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BAE Systems Announces New Commercial Aircraft Business Building On Successes In 2010


Prestwick, Scotland - BAE Systems announced today new aircraft transactions from its regional aircraft portfolio and a strong performance across all of its regional aircraft business sectors during 2010.

Commenting today on this business performance, Managing Director of BAE Systems Regional Aircraft Alan Fraser, said:

“In a highly competitive market, we have shown our resilience and determination to deliver quality support, engineering and asset management services to our customers during 2010 and, as a result, demonstrate excellent value to BAE Systems. We look forward to creating new opportunities during 2011 which promises to be an exciting year on a number of fronts.”

Across its core portfolio aircraft business, the Asset Management team of Regional Aircraft placed 52 aircraft, up from 44 in 2009, and despite continuing difficult market conditions.

Of these, 45 were for the BAe 146/Avro RJ regional jet, where BAE Systems significantly outperformed the market, with an estimated market share in excess of 75 per cent despite only managing around 40 percent of the global fleet.

New 2010 deals announced today include the sale of two BAe 146s to Cobham Aviation Services of Australia, the sale of one Avro RJ100 to Titan Airways of the UK and one BAe 146-200 to fast-growing Aerolineas Star Peru. A further two BAe 146-200s were sold for conversion into aerial firefighting waterbombers (Airtankers).

The remaining seven portfolio aircraft placed were Jetstream 32 and 41 regional turboprops. A new deal announced today is the sale from the portfolio of two Jetstream 32s to Air National of New Zealand.

In the Support business despite an increasingly competitive market for continuing spares sales and modifications, the team delivered an excellent performance throughout the year. In addition, the JetSpares rate-per-flying hour product also performed well to deliver results ahead of business plan targets. Discussions with existing and new customers revealed their desire for a more all-embracing support service to include full supply chain management, a wide range of technical services, including obsolescence and reliability management, and continued airworthiness support.

These support elements provide an integrated menu of services which can be tailored to the customer’s requirements and demonstrates BAE Systems’ continued confidence in this market. This expanded Total Support strategy led to a major contract win from Ireland’s CityJet in the final quarter of 2010.

2010 was again a strong year for the Engineering business which continues to be held in high regard by its customers. This was demonstrated by a further contract win during the year on the Mitsubishi Regional Jet (MRJ) to provide engineering development and integration services related to flight test equipment and systems for the new aircraft.

The strategy of diversifying the engineering business customer base and increasing the volume of non-BAE Systems work continued successfully with 33 percent of engineering revenue now external to BAE Systems (up from 25 per cent in 2009).

Building on the strategy of tackling five separate market segments for the BAe 146/Avro RJ, BAE Systems placed aircraft into all of these sectors. Forty-one aircraft were placed into passenger markets in Europe, Australia and increasingly into Latin America, South-East Asia and Africa. One BAe 146QT (Quiet Trader) freighter was placed and one Avro Business Jet deal was secured in the corporate aviation market. In addition to the two BAe 146s placed for Airtanker conversion, one aircraft was placed into the military transport logistics role, where good progress was made in promoting the BAe 146M.

The considerable churn in the BAe 146/Avro RJ portfolio meant that significant progress was made during the year in reducing the number of out of service aircraft. It is expected that much of the inactive aircraft churning through the portfolio, as aircraft change hands, will be placed with operators by the end of 2011. The high volume of BAe 146/Avro RJ deals ensured good progress was made during the year towards the objective of keeping the number of out of service aircraft to a minimum. Meanwhile, the turboprop portfolio of ATP and Jetstream aircraft remained fully contracted for the second year running.

In addition, the Asset Management team secured a further 19 transactions across the year on various spare engine deals and short-term lease extensions.

During the year the Business Development team in Asset Management won significant remarketing mandates from airlines, financial institutions and leasing companies covering primarily Airbus and Boeing narrow-body and wide-body types, together with some BAE Systems-built regional aircraft. The sale of five Boeing MD-83s on behalf of Avianca of Colombia was arranged, along with a Boeing 767-300ER on behalf of the Presidential Flight of Abu Dhabi. Although a number of aircraft under mandate were withdrawn by owners due to their changing plans, at the start of 2011 a total of 13 aircraft were being actively remarketed.

BAE Systems Regional Aircraft provides its customers with managed solutions for aircraft portfolios, fleet support and engineering. In addition to a trading portfolio of some 150 aircraft, a proven track record in aircraft remarketing and lease management services and a broad base of aircraft support solutions, Regional Aircraft also provides engineering expertise for both commercial aircraft and defence platforms.


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