There is a lot of airplane news but let’s start off with news highlights from Inmarsat this week:

INMARSAT

Inmarsat, the world leader in global mobile satellite communications, announced that its GX Aviation inflight broadband service is now being offered by leading Latin American airline Avianca as part of a free trial period on selected aircraft.

The trial period will last two months, providing passengers with the freedom to browse the internet, check social media and catch-up on emails, all from the comfort of their aircraft seat, with onboard connectivity comparable to mobile broadband services available on the ground. The initiative marks the Latin America debut of GX Aviation, the world’s first and only global, high-speed inflight broadband service, delivered through a wholly-owned and operated network of Global Xpress high-throughput satellites. The award-winning inflight broadband service, which will be rolled out gradually on selected Airbus A320s, Airbus A330s and Boeing 787s within the airline’s fleet, is currently available on its first two aircraft. Installations on additional aircraft are continuing to progress in Avianca’s MRO facilities in Colombia.


AIRBUS

TAP
TAP Air Portugal has taken delivery of the world’s first new-generation widebody A330neo and, as the launch airline, will be the first to benefit from the aircraft’s unbeatable operating economics, increased range, and Airbus’ new Airspace cabin offering passengers the best in class comfort. The Portuguese carrier will take delivery of a further 20 A330-900s in the coming years.

TAP Air Portugal’s first A330-900 is leased from Avolon. It features 298 seats in a comfortable three-class lay-out with 34 full-flat business class, 96 economy plus and 168 economy class seats. The Airspace by Airbus cabin offers more personal space, larger overhead storage bins, advanced cabin lighting and the latest-generation in-flight entertainment system and connectivity. The aircraft will be deployed on routes from Portugal to the Americas and Africa.

China Eastern
The airline has taken delivery of its first A350-900 in Toulouse, becoming the latest operator of this efficient twin-engine widebody aircraft. The Shanghai-based carrier now operates an Airbus fleet of 356 aircraft, including 306 A320 Family aircraft and 50 A330 Family aircraft (figures at the end of October 2018). China Eastern is the largest Airbus operator in Asia and second largest in the world. China Eastern’s A350-900 aircraft features a modern and comfortable four-class cabin layout of 288 seats: four first, 36 business, 32 premium economy and 216 economy. The airline will initially operate the new aircraft on its domestic routes, followed by flights to international destinations. Bringing new levels of efficiency and comfort to the long-range market, the A350 XWB Family is particularly well suited to the needs of Asia-Pacific airlines. To date, A350 XWB firm orders from carriers in the region represent over a third of total sales for the type.


BOEING
Boeing delivered its 2,000th airplane to a Chinese operator, a 737 MAX for Xiamen Airlines. The milestone and the pace at which it was reached reflect the accelerating growth in the world’s largest commercial aviation market.

Boeing delivered its first 1,000 airplanes to Chinese airlines over four decades. The next 1,000 Boeing jets have now been delivered over the past five years. The rapid pace continues as one in four Boeing-made commercial jet goes to a Chinese operator, either through direct purchase or lease.The new 737 MAX delivered today sports a special logo commemorating the milestone. It is the eighth MAX airplane to join fast-growing Xiamen Airlines, which operates the largest all-Boeing fleet in China with more than 200 jets. The carrier also uses Boeing Global Services to improve the efficiency of its network and operations. Xiamen is the first Chinese airline to use Optimized Maintenance Program, which leverages Boeing AnalytX to recommend customized airplane maintenance plans.

Xiamen Airlines is one of Boeing’s more than 30 commercial customers in China. In all, Boeing-made jets comprise more than half of the greater than 3,000 jetliners flying in the country.

China’s commercial fleet is expected to more than double over the next 20 years. Boeing forecasts that China will need 7,690 new airplanes, valued at $1.2 trillion, by 2038. Boeing also forecasts China will experience strong growth in the commercial services market with demand growing $1.5 trillion over the next 20 years, accounting for 17 percent of world demand.

China also plays a major role in building the world’s jetliners. The Chinese aerospace manufacturing industry supplies parts for every Boeing jet, including the 737 MAX, 777, and 787 Dreamliner. In December, Boeing and the Commercial Aircraft Corp. of China (COMAC) are set to deliver the first 737 MAX airplane from a completion and delivery center in Zhoushan, China. The facility will handle interior work and exterior painting of 737 MAXs for the Chinese market. Final assembly work will continue to be done at Boeing’s factory in Renton, Washington.

