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Friday, January 1, 2010

Executive Outlook

Aerospace Filtration Systems

“Corporate Backbone & Global Footprint”

Nothing has shown to be more true in the last year than a need for a strong corporate backbone and a global footprint to weather today’s economy. As we have all seen businesses struggling from small to large, those that survive and thrive are able to quickly mitigate market shifts and pullbacks. After a year of surprises and fluctuating order books our strength relies on a well-diversified military and commercial product base.

Here at Donaldson Aerospace and Defense Group, we have strengthened our product base across all filtration disciplines with a complete line of both air and liquid solutions. Our rotorcraft filtration solutions are available on type certificate aircraft and also through the application of supplemental type certificates (STCs). Various STC kits are available directly from the manufacturer as factory options with product expansion continuing.

We stay committed to advancing filtration technology, providing quality products and prompt customer service. Our group serves customers from sales, engineering, and manufacturing locations around the world. We are truly global. New barrier filter product introductions for the AgustaWestland AW109 and AW139, Eurocopter EC135 and continued expansion of foreign STC certifications remain our focus. Donaldson’s strategy drives a very busy 2010 filled with new growth opportunities and continued strong sales.

- Michael Scimone, President, Aerospace Filtration Systems Inc.


Enstrom Helicopter Corp.

“Importance of Diversity”

The economic downturn in 2009 has demanded a more diversified focus for 2010 and on. Strengthening international markets is a must to weather the economic downturn seen in the U.S. The international market takes more time and money to develop, however the return will prove worth the cost. An example of this type of effort is military training. Enstrom started working a program in 2003 with the Royal Thai Army. This hard work has finally consummated in 2009 with Enstrom being selected to supply 16 turbine trainers with follow-on expectations. Enstrom also worked several years in Peru to be selected to supply six piston trainers for the Navy and two for the Army, with additional orders expected. Enstrom has added 12 additional countries in the last six years. This type of investment is a must for 2010 and beyond to diversify and minimize economic impacts from a single market.

- Jerry M. Mullins, President and CEO, Enstrom Helicopter Corp.

Alpine Air Support

“Back Down to Reality”

Aviation suffered a poor 2009; cancellations of new orders brought the market back down to reality after a few years of Wild West speculation that can only be described as an opportunistic orgy. If last year was the low point, then we remain hopeful that 2010 will be the year that our industry gets back to work, using helicopters where they are the only tool to get the job done right.

Despite this backdrop, Alpine has increased market share, even though our niche market is supplying parts for just one Eurocopter model—the AS365 Dauphin. Aeromedical operators, police forces and oil industry support organizations have kept flying using our company as their parts source and I hope that 2010 is the year that we can welcome back the VIP and charter market customers getting their Dauphins back in the air.

- Peter Lewis, CEO, Alpine Air Support GmbH

Eurocopter

“Military Helicopter Rates Will Increase”

While governmental markets seem to remain stable despite budget constraints, a full recovery of the commercial markets in 2010 is not obvious. The lower order intake in 2009 for light helicopters will lead to lower production rates in 2010, while military helicopter rates will increase, a situation which Eurocopter can manage with its built-in flexibility. Eurocopter has launched a company program called SHAPE with two major objectives: speed up the company and increase efficiency in a way that will allow us to continue to invest in our future in economically more difficult times.

Eurocopter will continue to increase its self-funded investment in R&D for the development of new products and services to maintain its leadership. Main trends will be safety, environmental friendliness, efficiency and extended mission capabilities; all with a strong focus on increasing customer value. Global customer proximity has proven to be an asset in the time of crisis. Like we did in Brazil, the UK or Japan in the last three years, Eurocopter will continue to increase its global presence.

- Lutz Bertling, President & CEO, Eurocopter

REBTECH

“NVGs Improve Safety and Ops Efficiencies”

I see conditions improving overall in 2010 and beyond with our night vision modification and service business. We were relatively unaffected by the downturn in the market over the past two years. NVG technology has advanced to the point that using NVGs in the civil market has both improved safety of the flight crew and their operational efficiencies. This is very good for the helicopter industry. With the proper use of NVGs, good NVG lighting of the aircraft and flight training of the crew, the flight crews have experienced expanded mission readiness and increased safety of night operations in all areas of our industry, including law enforcement, EMS, public use and utility missions. I am optimistic that we will continue to show improvements in helicopter and overall aviation safety as it relates particularly to safety of flight operations.

- Richard M. Borkowski, President, REBTECH/REB Technologies Inc.

