netrashetty
Netra Shetty
Journal Communications, Inc. (NYSE: JRN) is a publicly traded media company based in Milwaukee, Wisconsin. It publishes the Milwaukee Journal Sentinel, a daily newspaper, and it also owns television stations, radio stations and weekly newspapers, among other businesses.
S. Domestic Trends
The industry was expected to have a moderate to strong increase in the value of shipments made in 1999 compared with 1998. The total value of shipments by the U.S. aerospace industry in 1998 was $145 billion, a 2.2 percent increase over 1997. In the first half of 1999, compared with the same period in 1998, shipments increased 1.8 percent and new orders grew 0.8 percent. Deliveries of complete civil aircraft and engines reached $48 billion in 1998, an increase of 34 percent over the 1997 level. U.S. aerospace exports increased 27 percent in 1998 compared with 1997. U.S. defense procurement in fiscal year (FY) 1998 (including new buys, modifications, and parts) totaled $14 billion for aircraft and $3.8 billion for missiles and space equipment.
Defense Industry
Reversing 15 years of decline, total procurement from all industry sectors by the U.S. Department of Defense (DOD) in FY 1998 rose slightly to $128.8 billion, in comparison to $128.4 billion in 1997. The total outlay was significantly lower than the peak of $163.7 billion reached in 1985. The largest prime contractors in the U.S. defense industry— Lockheed Martin and Boeing—were each awarded over $10 billion in prime contracts in FY 1998. The third largest, Raytheon, received $5.7 billion in prime contract awards. Rounding out the list of the top 10 prime contractors in 1998 were General Dynamics, Northrop Grumman, United Technologies, Textron, Litton Industries, Newport News Shipbuilding, and TRW (with $1.3 billion). The largest military aviation development program is the multirole Joint Strike Fighter (JSF), which will be produced for the U.S. Air Force and Marines and the U.S. and British navies. Three thousand JSFs are planned for manufacture over several years to replace aging F-16s and other aircraft. Competition for the role of primary contractor for the JSF has been narrowed to Boeing and Lockheed Martin as the program enters the prototype and testing stages.
With the United States accounting for 46 percent of the world’s inventory of tactical combat aircraft, the export potential of the JSF is envisioned to be high, although it may not be available for exportation before the year 2010. Foreign competition would come largely from the newly developed Eurofighter Typhoon, Dassault’s Rafale or Mirage, and Russia’s MiG and Sukhoi combat aircraft.
Other aircraft in various stages of development include Lockheed Martin’s multi-billion-dollar F-22 Raptor program to replace F-15s, large transports to replace the C-130s, and new bombers, helicopters, and refuelers. Fearing that a single supplier could emerge in Europe and resisting further domestic consolidation, DOD is encouraging transatlantic partnerships. The Balkan war accelerated the impetus for U.S. partnerships with European industry stemming from concerns about the existing technology gaps and lack of interoperability that hindered NATO’s effectiveness. In 1998, deliveries of new military aircraft to foreign customers rose to $3.6 billion, an increase of 57 percent compared with 1997. U.S. arms exports as measured by agreements signed (actual deliveries can lag several years) totaled $7.1 billion in 1998. While the United States continued to dominate global export markets with almost a third of total military exports worldwide, the market is considerably smaller than the $37 billion in sales reached in 1993.
Developing countries, which can stage the fiercest competition among military suppliers, purchased some $4.6 billion of U.S. arms in 1998, compared with $2.4 billion from France and less than $2 billion each from Germany, the United Kingdom, and Russia. Middle Eastern countries such as Saudi Arabia, Kuwait, the United Arab Emirates, Egypt, and Israel continue to be some of the largest purchasers of arms. In Asia, Malaysia led with $2.1 billion in imports. The top recipients of arms deliver-ies in 1998 were Saudi Arabia, Taiwan, Singapore, and South Korea.
Aircraft
This sector consists of large transports, general aviation aircraft, rotorcraft, and unmanned aerial vehicles. Large Transports. The large civil aircraft sector includes commercial passenger and cargo aircraft with an operating empty weight greater than 15,000 kilograms and two, three, or four engines. Passenger aircraft in this category can accommodate at least 70 passengers. The Boeing Company is the only manufacturer of such aircraft in the United States.
