New heads up from Rockwell Collins

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Whilst business jet makers get the most attention, building an aircraft is a team sport that can be won or lost by suppliers. And because significant suppliers like Rockwell Collins are key suppliers to a wide range of aircraft, they often have the best visibility of the market.

Unfortunately, whilst much of Rockwell Collins is growing, the company is less optimistic about the next year for business aviation. “I’m encouraged by the progress we are making in all of these businesses, and I expect market conditions will support continued growth in fiscal year 2016,” said Kelly Ortberg, CEO and president of Rockwell Collins in a statement as part of its 2015 guidance. “However, this is not the case in business aviation where we continue to experience weak market conditions.”

“In business aviation we continue to experience weak market conditions”

Ortberg does not expect to see an improvement in the next 12 months. Rockwell Collins has been affected by the cut in Global 5000 and Global 6000 production but it is also predicting a cut in mid-size and light jet production.  “The resulting effect is that we now expect our overall Business and Regional jet OEM sales to decrease low-double digits from fiscal year 2015,” said Ortberg. “In addition, we expect Business and Regional jet aftermarket sales to continue growing at a fairly modest level, similar to what we’ve seen in fiscal year 2015.”

Rockwell Collins will benefit from more Legacy 450 and Legacy 500 deliveries and is optimistic about more cabin retrofit sales. But the company’s Fiscal Guidance does say that the company may “right size” some of its businesses.

Like OEMs, the company is taking a long term view. Rockwell Collins is also set to benefit from what it calls the Internet of Aircraft Things. Like everything else, aircraft are only going to become more connected and the company is a great position to benefit from long-term growth.

Rockwell Collins’ visibility for 2016 is disappointing, but at least they have given us a heads up.

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