Turbomeca

“Bright Future for Helicopters in the World”

I believe that there is a bright future for helicopters in the world. About our future technical developments in the helicopter engine industry, I believe we will see major changes over the coming 20 or 30 years. Pressures from both operational costs and environmental issues will demand that we continuously reduce overall fuel consumption—and therefore emissions, and noise. Our goal is that we aim for a reduction of around 30 percent by 2030 and our staff is open-minded about future developments. We continuously improve our performance and service with high investment in research and development (11 percent of sales).

We are, more than ever, focusing on helping our customers meet their business challenges. And the best way to help our operators is to serve them better and better, offering them maximized material availability in order to help them to control operating costs.

- Pierre Fabre, Chairman and CEO, Turbomeca

PAG/Precision Heliparts

“We’ve Continued to Expand and Grow”

In spite of current global economic condition, Precision Aviation Group (PAG) has continued to expand and grow. In 2009, the expansion and renovation of our Atlanta and Vancouver facilities were completed, encompassing more than 75,000 square feet of sales/service and distribution space. We added new technical capabilities, increased our MRO service billings to customers by 12 percent and added a Government Programs division. We also strengthened our strategic partnerships with OEMs by being named a Goodrich authorized repair center (ARC) and signing a distribution agreement with Parker Aerospace. In 2010, we will continue to expand our Inventory Supported Maintenance Repair and Overhaul (ISMRO) system. We will make substantial MRO capital investments in tooling and equipment in both our Atlanta and Vancouver facilities. In direct support of ISMRO, we will continue investing in inventory that supports the aircraft our customers fly, such as the Sikorsky S-92 and AgustaWestland AW139.

- David Mast, President & CEO, PAG/Precision Heliparts

Aviall Inc.

“Total Solutions Provider”

The economic problems of 2008-09 faced by aviation, including the helicopter industry, presented Aviall with an opportunity to demonstrate its mission to be a total solutions provider.

As economic recovery begins, engine shops, commercial operators and fleet operators in the rotary segment will depend on Aviall for critical inventory and supply chain services. With $1 billion in available inventory and 39 locations around the world, our customers will be able to operate more efficiently and keep their helicopters flying—essential ingredients for success.Our global customer support and sales network will continue to monitor the pulse of the helicopter marketplace and enable Aviall to work closely with its roster of industry-leading OEMs to enable Aviall to deliver the right inventory to the right place at the right time.

- Dan Komnenovich, President and CEO Aviall, Inc.


Carl Zeiss Optronics

“Opportunities in Homeland Security Market”

While defense budgets are shrinking internationally, the contrary is true for the homeland security market, of which helicopters form an integral part. Increasing interoperability is becoming increasingly important as different countries and different government agencies cooperate and share air assets. For Carl Zeiss Optronics, the challenge is to provide systems that are usable on a wide number of platforms and communication equipment. Network-centric solutions are also a key objective for Carl Zeiss Optronics.

- Kobus Viljoen, Managing Director, Carl Zeiss Optronics

Cobham Avionics

“Robust Demand Despite Challenging Economy”

In 2010, Cobham anticipates continued robust demand for products that enable safer and more efficient mission completion despite the challenging economic climate. Indications are that EMS, law enforcement, SAR, marine, and military training markets will respond to ongoing safety concerns—and potential mandates—by seeking solutions that will enable safer flight under a variety of challenging weather, terrain, and mission conditions.

Cobham is poised to meet operator requirements via its two centers of excellence: Communications in Prescott, Arizona and Integrated Systems in Mineral Wells, Texas. The two centers will make it easier for customers to acquire integrated avionics solutions on a variety of platforms, helping them to meet their operational safety objectives. The Cobham cockpit includes synthetic vision flight displays, helicopter TAWS, stability augmentation/autopilot, emergency location and NVG compatibility, audio control and distribution, civil and tactical radios, and airborne servers and networking.

- Mike Sheehan, Vice President, Cobham Avionics

Aviation Instrument Services

“Rotorcraft Are Needed More Than Ever”

The recession notwithstanding, helicopters have remained a strong and vital industry. It has enjoyed solid growth over the past few years and I see no reason why this trend will not continue in 2010. After all, rotorcraft are still needed more than ever for homeland security, military missions, air medical services, charters, and corporate transport. This means ever-more demand for components and instruments to keep these aircraft flying. When certain products are a must, people find money to buy them.

Since Aviation Instrument Services was founded 33 years ago, our determination to develop a reputation for service excellence has not flagged—in good times or bad. This is why Aviation Instrument Services has grown into a company that sells and exchanges instruments for helicopters and general aviation aircraft, and why we help out by managing consignment sales for our global customers; including the handling of component repairs and overhauls. We’re here for the long haul, as is the helicopter industry.