Economic growth is expected to continue to be the main stimulus for aircraft demand. A decline in economic growth that followed the 1997–1998 financial troubles in Asia resulted in a decrease in airline traffic in that region. That decline had a negative impact on the airlines’ revenue and overall cash flow, resulting in a decreased demand for aircraft. However, nations such as India and China are expected to experience growth in air travel as they climb the economic development curve. In mid-1999, there were signs of economic recovery in Asia, especially South Korea, Singapore, and Thailand, as those countries began to emerge from the Asian financial crisis. China, Australia, and New Zealand continued to maintain stable economies, and U.S. and European economies remained strong. Air travel remains brisk, aging domestic fleets are being phased out and replaced with new planes, and overseas travel continues to grow. These factors are expected to spur demand for new aircraft over the next 5 years.
Industry experts foresee an overall production downturn in the year 2000. On the basis of announced manufacturing rates, 1999 was expected to be the peak year in total aircraft production, with the global industry delivering about 920 jets. The outlook for 2000 is estimated to be below 1999 levels, with about 800 jets expected to be delivered. U.S. production of large civilian transports was expected to reach about 620 aircraft in 1999 and about 480 in 2000.
In the early years of the twenty-first century, technology may take a back seat to efficiency. Rather than creating entirely new passenger aircraft that will fly faster, higher, and farther on less fuel, large aircraft manufacturers are more likely to modify existing designs; this will reduce production costs, pollutants, and noise and add more seats. Stiff price competition between Boeing and Airbus will continue.
U.S. government funding for aeronautical research and development decreased significantly with the cancellation in 1999 of the National Aeronautics and Space Administration’s (NASA) funding for the High Speed Research and Aviation Subsonic Technology programs.
One of the most significant new influences on twenty-firstcentury aircraft will be the environment. Next-generation and future aircraft will be required to meet new and increasingly more stringent environmental protection requirements for engine emissions in keeping with the U.S. Clean Air Act and the Kyoto Protocol.
Fair trade principles should stimulate new services in the twenty-first-century air transport market. Improved market access would promote greater freedom for developing commerce, particularly among the three largest trading partners: North America, Europe, and Japan (see Tables 21-4 and 21-5). Air traffic is expected to grow at an average annual rate of 5 percent through 2005.
The industry has had a gradual expansion, especially in productivity, increasing the number of firms approximately 7% in the 5 year period between 1997 and 2002, but shedding about 18,000 workers in the same period - or almost 19% (see chart below)
At the same time, the industry has experienced solid growth up until late in this decade. According to the U.S. Department of Commerce, the industry grew 11% in the five years between 1997 and 2002, reaching over US $64 billion in annual sales (see chart below).
General Aviation Aircraft
Manufacturers in the general aviation sector produce fixed-wing aircraft for regional airline service, business transportation, recreation, and specialized uses such as ambulance service, agricultural spraying, and pilot training. About 12 companies in the United States manufacture general aviation aircraft. The largest manufacturers, measured by number of aircraft produced, are Cessna, Learjet, Mooney, Piper, and Raytheon.
The General Aviation Manufacturers Association (GAMA) reported that in 1998 its members had their highest billings ever at $5.9 billion, up 26 percent from the level in 1997. This was the third year in a row of record-setting sales and deliveries. Shipments of general aviation aircraft reached 2,213 units, up 42 percent from 1,569 units in 1997. Piston-powered aircraft shipments rose 56 percent, and those of turbine-engine aircraft, including seven Boeing Business Jets, increased 18 percent. Billings in the first half of 1999 reached $3.5 billion, an increase of 45 percent over the same period in 1998; unit shipments increased 13 percent in that period. Units exported in 1998 increased 19 percent compared with 1997 and remained steady in the first half of 1999 compared with the same period in 1998.