Boeing activity in China is valued at more than $1 billion in economy activity in China. This includes procurement from Boeing’s extensive supply base, joint venture revenues, operations, training, and research and development investment.

Fiji Airways
Boeing delivered the first 737 MAX for Fiji Airways, which plans to use the fuel-efficient, longer-range version of the popular 737 jet to expand and modernize its single-aisle fleet. Fiji Airways plans to take delivery of five MAX 8 airplanes, which will build on the success of its fleet of Next-Generations 737s.

The MAX incorporates the latest technology CFM International LEAP-1B engines, Advanced Technology winglets, and other airframe enhancements to improve performance and reduce operating costs. Compared to the previous 737 model, the MAX 8 can fly 600 nautical miles farther, while providing 14 percent better fuel efficiency. The MAX 8 can seat up to 178 passengers in a standard two-class configuration and fly 3,550 nautical miles (6,570 kilometers).

Based at Nadi International Airport, Fiji Airways serves 13 countries and 31 destinations/cities including Fiji, Australia, New Zealand, Samoa, Tonga, Tuvalu, Kiribati, Vanuatu and Solomon Islands (Oceania), the United States, Hong Kong, Japan and Singapore. It also has an extended network of 108 international destinations through its codeshare partners. In addition to modernizing its fleet, Fiji Airways will use Boeing Global Services to enhance its operations. These services include Airplane Health Management, which generates real-time, predictive service alerts, and Software Distribution Tools, which empowers airlines to securely manage digital ground-based data and efficiently manage software parts.

Air New Zealand
The airline completed an Auckland/Chicago flight with their B787-9 – It is 15 hours one way (North) and 16 the other!


MORGAN STANLEY
“Last week, the Indonesian National Transportation Safety Committee (NTSC), in consultation with US authorities, issued its preliminary findings relating to the fatal Lion Air 737 MAX crash on October 29. The report was factual in nature and highlighted a number of factors contributing to the accident, including the equipment and maintenance practices. We view the outcome as supportive for Boeing shares since it did not lead to immediate disruptive actions for production and the in-service fleet. Going forward, we will continue to monitor any such potential, though our expectation is that more routine software adjustments may be pursued.”


OTHER NEWS

November 30, 2018– Women in Aviation International (WAI) has selected the 2019 inductees for its International Pioneer Hall of Fame. These women will be honored at the 30th Annual International Women in Aviation Conference during an induction ceremony and celebration dinner at the Long Beach Convention Center on Saturday, March 16, 2019, from 6-8 p.m. Please note this year’s evening events will be business casual dress.

The 2019 Pioneer Hall of Fame inductees are:

Leanne Caret is executive vice president of The Boeing Company and serves as president and CEO of Boeing Defense, Space and Security unit. She is a member of the Boeing Executive Council. Throughout her career, Leanne has engaged with industry, government and academic leaders on a wide range of topics and issues related to national defense. She has devoted considerable attention to STEM education and support for veterans and their families; and leadership excellence. She is executive champion for the Boeing Women in Leadership organization.

Mary Golda Ross was the first known Native American female engineer and the first female engineer in the history of Lockheed. She was one of the 40 founding engineers of the renowned and highly secretive Skunk Works project at Lockheed Corporation. She worked at Lockheed from 1942 until her retirement in 1973, where she was best remembered for her work on aerospace design – including the Agena Rocket program – as well as numerous design concepts for interplanetary space travel, manned and unmanned earth-orbiting flights, and the earliest studies of orbiting satellites for both defense and civilian purposes.