- Jim Sensale, President and Founder, Aviation Instrument Services

Goodrich Corp.

“Extended Outlook Remains Healthy”

High utilization of helicopters by allied forces in worldwide conflicts is providing continued requirements for new production rotorcraft as well as retrofit products that enhance legacy helicopters’ ability to accomplish the mission. Systems that provide ISR, survivability, and condition-based maintenance capability—increasing both the relevancy and mission availability of aircraft—will continue to be in strong demand. Market segments of executive transport, air medical, law enforcement, search and rescue, firefighting, and offshore fuel transport are seeing diverse impacts from current economic conditions.

Overall, we expect the civil helicopter market to remain soft in 2010. However, the value and utility of helicopters has been proven repeatedly in incidents such as the California wildfires and other natural disasters, so the extended outlook remains healthy. Successful businesses will provide products and services that address specific mission goals, and respond quickly with solutions that meet operator needs in this challenging environment.

- Curtis Reusser, Segment President, Electronic Systems, Goodrich Corp.


Becker Avionics

“Recovery Not Seen Before 2011”

We are anticipating 2010 to be a difficult year for the helicopter manufacturers, as the civil helicopter market will remain depressed. As 2009 was marked by aircraft cancellations and quickly melting order backlogs, we believe that helicopter deliveries will bottom out in 2010.

With more than 2,000 new and used turbine helicopters on the market, the recovery will not be noticeably be seen before 2011. Fortunately, companies continue investing into their existing assets in order to stay competitive and to keep them flying. We will see a continuation in adopting new technologies that reduces cockpit workload and makes the rotary-wing business safer. One question remains how quickly the NTSB safety recommendations, to improve HEMS operations, will actually influence the operation and industry.

- Markus Schmitz, President, Becker Avionics

Aero Dynamix

“2010 Will Be Stronger”

While flight safety has always been at the forefront for Aero Dynamix, the FAA and the helicopter industry, at no time has that been demonstrated more strongly than in 2009. With new mandates from the NTSB and regulatory guidance from the FAA, particularly concerning NVG operations, Aero Dynamix expects our business operations to see a marked increase in the demand for NVGs and NVG lighting systems in 2010. To support this expected increase in demand for NVG systems, Aero Dynamix will be moving into a new, much larger, state-of-the-art facility expected to be completed during the summer of 2010.

While business was great in 2009 and we continued to grow at a record pace, we anticipate 2010 to be even stronger due to these regulatory changes and the Aero Dynamix commitment to continue producing the highest quality product available with superior before and aftersale customer service and on-time delivery.

- Daniel C. Hewitt, P.E., President, Aero Dynamix, Inc.


FlightSafety International

“World’s First Level 7 Helicopter FTDs”

With our successful deployment of the world’s first Level 7 helicopter FTDs, FlightSafety has launched the next generation of cost-effective professional rotorcraft training, greatly expanding the availability of mission-specific safety training for a broad cross-section of the most widely used rotorcraft.

Regulatory agencies and the insurance industry continue to press for more and higher-quality training to ensure the safest possible rotorcraft operation. Together with increasing recognition that simulation-based instruction is the single most effective way to improve safety, we expect to see steadily expanding demand for FTD training.Our new Level 7 FTDs provide an efficient and cost-effective strategy to incorporate safety as a key component of overall flight operations. We believe even more operators will turn to our mission-specific training for EMS, offshore, law enforcement and newsgathering. This training recognizes the widely different roles for which helicopters are used, preparing crews to anticipate and safely handle a broad range of scenarios.

- George Ferito, Director, Rotorcraft Business Development, FlightSafety International

Rolls-Royce

“Long-term Prospects Remain Strong”

The turbulent economic environment has had a negative impact on many segments of the helicopter market, and a return to pre-downturn levels of activity in those segments is not yet in sight. Despite this, however, a number of positive forces that underpin overall market demand suggest that long-term prospects for the industry remain strong.

Military helicopter usage and demand is expected to remain robust worldwide. Most militaries face a significant shortfall in vertical lift, along with rapidly aging fleets. The need for fleet recapitalization and enhanced capability will sustain helicopter demand in all size classes. Despite increasing pressure on military budgets, the unique and essential capabilities of helicopters will afford them high priority in many countries.Civil markets are more exposed to broad macroeconomic factors. Despite this, however, we feel guarded optimism as new models enter the market and the nascent global economic recovery gains momentum. Growth in the light single and heavier twin segments is expected to complement a return of demand in other product classes over the coming three to five years.

- Ken Roberts, President, Helicopter Engines, Rolls-Royce Corp.