There are several programs to revitalize the U.S. general aviation industry. One is the Advanced General Aviation Transport Experiments (AGATE) program initiated by NASA in 1994. The AGATE Consortium is a cost-sharing industry-universitygovernment partnership—which includes the Federal Aviation Administration (FAA) as well as NASA’s Langley Research Center—to develop affordable new technologies, industry standards, and certification methods for airframe, cockpit, flight training systems, and airspace infrastructure for next-generation single-pilot, four- to six-passenger, near-all-weather light airplanes. The latest initiative is called the “highway in the sky,” a cockpit display system that includes a computer-drawn highway that the pilot follows to a preprogrammed destination. The displays and other equipment will provide intuitive situational awareness and enough information for a pilot to perform safely, with a reduced workload, in nearly all weather conditions. Business aviation, one of the most important segments of general aviation, consists of companies and individuals that use aircraft as tools to conduct their business. Business aircraft are used by all types of people and companies, from individuals who fly rented, single-engine, piston-powered airplanes to sales or management teams from the largest multinational corporations, many of which own fleets of multiengine, turbine-powered aircraft and employ their own flight crews, maintenance technicians, and other aviation support personnel. The number of flight departments in U.S. businesses grew nearly 25 percent from 6,747 in 1993 to 8,236 in 1998. Although the overwhelming majority of business aircraft missions are conducted on demand, some companies have scheduled operations, known as corporate shuttles, that essentially are in-house airlines. Most corporations that operate business aircraft use modern multiengine turbine-powered jets, turboprops, or turbine helicopters that are certified to the highest applicable transport-category standards.
Aircraft built specifically for business use vary from fourseat, short-range, piston-powered airplanes to two- and threeengine corporate jets that can carry up to 19 passengers nearly 7,000 miles nonstop. Some companies even use airline-type jets, including the Boeing Business Jet, which uses the fuselage of the 737-700 airliner and the wings and landing gear of the 737-800. A rapidly growing alternative to full ownership is fractional ownership, by which companies or individuals own a fraction of an aircraft and receive management and pilot services associated with the aircraft’s operation. Growth in this area has been phenomenal. In 1986, there were four owners of fractionally held aircraft; by 1993, there were 89. From 1997 to 1998, the number of companies using fractional ownership grew over 50 percent from 743 to 1,125.
World deliveries of turbine-powered business airplanes were expected to reach about 760 units in 1999 and increase slightly to about 770 units in the year 2000. Deliveries are expected to decrease each year through 2004 until they reach about 680 aircraft a year.
S. Domestic Trends
The industry was expected to have a moderate to strong increase in the value of shipments made in 1999 compared with 1998. The total value of shipments by the U.S. aerospace industry in 1998 was $145 billion, a 2.2 percent increase over 1997. In the first half of 1999, compared with the same period in 1998, shipments increased 1.8 percent and new orders grew 0.8 percent. Deliveries of complete civil aircraft and engines reached $48 billion in 1998, an increase of 34 percent over the 1997 level. U.S. aerospace exports increased 27 percent in 1998 compared with 1997. U.S. defense procurement in fiscal year (FY) 1998 (including new buys, modifications, and parts) totaled $14 billion for aircraft and $3.8 billion for missiles and space equipment.
Defense Industry
Reversing 15 years of decline, total procurement from all industry sectors by the U.S. Department of Defense (DOD) in FY 1998 rose slightly to $128.8 billion, in comparison to $128.4 billion in 1997. The total outlay was significantly lower than the peak of $163.7 billion reached in 1985. The largest prime contractors in the U.S. defense industry— Lockheed Martin and Boeing—were each awarded over $10 billion in prime contracts in FY 1998. The third largest, Raytheon, received $5.7 billion in prime contract awards. Rounding out the list of the top 10 prime contractors in 1998 were General Dynamics, Northrop Grumman, United Technologies, Textron, Litton Industries, Newport News Shipbuilding, and TRW (with $1.3 billion). The largest military aviation development program is the multirole Joint Strike Fighter (JSF), which will be produced for the U.S. Air Force and Marines and the U.S. and British navies. Three thousand JSFs are planned for manufacture over several years to replace aging F-16s and other aircraft. Competition for the role of primary contractor for the JSF has been narrowed to Boeing and Lockheed Martin as the program enters the prototype and testing stages.