The U.S. Coast Guard’s First Women Aviators and Aviation-Related Enlisted Women is a group of three officers and six enlisted women who proved women had a place in military aviation and who opened the door for future generations of women to pursue their military aviation dreams. On January 1, 1976, the Coast Guard opened all aviation ratings to women, thus making aviation service possible for these nine women and others that would follow them. They include officers Colleen Cain, Vivien Crea, and Janna Lambine and enlisted personnel Erminia Chillon, Andrea Gardner, Dior Lowen Hubbel, Kelly Mogk Larson Robyn Rogers Norwell, and Elizabeth Uhrig. (This portrait of a Coast Guard heroine – the first female Coast Guard aviator killed in the line of duty. Lt. Colleen Cain’s helicopter crashed during a rescue mission off Hawaii, 1982. By Leonora Rae Smith)

“This year’s inductees reflect the diversity of careers enjoyed by our members,” says WAI President Dr. Peggy Chabrian. “Our International Pioneer Hall of Fame honors not merely women of great accomplishment, but women who have paved the way for generations to follow.”

The Women in Aviation International Pioneer Hall of Fame was established in 1992 to honor women who have made significant contributions as record setters, pioneers, or innovators. Special consideration is given to individuals or groups who have helped other women be successful in aviation or opened doors of opportunity for other women. Each year, the organization solicits nominations from throughout the aviation industry for the WAI Pioneer Hall of Fame. For more information on the WAI Pioneer Hall of Fame, visit pioneers.

Seletar, Singapore | December 3, 2018– Flying Colours Corp. PTE the Singapore-based cabin interiors business has expanded its scope of refurbishment services at its Bombardier Seletar Airport facility.  Flying Colours has completed four full and three partial interior refurbishment projects on two Challenger and five Global aircraft types. This represents a significant step-change as the Singapore team has progressed from undertaking simple repairs of cabinetry and soft furnishing, to using its extensive experience to realize partial and full cabin overhauls on Bombardier aircraft for Asian and Middle Eastern customers.

One of the latest projects followed the purchase of a pre-owned Bombardier Global XRS aircraft. As it began extensive maintenance in the Bombardier Seletar facility, Flying Colours worked in parallel to complete an upgrade of the 14-passenger cabin. Meeting the brief of the China-based customer who wanted to modernise the dated look Flying Colours outfitted the interior with an elegant, neutral cream palette. The cabinetry was refinished, new satin rose gold plating was added to the metal work, a camel coloured carpet was fitted, and the divan and seats were recovered. The galley and aft lavatory countertops were replaced to complement the newly fitted vanity wardrobe and cabinet.

“The increase in cabin overhauls really exemplifies the change in demand from the maturing Asia and Middle East markets as savvy owners and operators recognize the benefits of acquiring preowned aircraft,” says Paul Dunford, general manager of Flying Colours Corp. PTE. “This has stimulated a need for high-level refurbishments and demand for complete customization has increased.” Flying Colours is meeting the charge providing highest standard interior services to a widening customer-base. Its 20-strong team now supports Bombardier and aircraft owners in Asia and the Middle East by mirroring its North American facilities in providing full refurbishment services while aircraft are in the hangars for maintenance.

“A few years ago, the Asian market preferred to buy new, but we are seeing more purchasers looking to buy pre-owned and style it in their own look. Our team is well-equipped to tackle minor repairs, through to full completion work scopes and has built a reputation for producing results equal to the mature markets in North America and Europe. We are now well known to the Asian and Middle East-based customers.”

The latest project is becoming the norm for the Flying Colors Corp PTE team. “There are more than 300 Bombardier business aircraft in the region and many are nearing their 96-and 120-month inspection intervals. We believe this is a great opportunity, as we can fully support an operator’s interior refurbishment needs and deliver a customized, high-quality aircraft, in parallel with the maintenance work. We anticipate a very busy year in 2019,” says Dunford.

Tail-mounted connectivity solution certified to provide high-throughput Ku-band connectivity

East Aurora, NY | December 4, 2018–

Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for the global aerospace, defense and semiconductor industries, announced that its wholly owned subsidiary, Astronics AeroSat Corporation, has certified its next generation FliteStreamTM T-310 SATCOM connectivity solution for business aircraft.

Astronics AeroSat has received an FAA Supplemental Type Certificate (“STC”) and Parts Manufacturer Approval (“PMA”) for installation onto a Gulfstream GIV-SP business aircraft.

The FliteStream T-310 is currently offered in partnership with
Satcom Direct (“SD”) as part of its SD Xperience end-to-end
solution. The FliteStream T-310 SATCOM solution includes the next generation iDirect CX780 modem, providing compatibility with both Ku-band wide beam and HTS spot beam satellite networks.

