TOP 100 SPECIAL REPORT REBOUND TO GROWTH After the sharp downturn of 2009, profits bounced back in 2010, with Boeing and EADS maintaining clear leadership of our Top 100 ranking of aerospace manufacturers as civil demand overcame defence cutbacks to pull the industry out of recession DAN THISDELL LONDON pectations to hold firm – but profits dropped of 2006-2007, and even less than a third of the sharply, by more than 17%. Summing up 2009, growth in 2008, despite its horrific fourth quar- lobal financial markets are look- and also in defiance of expectations, Airbus and ter. And the 2010 aerospace industry growth ing fragile. Oil is priced stubborn- Boeing delivered a record 979 airliners – but didn’t keep pace with global gross domestic ly high. Major world currencies saw orders plunge to just 413, from a whacking profit, which bounced back from a 1% fall in are under pressure. Nobody who 1,439 chalked up in 2008. 2009 to gain 5% last year, as Western econo- Gworried through the summer of 2008 – But while financial markets, and thus the mies rebounded and key developing regions those phoney war days before Lehman real economy, are keeping fingers crossed this continued to power ahead. Brothers fell and the financial crisis sucked summer, it’s nice to be reminded that 2010 was, But on the profit front, 16% growth in 2010 global economies into the steepest down- for aerospace, a year of buoyant rebound. nearly reversed 2009’s 17% decline. And – turn since 1929 – really needs to be asked As the latest Flight International Top 100 sur- again standing as a quick summary of the in- whether it all sounds familiar. Nor do they vey, compiled in association with PwC, shows, dustry’s year – Airbus and Boeing fell just a need to be reminded of the agony of 2009, revenue grew by a healthy 2%. handful of deliveries short of the all-time high when aerospace industry revenue defied ex- That’s far from the double-digit growth days set in 2009, while net orders surged back into 30 | Flight International | 30 August-5 September 2011 flightglobal.com TOP 100 SPECIAL REPORT IN ASSOCIATION WITH four figures, at 1,104 – enough to push their pulled Dassault Aviation up from 23rd in joint backlog to within sight of 7,000 aircraft. 2009 to 20th place, bumping out Embraer, which closed 2010 in 22nd place, and has REVENUE GROWTH seen revenue fall every year since 2007. Mit- Over the year, most of the Top 100 companies subishi held on in 21st position. enjoyed revenue growth, with a tail of about 30 At the top, Boeing held the crown it companies experiencing sales decline. regained from Airbus parent EADS in 2009 In 2010, there was just one Expansion by the fastest-growing firms far – though EADS closed the revenue gap a bit new entry into the Top 20, as outpaced backward movement by those at the in this battle of titans. tail end of the rankings. The pair remain far out in front by reve- strong revenue growth pulled The Top 20 companies still dominate the Top nue, nearly half again bigger than third place Dassault Aviation up from 100, accounting for 79% of both revenues and Lockheed Martin, and about twice the size of profits. In 2010, there was just one new entry fourth place General Dynamics. 23rd in 2009 to 20th place into that Top 20, as strong revenue growth In the defence sector, growth is run- ❯❯ flightglobal.com 30 August-5 September 2011 | Flight International | 31 TOP 100 SPECIAL REPORT ❯❯ ning well below historic levels. PwC assist- PROFILE TRANSDIGM Alan DRon ant director, strategy, Anna Sargeant says de- fence-oriented companies are reassessing future A stealthY CONTENDER priorities. In a sector that is seeing spending TRANSDIGM GROUP might not pressure, Lockheed Martin nevertheless man- be an aerospace name that aged 7.2% revenue growth, to take the top slot resonates, but the manufac- from Boeing, which dropped back to second turer is headed for billion-dollar place. Another company to watch is Thales, annual turnover via a strategy which has been seen as an underperformer, but of making small components is undergoing a restructuring; the company that a passenger never consid- moved from 10th place to 8th, despite a decline ers, but are nonetheless vital in revenue. in getting an aircraft to func- tion. Electro-mechanical actua- North America and Europe tors, pumps and valves, continue to dominate the Top electric motors, audio sys- tems, latches and locks – the Sikorsky 100, though Asia is growing product range rolls on. Sikorsky CH-53 is one TransDigm destination Cleveland, Ohio, US-based TransDigm has been stealthily 30 September. The assets long-term, and that its acquisi- The aero engines sector was also one climbing the Top 100 for sev- picked up