With the United States accounting for 46 percent of the world’s inventory of tactical combat aircraft, the export potential of the JSF is envisioned to be high, although it may not be available for exportation before the year 2010. Foreign competition would come largely from the newly developed Eurofighter Typhoon, Dassault’s Rafale or Mirage, and Russia’s MiG and Sukhoi combat aircraft.
Other aircraft in various stages of development include Lockheed Martin’s multi-billion-dollar F-22 Raptor program to replace F-15s, large transports to replace the C-130s, and new bombers, helicopters, and refuelers. Fearing that a single supplier could emerge in Europe and resisting further domestic consolidation, DOD is encouraging transatlantic partnerships. The Balkan war accelerated the impetus for U.S. partnerships with European industry stemming from concerns about the existing technology gaps and lack of interoperability that hindered NATO’s effectiveness. In 1998, deliveries of new military aircraft to foreign customers rose to $3.6 billion, an increase of 57 percent compared with 1997. U.S. arms exports as measured by agreements signed (actual deliveries can lag several years) totaled $7.1 billion in 1998. While the United States continued to dominate global export markets with almost a third of total military exports worldwide, the market is considerably smaller than the $37 billion in sales reached in 1993.
Developing countries, which can stage the fiercest competition among military suppliers, purchased some $4.6 billion of U.S. arms in 1998, compared with $2.4 billion from France and less than $2 billion each from Germany, the United Kingdom, and Russia. Middle Eastern countries such as Saudi Arabia, Kuwait, the United Arab Emirates, Egypt, and Israel continue to be some of the largest purchasers of arms. In Asia, Malaysia led with $2.1 billion in imports. The top recipients of arms deliver-ies in 1998 were Saudi Arabia, Taiwan, Singapore, and South Korea.
Aircraft
This sector consists of large transports, general aviation aircraft, rotorcraft, and unmanned aerial vehicles. Large Transports. The large civil aircraft sector includes commercial passenger and cargo aircraft with an operating empty weight greater than 15,000 kilograms and two, three, or four engines. Passenger aircraft in this category can accommodate at least 70 passengers. The Boeing Company is the only manufacturer of such aircraft in the United States.
Economic growth is expected to continue to be the main stimulus for aircraft demand. A decline in economic growth that followed the 1997–1998 financial troubles in Asia resulted in a decrease in airline traffic in that region. That decline had a negative impact on the airlines’ revenue and overall cash flow, resulting in a decreased demand for aircraft. However, nations such as India and China are expected to experience growth in air travel as they climb the economic development curve. In mid-1999, there were signs of economic recovery in Asia, especially South Korea, Singapore, and Thailand, as those countries began to emerge from the Asian financial crisis. China, Australia, and New Zealand continued to maintain stable economies, and U.S. and European economies remained strong. Air travel remains brisk, aging domestic fleets are being phased out and replaced with new planes, and overseas travel continues to grow. These factors are expected to spur demand for new aircraft over the next 5 years.
Industry experts foresee an overall production downturn in the year 2000. On the basis of announced manufacturing rates, 1999 was expected to be the peak year in total aircraft production, with the global industry delivering about 920 jets. The outlook for 2000 is estimated to be below 1999 levels, with about 800 jets expected to be delivered. U.S. production of large civilian transports was expected to reach about 620 aircraft in 1999 and about 480 in 2000.
In the early years of the twenty-first century, technology may take a back seat to efficiency. Rather than creating entirely new passenger aircraft that will fly faster, higher, and farther on less fuel, large aircraft manufacturers are more likely to modify existing designs; this will reduce production costs, pollutants, and noise and add more seats. Stiff price competition between Boeing and Airbus will continue.
U.S. government funding for aeronautical research and development decreased significantly with the cancellation in 1999 of the National Aeronautics and Space Administration’s (NASA) funding for the High Speed Research and Aviation Subsonic Technology programs.
One of the most significant new influences on twenty-firstcentury aircraft will be the environment. Next-generation and future aircraft will be required to meet new and increasingly more stringent environmental protection requirements for engine emissions in keeping with the U.S. Clean Air Act and the Kyoto Protocol.
Fair trade principles should stimulate new services in the twenty-first-century air transport market. Improved market access would promote greater freedom for developing commerce, particularly among the three largest trading partners: North America, Europe, and Japan (see Tables 21-4 and 21-5). Air traffic is expected to grow at an average annual rate of 5 percent through 2005.
