Rolls-Royce: 8,000 engines and counting 

 

Rolls-Royce has delivered the 8,000th engine manufactured at its German facility in Dahlewitz, the company announced late last week. Good news in a time of uncertainty for Rolls-Royce and the business aviation industry as the world emerges from lockdown. The milestone engine, a BR725 powerplant, was delivered to Gulfstream and will be installed on a Gulfstream G650ER.
 

Locatedimmediately south of Berlin, the Dahlewitz facility began production in 1995 and today employs approximately 3,000 who assemble the BR710, BR725, and Pearl 15 engines for various business jets as well as the Trent XWB for the Airbus A350. It is also the company’s centre of excellence for business aviation and houses the development and testing facilities dedicated to the new power gearbox for the UltraFan demonstrator programme. 

 

More than 4,700 BR700 family engines have been built since Rolls-Royce started  the programme and the fleet has recorded more than 27m cumulative operating hours. 

 

“We are very proud of this achievement, which comes as the result of 25 years of hard, dedicated work from our Dahlewitz team,” said Dirk Geisinger, director of business aviation for Rolls-Royce and chairman of Rolls-Royce Deutschland. “I’m especially proud of our employees who are committed, even in these unprecedented times, to delivering world-class products and to supporting our global customer base.” 

 

Geisinger noted the unprecedented nature of the current global climate due to Covid-19’s impact. Last month, Rolls-Royce announced it will have to cut 17% of its workforce – around 9,000 jobs. Furthermore, to ensure rapid adjustment, CEO Warren East said that the company aims to make at least half of the job cuts this year.  

 

Despite opposition from unions, financial commentators have recognised the financial necessity of the move. Sandy Morris, an analyst with Jefferies International, said while cuts are an essential step further clarity needs to be provided on the nature of the cost savings.  

 

East said the company would consider taking advantage of the UK government’s Covid-19 Corporate Financing Facility, but he noted it would “be a relatively small amount of funding”. 

 

Rolls-Royce has already taken some steps to guarantee itself extra liquidity by announcing in April that it would suspend its dividend and borrow £1.5bn to boost reserves. Rolls also nearly halved its forecast for engine deliveries this year, and now plans to produce 250, down from its previous estimate of 450 engines. 

 

Meanwhile, earlier this month, James Prater, VP Customer Services Business Aviation with Rolls-Royce, told Corporate Jet Investor’s Town Hallabout the benefits of the manufacturer’s virtual reality training programme for its BR725 engine. Watch his comments here. 

 

 

Textron Aviation deliveries down 44 jets, sales down $262m

Textron Aviation sales were down $262m to $872m  for the first quarter of 2020. It delivered 23 jets, down from 44 last year, and 16 turboprops, down from 44 compared with the first three months of 2019.

Segment profit was $3m  in the first quarter, down $103m from 2019. This was due to the cut in deliveries – partly caused by travel restrictions for customers – and $12 million of idle facility costs due to stopping production and furloughing employees because of Covid-19. An accident in December 2019 also led to delays with composite manufacturing.

Scott Donnelly, chairman and CEO of Textron said:

“Our team is meeting the unprecedented challenges presented by this pandemic with a commitment to the health and safety of our employees and communities while meeting customer commitments. We have taken measures to reduce cost and conserve cash, including temporary plant shutdowns and employee furloughs at many of our commercial businesses. While the effects of COVID-19 on many of our end markets has been unfavorable, Bell and Textron Systems delivered higher revenue and strong margin performance for the quarter in their military businesses.”

Textron Aviation had a $1.4 billion backlog at the end of the quarter.

Brian Foley: business aviation in a word, unsettled

Summing up the state of the business aviation industry in one word. Analyst, Brian Foley, said “unsettled”. He said Covid-19 is having a direct impact upon the industry, citing double digit decline in European business jet activity and the furlough of 7000 employees by Textron. There is no telling how long this pandemic will go on for, Foley said he seen some estimates of six to eight weeks for peak in the US but some as much as several months. Also he added, whether the pandemic turns out to be a short or longer term event could have massive sway on the overall impact.

 

Foley told Corporate Jet Investor: “The thing is, we just don’t know where the end is. You know, where things come back to some semblance of normalcy. I’ve seen estimates for at least in the US to wait six to eight weeks for the peak. And then I’ve seen things in the order of, you know, several months. Say depending if it’s a shorter-term event or a longer-term event, it will have a huge impact on where this thing could go in the more immediate term.”

 

“From what I’ve observed today, we’ve seen that Textron went ahead and, you know, furloughed seven thousand employees, I think, which would conceivably include the production. So, in a sense, if I read the tea leaves, that means they essentially halted production maybe for through May – if you read their press release. So minimum case, I suspect production is shut down there through May. Other than if there’s a principle program like for FedEx or something,” said Foley.

 

On the business jet side, Foley continued: “They’re just taking a wait and see attitude and assuming that some customers will cancel and defer and that they’ll be okay by the end of the year. You know, the situation they don’t want to get into is the one during the last financial crisis where not only Cessna, but others just had ramps full of unsold whitetail aircraft. So, they’re trying to be a little more aggressive in preventing this time. And they’re probably thinking that any kind of penalty fee for a late delivery is a lot less expensive than parking a $25m jet.”