were valve maker tion policy would continue. where growth is small, by historic standards. eral years – from 72 in 2008 Dukes Aerospace, sensor spe- Among 2010’s highlights were Rolls-Royce’s 7.4% revenue growth far out- to 69 in 2009 and 64 in the cialist Semco Instruments, development work on the paced its peers. latest rankings, with sales of the actuators business of Airbus A380 and A350 cockpit Geographically, North America and Europe $828 million in 2010. Teleflex and, largest of all, security systems, which in turn continue to dominate the Top 100 by revenue Delving into the product McKechnie Aerospace, a hold- led to a contract award for the and number of companies, though Asia is grow- range gives clues as to why: ing company consisting of sev- cockpit security door module ing. However, Sargeant points out that neither TransDigm claims more than en major operating units that for the Mitsubishi Regional Jet. Chinese nor Russian companies feature in the 95% of its products as propri- primarily sell proprietary engi- The company also complet- Top 100 – their financial data is either unavail- etary items to which it owns neered components. ed development work on the able or incomplete – but PwC hopes to over- the design. About 60% of its McKechnie joined the digital audio system and sev- come this hurdle in future. revenue comes from aftermar- TransDigm fold in a $1.27 eral other components for the ket sales: even if orders for billion deal. Boeing 787. ACQUSITIONS both the civil and military air- In its annual report, In the military sector, the In the background, merger and acquisition ac- craft sectors were to slow si- TransDigm notes that “our company won contracts to en- tivity also picked up sharply last year, after fall- multaneously, airlines and market research tells us there hance the capabilities or ex- ing into a trough as the financial crisis started to squadrons would still have to is no shortage of good pros- tend the operational life of bite. Separate figures from PwC show 2010 fea- keep their existing equipment pects” in both the near and several helicopter types, in- turing not only a dramatic bounceback in the in the air. As an added benefit, cluding the Boeing CH-47 number and value of buyout and merger deals, notes TransDigm, aftermarket Chinook and Sikorsky CH-53. but the return of $50 million-plus deals. revenues historically produce AT A GLANCE In the fixed-wing sector, Total deal value nearly doubled year-on-year, a higher gross margin. ■ Top 100 rank 64 TransDigm won work on the from $10.9 billion in 2009 to $20.2 billion in TransDigm has traditionally ■ HQ Cleveland, Ohio Boeing P-8A Poseidon mari- 2010. As PwC’s London-based global aerospace looked to acquisitions to in- ■ Aero revenues $828m time patrol aircraft and the and defence practice leader, Neil Hampson, crease revenues, and 2010 ■ Sales growth 8.7% Northrop Grumman RQ-4 points out, the resurgence of merger and acqui- was no exception. The firm ■ Operating margin 43.8% Global Hawk. sition activity highlights the powerful trends bought four companies in the ■ ROCE 14.2% TransDigm believes its driving the aerospace industry in 2010 – nota- calendar year – two beyond ■ Employees 2,400 momentum will continue bly the fact that commercial aerospace recov- its fiscal year, which ended on ■ CEO Nicholas Howley through 2011. ■ ered from the recession faster and stronger than most analysts predicted. This was also while looking to respond to new competitors and capitalising on a growing market and a changing landscape, as the cus- tomer base shifts toward the Asia-Pacific region. The largest revenue growth in the Top 100 was achieved by Triumph, due to its acquisition of the remainder of Vought Aircraft in June 2010. United Technologies, for example, made some $3 billion worth of acquisitions in 2010, including a $1.8 billion purchase of GE Security. ■ itsubishi Drill down into the Flight International Top 100 M online at flightglobal.com/top100 or see Work for Airbus led to a Mitsubishi Regional Jet contract for TransDigm flightglobal.com/pwcdataexplorer 32 | Flight International | 30 August-5 September 2011 flightglobal.com TOP 100 SPECIAL REPORT AEROSPACE OPERATING MARGIN* Operating margin Rank Company 50% 1 TransDigm 48.3% 2 FLIR Systems 38.1% 40% 3 Garmin 27.5% 4 Martin Baker 24.1% 5 Harris 22.0% 30% 7 Hindustan Aeronautics 20.8% 6 Meggit 18.9% 20% 8 Crane 18.9% 9 Chemring 18.1% 10 Heico 17.7% 10% 0% 0 20 40 60 80 10% NOTE: *Availabe for 80 companies. SOURCE: PwC ENGINES (CIVIL AND MILITARY) Dan Sector Rank Sector Rank Company Division Sales 2009 Sales 2008 2009 2008 FIN_CHRT3_Xa ($m) ($m) 1 1 General Electric Aircraft Engines 15,680 15,615 Feature(excl.