) for XM Satellite Radio (Nasdaq: XMSR). Named "Rock," the satellite is the first of two of the most powerful spacecraft ever built by Boeing Satellite Systems, the world's leading provider of commercial communications satellites. Sea Launch will immediately begin preparing for the launch of the second satellite, XM-1, called "Roll," for launch in May, bringing "Rock and Roll" to the far corners of the continental United States.
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The U.S. Air Force's Global Hawk unmanned aerial reconnaissance system, developed by Northrop Grumman Corporation's Integrated Systems Sector (ISS), has successfully completed a milestone flight across the equator that set pending world records for altitude and endurance by an autonomous, unmanned jet-powered aircraft. Global Hawk, a high-altitude, long-endurance system under development to provide military field commanders with high-resolution, near-real-time imagery of large geographic areas, reached an altitude of 65,191 feet during a 30-hour, 24-minute flight. A representative of the National Aeronautic Association (NAA) was present for the landing, and the NAA is evaluating the flight data to confirm the world records. In February, the NAA named Global Hawk the winner of its prestigious Collier Trophy as the top aeronautical achievement of 2000.
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The first firings of Matra BAe Dynamics' Advanced Short Range Air-to-Air Missile (ASRAAM) from an F/A-18 have taken place at the United States Naval Air Warfare Centre - Aircraft Division, Patuxent River, Maryland, USA. The unguided firings, carried out between 1st November and 31st January, were part of a series of weapons separation tests by the United States Navy intended to clear ASRAAM for F/A-18 wingtip employment under a programme funded by the Royal Australian Air Force. Initial analysis of all three firings indicated clean separations with no adverse characteristics, and planning is now under way for the next firing before the end of February.
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The Association of Aviation Manufacturers in the Czech Republic (ALV), AECMA (European Association of Aerospace Industries), and the European Commission held a two-day workshop on "Standardisation and Airworthiness in Aerospace" in Prague on 21 and 22 March. The workshop focussed on current activities and future importance of standardisation and airworthiness in Europe, and aimed at supporting further integration of the Czech aerospace industries into the European aerospace industry structure. Over 50 General Managers and Technical Directors from the Czech aerospace industry as well as Czech officials, including representatives of the Czech Civil Aviation Authorities, have attended the workshop, that was supported by the TAIEX Office of the Directorate-General Enlargement of the European Commission. Speakers were standardisation and airworthiness experts from AECMA and AECMA-STAN, Airbus Industrie, Dassault Aviation, EADS, Lufthansa and the Czech industry as well as a specialist from the European Commission's Enterprise Directorate-General.
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Hawker Pacific Aerospace announced that on March 16, 2001, Lufthansa Technik AG ("LHT") converted into equity approximately $9.8 million of debt and accrued interest owed to it by Hawker Pacific. The conversion was executed pursuant to a February 6, 2001, debt exchange agreement between the parties. The conversion rate of $3.125 per common share was set equal to the then-current market price, and was determined by the average of the closing bid prices on the five trading days immediately preceding the date of the agreement. Based upon this conversion rate, LHT was issued 3,136,952 shares of the Company's common stock. As a result of these transactions, LHT now owns or controls approximately 67% of the outstanding common stock of the Company.Philip M. Panzera, executive vice president of the Company, stated, "This conversion has helped to strengthen the Company's balance sheet, and is also expected to save the Company over $1 million of interest expense annually. In addition, it has had the effect of increasing the Company's net tangible assets by approximately $7.2 million, which will assist the Company in complying with the Nasdaq continued listing requirements. The Company is grateful to LHT for its continued assistance and financial support."
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