The industry has had a gradual expansion, especially in productivity, increasing the number of firms approximately 7% in the 5 year period between 1997 and 2002, but shedding about 18,000 workers in the same period - or almost 19% (see chart below)
At the same time, the industry has experienced solid growth up until late in this decade. According to the U.S. Department of Commerce, the industry grew 11% in the five years between 1997 and 2002, reaching over US $64 billion in annual sales (see chart below).
General Aviation Aircraft
Manufacturers in the general aviation sector produce fixed-wing aircraft for regional airline service, business transportation, recreation, and specialized uses such as ambulance service, agricultural spraying, and pilot training. About 12 companies in the United States manufacture general aviation aircraft. The largest manufacturers, measured by number of aircraft produced, are Cessna, Learjet, Mooney, Piper, and Raytheon.
The General Aviation Manufacturers Association (GAMA) reported that in 1998 its members had their highest billings ever at $5.9 billion, up 26 percent from the level in 1997. This was the third year in a row of record-setting sales and deliveries. Shipments of general aviation aircraft reached 2,213 units, up 42 percent from 1,569 units in 1997. Piston-powered aircraft shipments rose 56 percent, and those of turbine-engine aircraft, including seven Boeing Business Jets, increased 18 percent. Billings in the first half of 1999 reached $3.5 billion, an increase of 45 percent over the same period in 1998; unit shipments increased 13 percent in that period. Units exported in 1998 increased 19 percent compared with 1997 and remained steady in the first half of 1999 compared with the same period in 1998.
There are several programs to revitalize the U.S. general aviation industry. One is the Advanced General Aviation Transport Experiments (AGATE) program initiated by NASA in 1994. The AGATE Consortium is a cost-sharing industry-universitygovernment partnership—which includes the Federal Aviation Administration (FAA) as well as NASA’s Langley Research Center—to develop affordable new technologies, industry standards, and certification methods for airframe, cockpit, flight training systems, and airspace infrastructure for next-generation single-pilot, four- to six-passenger, near-all-weather light airplanes. The latest initiative is called the “highway in the sky,” a cockpit display system that includes a computer-drawn highway that the pilot follows to a preprogrammed destination. The displays and other equipment will provide intuitive situational awareness and enough information for a pilot to perform safely, with a reduced workload, in nearly all weather conditions. Business aviation, one of the most important segments of general aviation, consists of companies and individuals that use aircraft as tools to conduct their business. Business aircraft are used by all types of people and companies, from individuals who fly rented, single-engine, piston-powered airplanes to sales or management teams from the largest multinational corporations, many of which own fleets of multiengine, turbine-powered aircraft and employ their own flight crews, maintenance technicians, and other aviation support personnel. The number of flight departments in U.S. businesses grew nearly 25 percent from 6,747 in 1993 to 8,236 in 1998. Although the overwhelming majority of business aircraft missions are conducted on demand, some companies have scheduled operations, known as corporate shuttles, that essentially are in-house airlines. Most corporations that operate business aircraft use modern multiengine turbine-powered jets, turboprops, or turbine helicopters that are certified to the highest applicable transport-category standards.
Aircraft built specifically for business use vary from fourseat, short-range, piston-powered airplanes to two- and threeengine corporate jets that can carry up to 19 passengers nearly 7,000 miles nonstop. Some companies even use airline-type jets, including the Boeing Business Jet, which uses the fuselage of the 737-700 airliner and the wings and landing gear of the 737-800. A rapidly growing alternative to full ownership is fractional ownership, by which companies or individuals own a fraction of an aircraft and receive management and pilot services associated with the aircraft’s operation. Growth in this area has been phenomenal. In 1986, there were four owners of fractionally held aircraft; by 1993, there were 89. From 1997 to 1998, the number of companies using fractional ownership grew over 50 percent from 743 to 1,125.
World deliveries of turbine-powered business airplanes were expected to reach about 760 units in 1999 and increase slightly to about 770 units in the year 2000. Deliveries are expected to decrease each year through 2004 until they reach about 680 aircraft a year.