Keystone Helicopter

“Changing of the Guard”

The rotorcraft market in 2010 is going to continue to feel the impact of the protracted economic downturn on a number of fronts. Companies that went into this recession in poor cash positions and have managed to survive are going to have a very hard time gearing back up to meet the needs of their customers as the economy begins to recover and pent-up demand begins to break loose.

At Keystone/Sikorsky Global Helicopters, we are in a very fortunate position in that we were already in the midst of a major restructuring and expansion before the economy tanked. In an odd way, the slowing of demand in the helicopter market actually allowed us to focus on building an infrastructure better suited to our significantly larger scope and scale, and to selectively move forward with upgrades to our facility and equipment without disrupting critical delivery schedules to our core customers. We are now well positioned to serve the needs of our existing customers, as well as the needs of new customers who find that they are ready to move forward in 2010 faster than their previous service providers may be able to.

- David Ford, President, Keystone Helicopter

Kaman Aerospace

“Looking Ahead to Change and Growth”

Of course, the economy remains a key factor for us all, as does the dynamic state of U.S. military operations and requirements, but in general our industry has fared better than many others. Kaman is optimistic and looking ahead to a year of change and growth.

Our team is especially excited about the potential contract for unmanned K-MAX helicopters from the U.S. Marine Corps. We are completely confident that we have the best aircraft for the mission, and the effect of this win would positively impact Kaman for years to come. From a military standpoint, we also see that customers have requirements for ship- or land- based maritime helicopters due to ongoing piracy and terrorist attacks and we are offering multi-mission Seasprite helicopters as the ideal solution.Of course, Kaman’s ability to offer high quality, reliable and cost-effective engineering and manufacturing support solutions remains an important part of our business. We intend to continue our HeliworX expansion to encompass aftermarket work, which is obviously a growing requirement as older aircraft are called on to serve longer, so we fully expect that operation to continue to expand and grow.

- Mark Tattershall, Director of Marketing & Business Development, Kaman Aerospace

Air Comm Corp.

“Market Remains Soft Through Mid-Year”

Air Comm Corporation achieved 17 percent growth in 2009. We saw growth in top line sales and bottom line revenue, and continued to develop and certify new products, add staff, and expand our facility. This growth continued a multi-year trend, and we expect it to continue into 2010 and beyond.

Because of our systems’ reputation for performance and reliability, and our reputation for customer responsiveness, Air Comm is a key supplier to several military programs, including the UH-60M Black Hawk and UH-72A Lakota. These programs and others have served to fuel our growth, even during challenging times for the civil market. Simultaneously, numerous initiatives at Air Comm, such as AS-9100 certification, implementation of lean manufacturing processes and the addition of personnel in key positions, have insured that our profitability has remained healthy.Looking forward, we expect the civil market to remain soft through at least mid-year. However, companies such as ACC, with a strong military presence, products on a broad array of civil helicopters, and a culture of total customer support and continuous improvement, will be best positioned to take advantage of opportunities as the market rebounds.

- Keith Steiner, President, Air Comm Corp.

Sikorsky Global Helicopters

“2010 Deliveries Projected to Increase”

Our research shows that demand in the light helicopter market has decreased in 2009 and is not expected to increase until 2013. We project sales in this market to show significant growth from 2014–2018. However, current demand for Sikorsky S-300C, S-300CBi, S-333 and S-434 helicopters remains constant and 2010 deliveries are projected to increase over 2009 deliveries.

Weak economic conditions have affected the aviation market around the world. The majority of Sikorsky light helicopters are operated in the training market, which has suffered due to tightened lending restrictions. Efficiency and direct operating costs have become important factors in the number of hours many companies and individuals are able to fly their aircraft. Sikorsky offers a great solution in the light helicopter market with low purchase and direct operating costs.

- David Oglesbee, Director, Sikorsky Global Helicopters, Light Helicopter Division


BLR Aerospace

“Looking for Every Competitive Advantage”

BLR is expecting a slow-to-steady recovery in the North American commercial market and continued strength in global military sales. Technology-driven companies such as BLR Aerospace will benefit from the ongoing strength of the helicopter market. Operators who would like a new helicopter but don’t want to wait may instead choose to improve the performance and handling of existing aircraft. At the same time, operators who have been negatively affected by the recession are looking for every competitive advantage. Our technology expands the envelope for these operators and helps them achieve maximum return on their capital investments. Hard-working helicopter operators everywhere continue to look to BLR for innovations that boost their performance and their bottom line.

- Dave Marone, Vice President of Sales and Marketing, BLR Aerospace

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