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KN35008

KEY NOTE AEROSPACE DECEMBER 1998

Overview

ISBN 1-85765-885-X

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Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

The apparent UK market for the aerospace industry in 1998 was estimated by Key Note to be £21.6bn. The importance of the aerospace industry in UK manufacturing can be gauged by the fact that aerospace contributes over 10 percent of the UK manufacturing gross domestic product (GDP) and some 2 percent of the total UK GDP. Military sales form around half of the total product sales of the UK aviation sector, with British Aerospace (BAe) military sales helping it become the UK's largest exporting company.

The aerospace market, as defined for the purposes of this report, includes airframe manufacture, aircraft components and engines, missiles, avionics, satellite equipment and refurbishment work. Avionics covers electrical and electronic control systems for use on aircraft, and also ground-based software and systems for flight management. Space equipment covers communications and earth observation satellites, but does not cover launchers. Refurbishment work includes maintenance work carried out by the major manufacturers where such work cannot be distinguished from the remainder of the company's turnover.

Technical excellence and exposure to market forces (compared to the government backing of certain European aerospace firms) has resulted in a strong UK aerospace sector that has survived a period of severe defence budget cut-backs and civil airline order cancellations. A willingness to form consortia with traditional rivals has led to the industry gaining a number of overseas defence contracts and has widened the scope of Rolls-Royce sales. A commitment to Airbus by the Government, has seen a healthy return on the original £250m loan to BAe for A320 design work.

Airbus Industrie has had a particularly good year, with market share finally approaching that of Boeing. It looks set to overtake Boeing over the next 3 or 4 years. The decision by Boeing to drop the 500-seater version 747 has laid open that market opportunity to Airbus and thus to British Aerospace, Rolls-Royce and to all the other UK suppliers to Airbus. In other markets, the failure of the consortium, of which BAe was a part, to be considered for the JSF project proved a bitter blow, but BAe is still hopeful to gain part of the contract.

Total UK output, including exports, for the aerospace industry has been forecast to be £35.4bn in 2002. This takes into account Airbus predictions for future civil aircraft growth, including an assumption that the economic difficulties in the Asian market will have little effect on civil aircraft sales.

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TABLE OF CONTENTS

Executive Summary

Market Definition

MARKET SECTORS

MARKET TRENDS

Table 1: Approximate Number of Parked Aircraft, Year End 1989-1997

Market Size

THE TOTAL MARKET

AIRCRAFT PRODUCTION

OVERSEAS TRADE

Table 2: The UK Aerospace Industry - Estimated UK Manufacturers' Sales by Product Category (£m at msp), 1991-1998

Table 3: Apparent UK Market for Aerospace (£m), 1998

Table 4: New Deliveries of UK Aircraft, 1990-1997

Table 5: Trade Balance of the UK Aerospace Industry (£m), 1997

Table 6: Exports of the UK Aerospace Industry (£m), 1997

Table 7: Exports of the UK Aerospace Industry (£m), 1995 and 1997

Table 8: Imports of the UK Aerospace Industry (£m), 1997

Table 9: Imports of the UK Aerospace Industry (£m), 1995 and 1997

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

EMPLOYMENT

DISTRIBUTION

TRADE ASSOCIATIONS

Table 10: Employment in the UK Aerospace Industry (000), 1990/1991-1997/1998

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 11: Financial Results of Principal Aerospace Companies in the UK (£m), 1996/1998

Table 12: Financial Results of Other Aerospace Companies in the UK (£m), 1996/1997

Table 13: Quarterly Main Media Advertising Expenditure on Aircraft (£000), June 1997 to June 1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

CONSUMER PENETRATION

Table 14: Distribution of the Major Airlines, 1997

Table 15: Civil Aircraft Purchases by Country (1997 $bn and units), 1998-2017

Outside Suppliers to the Industry

RAW MATERIAL SUPPLIERS

COMPONENTS

SERVICE ORGANISATIONS

Current Issues

FARNBOROUGH 1998

AIRBUS INDUSTRIE

CONTRACTS

PRODUCT DEVELOPMENT

JOINT STRIKE FIGHTER

OTHER JOINT VENTURES AND COLLABORATIVE PROJECTS

CORPORATE ACTIVITY

BOEING

Forecasts

INTRODUCTION

FUTURE PROSPECTS

Table 16: Number of Predicted Worldwide Aircraft Added and Removed, 1998-2002-2013-2017

Table 17: Deliveries of Civil Aircraft (units), 1997 and 2017

Table 18: Average Price of Delivered Civil Aircraft (units and $m), 1997 and 2017

Table 19: Forecast of UK Manufacturers' Sales for the Aerospace Industry (£m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1998 Key Note

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