Matthew Harrah, President of Astronics AeroSat, said, “We are excited to achieve an FAA STC and PMA for the new FliteStream T-310 product line. This new product variant will provide an improved business aviation connectivity experience to passengers, making an ‘office-in-the-sky’ dream a reality. We look forward to continuing and expanding our relationships with Satcom Direct and Intelsat. We expect the FliteStream T-310 will be an important part of the SD Xperience package now and in the future.”

Astronics AeroSat’s FliteStream T-Series includes its patented Rexolite Lens technology, which creates the most efficient, reliable and highest-performing SATCOM antenna system available. The FliteStream T-Series provides high-speed internet & IPTV in a single antenna.

Astronics AeroSat keeps people connected no matter where they fly. For over a decade, Astronics AeroSat has provided fuselage- and tail-mounted SATCOM solutions for general aviation, business aviation, commercial transport, VVIP and military aircraft around the world. Learn more at Astronics.com.

  • Upon separation, each company will have the strategic focus and financial flexibility to deliver innovative customer solutions and drive long-term value
  • Completion of Rockwell Collins acquisition creates an industry-leading aerospace systems supplier, Collins Aerospace Systems
  • Anticipates acquisition to be $0.15 to $0.20 accretive to adjusted earnings per share in 2019
  • Announces intention to separate United Technologies (“UTC”) into three independent companies
  • Following portfolio separation, UTC to operate as a leading aerospace company comprised of Collins Aerospace Systems and Pratt & Whitney businesses
  • Otis and Climate, Controls & Security (“CCS”) businesses to become independent companies; CCS will be renamed Carrier
  • Tax-free separation to UTC shareowners for U.S. federal income tax purposes expected to be completed in 2020
  • Investor conference call at 8:00 a.m. ET, Tuesday, November 27, listen live at www.utc.com

Farmington, Connecticut | November 26, 2018– United Technologies Corp. (NYSE: UTX) today announced the completion of its acquisition of Rockwell Collins (NYSE: COL) and the company’s intention to separate its commercial businesses, Otis and Carrier (formerly CCS), into independent entities. The separation will result in three global, industry-leading companies:

  • United Technologies, comprised of Collins Aerospace Systems and Pratt & Whitney, will be the preeminent systems supplier to the aerospace and defense industry; Collins Aerospace was formed through the combination of UTC Aerospace Systems and Rockwell Collins;
  • Otis, the world’s leading manufacturer of elevators, escalators and moving walkways; and
  • Carrier, a global provider of HVAC, refrigeration, building automation, fire safety and security products with leadership positions across its portfolio.

“Our decision to separate United Technologies is a pivotal moment in our history and will best position each independent company to drive sustained growth, lead its industry in innovation and customer focus, and maximize value creation,” said United Technologies Chairman and Chief Executive Officer Gregory Hayes. “Our products make modern life possible for billions of people.  I’m confident that each company will continue our proud history of performance, excellence and innovation while building an even brighter future.  As standalone companies, United Technologies, Otis and Carrier will be ready to solve our customers’ biggest challenges, provide rewarding career opportunities, and contribute positively to communities around the world.”

Overview of Three Leading Companies:
United Technologies (UTC)
United Technologies (NYSE: UTX), comprising Collins Aerospace and Pratt & Whitney, will be the preeminent systems supplier to the high-growth commercial aerospace and defense industry, with a unique portfolio of technologies and scale to invest through economic cycles.  Combined sales of the two businesses totaled $39.0 billion in 2017 on a pro forma basis.  Collins Aerospace supplies electrical, mechanical and software solutions across all major segments of the aerospace industry and serves commercial and military customers.  Pratt & Whitney is a global leader in aircraft propulsion with a growing number of engine programs including the revolutionary Geared Turbofan commercial engine and the F135 military engine for the F-35 Joint Strike Fighter program.

Otis Elevator Company (Otis)
Otis Elevator Company is the world’s leading manufacturer of people-moving products, including elevators, escalators and moving walkways, with significant recurring revenue from long-term maintenance contracts and $12.3 billion in 2017 sales.  Founded 165 years ago, Otis has a history of global leadership with products and services offered in nearly every country in the world.  Otis, with more than two million elevators under maintenance, has the largest aftermarket service portfolio of any elevator manufacturer.  Recent investments include digitally-enabled field service capabilities, positioning Otis for continued growth.