 

Foley added: “They’re doing the conservative thing, I guess, and trying to stay in front of this. And you can bet if Cessna is doing it, the others are certainly looking. And if they haven’t already, you know, at least examining, pausing or slowing down their production right now, the serious period of uncertainty.”

 

The impact is industry wide, Foley concluded: “From WingX numbers in Europe we can see that there is double digit declines in business jet activity which has a direct impact on the industry. Because business jets are being used less, there’s less of a maintenance demand. So, MRO’s are feeling the pinch now. Really any deals that were in the works for pre-owned, or new aircraft, are certainly on hold for now until buyers better understand where this is going. And we just don’t have a direction yet. [Furthermore] the uncertainty just brings the industry a little bit to a screeching halt as far as new sales.”

 

Emiliano Sala: Neither pilot nor plane had the correct licensing to operate commercially

The UK’s Air Accidents Investigation Branch (AAIB) has published its final report into the aircraft crash in which footballer, Emiliano Sala and the pilot, David Ibbotson, lost their lives. It found that neither Ibbotson nor the Piper Malibu, N264DB, held the correct licensing to operate on a commercial basis. It also said that Sala would have been “deeply unconscious” due to carbon monoxide poisoning at the point of impact. The report contains numerous safety recommendations concerning: the carriage of carbon monoxide (CO) detectors; additional in-service inspections of exhaust systems; and the maintenance of flight crew licensing records.

 

Crispin Orr, chief inspector of air accidents at the AAIB, said: “This was a tragic accident with fatal consequences. As we publish our final report today, our thoughts are with the families of Mr Sala and Mr Ibbotson. Today we have made important safety recommendations which, if fully implemented, would significantly reduce the risk of a recurrence.”

 

Orr continued, saying that whilst routine maintenance is vital, it cannot eliminate the risk of carbon monoxide leaks completely. Equipping aircraft with devices that provide warnings of the presence of this odourless, colourless and lethal gas, would enable pilots to take potentially lifesaving action. Therefore, the AAIB is calling for the regulators to make it mandatory for piston-engine aircraft, such as the one Piper Malibu involved in the accident, to carry an active CO warning device.

 

“The chartering of aircraft that are not licensed for commercial transport – so called ‘grey charters’ – is putting lives at risk” said Orr. “We welcome the Civil Aviation Authority’s efforts to stop this practice through their ‘Legal to Fly’ campaign and other interventions.”

 

Industry associations have expressed regret but little surprise at the focus upon illegal charter within the report. The European Business Aviation Association (EBAA), British Business & General Aviation Association (BBGA) and the Air Charter Association (ACA) have collectively said they will intensify their efforts to fight against the issue of illegal charter flights.

 

“This practice threatens passenger safety and gives legitimate providers a bad name, while undermining their financial viability.

  • We will organise a series of dedicated workshops across Europe for operators, brokers and authorities to accelerate knowledge and best-practice sharing.
  • We will roll-out new tools to empower passengers and the business aviation community to look up charter operators, access factsheets, and report questionable operations.

 

“The focus needs to shift to establishing clarity on what defines a private operation and a commercial operation. Compounding the concern, is a lack of clarity on the definition of an illegal charter, but also on who has what responsibility when operating or booking flights,” they said in a joint statement.

 

 

Piaggio Aerospace solicits buyers

Piaggio Aero Industries and its subsidiary Piaggio Aviation have launched an international call for the sale of the brand which has been in administration for the past year. The two companies, currently under Extraordinary Administration, operate under the Piaggio Aerospace brand. Following authorisation from the Italian Ministry for Economic Development, a notice, calling for expressions of interest in the company, was published in a number of Italian financial publications on Thursday 27th February.

 

Piaggio officials have expressed a preference to sell both companies to one new owner. Despite Piaggio Aero Industries and Piaggio Aviation being two different legal entities, Piaggio says the two form a unified business operating synergistically. Potential buyers for all or part of the businesses have been invited to send their expressions of interest (EOI) to the Extraordinary Commissioner, Vincenzo Nicastro, no later than April 3, 2020.

 

After assessing the quality of each proposal, the commissioner will decide whether to admit the applicants to continue in the process. Similarly, as the published announcement literally reads, “any final determination with regard to the sale shall […] be subject to the authorization of the Italian Ministry of Economic Development, after hearing the opinion of the Surveillance Committee”.

 

Nicastro said in a statement: “Just over a year since the extraordinary administration started, we have succeeded in creating a respectable order intake, which makes the company attractive for a buyer.

 

“We shall rigorously evaluate each of the offers that will reach us with the aim of selling the company in its entirety and finding a buyer who can offer a solid, long-lasting recovery and development plan. We aim at concluding the process within the current year.”

 

Piaggio currently has an orderbook of €450m but a further €450m of sales is expected to be added shortly; taking the total order to book to about €900m.

 

Potential buyers should sent an EOI in English or Italian to the Extraordinary Commissioner via email. More information for prospective buyers is available here.