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Monday, May 9, 2005

Supply Side


Brazil's Embraer [ERJ] has embarked on a $235 million program to develop two new business jets with the sales potential of 3,000 airplanes in the next decade. First off the production line in mid-2008 will be Embraer's entry in the very light jet category. The aircraft will carry up to eight people and it will be powered by Pratt & Whitney Canada's PW617F engines. Carrying four people, the plane has a range of 1,160 nautical miles. It can fly at 41,000 feet. Embraer is pricing this jet at $2.75 million. Pratt expects to have the engine certified in 2007. Embraer's light jet entry is expected to fly in mid-2009 and it will be priced at $6.65 million. This plane can carry up to nine passengers and it will be powered by a pair of PW535E engines. Pratt expects these engines will be certified in 2008. This plane will have a range of 1,800 nautical miles when carrying six passengers. It will be able to fly as high as 45,000 feet. Both planes will allow single-pilot operations. Embraer said its potential sales calculations do not include possible bulk sales to air taxi companies. Embraer will be financing the development from its own cash flow, bank loans and contributions from future partners. Embraer will continue to market its Legacy planes, which are built on the ERJ 135 platform.


Flexjet, Bombardier's [BBD] fractional ownership unit, has ordered 51 new business jets to replace older aircraft and expand its operations. At least 60 percent of the new planes will be Learjet 40XRs and Challenger 300s. The order, valued at $829 million, will be delivered over the next three years. Flexjet has added 16 new planes since January 2004.


AeroCentury [ACY] recently entered into a purchase-lease back agreement with Wideroe's Flyveselskap. The Norwegian carrier sold two Bombardier Dash 8-300s to AeroCentury and then immediately took them back on 37-month leases. AeroCentury also sold a Fairchild Metro II from its portfolio to an undisclosed Canadian operator.

AeroCentury reported a net profit of $39,840, or three cents per share, on first quarter sales of $2.5 million. A year ago, the company earned $30,120, or two cents per share, on sales of $2.1 million. The improved revenue picture is a result of new leases on aircraft purchased during 2004.


Arizona State University has purchased a Frasca Level 5 CRJ flight training device. The trainer features the avionics common to most CRJ 200s. In addition to the university's flight program, the new trainer will be used by Mesa Airlines [MESA] to supplement training done on its full flight simulators. The university also has a Frasca 142 trainer.

Pan Am Academy

ExpressJet Airlines [XJT] has renewed it alliance with Pan Am International Flight Academy. Under the agreement, ExpressJet guarantees to interview any student who has completed the school's career pilot development training program and meets ExpressJet's employment criteria. The carrier expects to be hiring 500 new pilots each year for the foreseeable future.


Raytheon [RTN] earned $166 million, or 36 cents per share, in the first quarter on sales of $4.9 billion. A year ago, it earned $128 million, or 30 cents per share, on sales of $4.6 billion. During the first quarter, Raytheon Aircraft had net sales of $442 million, up 18 percent from the first quarter of 2004. The aircraft division had an operating income of $2 million compared to an operating loss of $28 million in the same period last year.

First Aviation

First Aviation Services [FAVS], a provider of supply chain services, reported a loss of $2.2 million, or 31 cents per share, for its fiscal 2004. It had sales of $124.2 million for the year ending Jan. 31, 2005. In its previous fiscal year, First Aviation reported a net profit of $11,000 on sales of $105 million. The loss was attributed to one-time expenses due to changes in operations, as well as higher operating costs.

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