Carrier
Carrier is a leading global provider of innovative HVAC, refrigeration, fire, security and building automation technologies with 2017 sales of $17.8 billion.  Supported by the iconic Carrier name, the company’s portfolio includes industry-leading brands such as Carrier, Kidde, Edwards, LenelS2 and Automated Logic.  Carrier’s businesses enable modern life, delivering efficiency, safety, security, comfort, productivity and sustainability across a wide range of residential, commercial and industrial applications.  Through accelerated innovation, the company has released more than 200 new products over the last two years.

Separation Transaction Details
The proposed separation is expected to be effected through spin-offs of Otis and Carrier that will be tax-free for UTC shareowners for U.S. federal income tax purposes.  Each spin-off is subject to the satisfaction of customary conditions, including final approval by UTC’s Board of Directors, receipt of a tax opinion from counsel, the filing and effectiveness of a Form 10 registration statement with the U.S. Securities and Exchange Commission and satisfactory completion of financing.

Gregory Hayes will oversee the transition and will continue in his current role as UTC Chairman and CEO following the separation.

The three independent companies will be appropriately capitalized with the financial flexibility to take advantage of future growth opportunities.  Each business will be better positioned to pursue a capital allocation strategy more suitable to its respective industry and risk and return profile, and enjoy greater flexibility with an independent equity currency and more appropriately aligned management and employee incentives.  UTC’s commitment to strengthening its credit metrics remains unchanged.  Each independent company is expected to have a strong balance sheet and to maintain an investment grade credit rating.  Any existing or potential liabilities that are not associated with a particular entity will be allocated appropriately to each of the businesses.

Following separation, the three companies together are initially expected to pay a quarterly dividend that is in sum no less than 73.5 cents per share, although each company’s dividend policy will be determined by its respective Board of Directors following the completion of the separation.  Until the planned transactions are completed, UTC expects to continue to pay a quarterly dividend of no less than 73.5 cents per share.

One-time transaction costs are expected to include non-U.S. tax expense, debt financing, operational separation activities and other customary items.

The separation is expected to be completed in 2020, with separation activities occurring within the next 18-24 months.  There can be no assurances regarding the ultimate timing of the separation or that the separation will be completed.

Creating Collins Aerospace
UTC’s acquisition of Rockwell Collins is one of the largest in aerospace history.  It brings together Rockwell Collins and UTC Aerospace Systems to create Collins Aerospace Systems, an industry leader with a global presence of 70,000 employees in 300 sites and $23 billion in annual sales on a 2017 pro forma basis.

United Technologies expects the deal to be accretive to adjusted earnings per share in 2019 and to generate more than $500 million in run-rate pre-tax cost synergies by year four.

“Collins Aerospace brings together two great companies with unmatched expertise in developing electrical, mechanical and software solutions,” said Hayes.  “We will have a laser focus on developing innovative solutions for customers and generating strong returns for shareowners.”

Financial Outlook
UTC updates its 2018 outlook to include the acquisition of Rockwell Collins and now anticipates:

  • Sales of $64.5 to $65.0 billion, up from $64.0 to $64.5 billion;
  • Adjusted EPS dilution of approximately $0.10 from the acquisition, resulting in adjusted EPS of $7.10 to $7.20, down from $7.20 to $7.30*;
  • Free cash flow of $4.25 to $4.5 billion, down from $4.5 to $5.0 billion*;
  • All outlook changes are related to the acquisition of Rockwell Collins. There is no change in the Company’s previously provided 2018 expectations for organic sales growth of approximately 6 percent.*

For 2019, UTC anticipates the acquisition to be $0.15 to $0.20 accretive to adjusted EPS, including the estimated impact of approximately $650 million of incremental intangible amortization associated with the transaction.  UTC also expects $500 to $750 million of accretion to free cash flow in 2019 from Rockwell Collins. The weighted average diluted shares outstanding for 2019 is expected to be approximately 872 million shares.

*Note: When we provide expectations for adjusted EPS, organic sales and free cash flow on a forward-looking basis, a reconciliation of the differences between the non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort.  See “Use and Definitions of Non-GAAP Financial Measures” below for additional information.