Socata sticks to plans despite surge in deferrals

By Niall O’Keeffe

For Socata, Daher’s decision to take a majority stake in the company could scarcely have been better timed. News of the deal broke at the end of June 2008, just three months before the global banking system collapsed, sending business aviation into a tailspin.

The transfer of a 70% Socata stake from EADS to fellow French industrial group Daher was formally completed at the beginning of this year, and Daher’s aerospace activities have since been organised into a division named Daher-Socata, of which Socata represents the airplane subdivision. Socata manufactures the TBM range of single-engined turboprops at its base in Tarbes, a south-western French town nestled amid perennially snow-capped Pyrenees mountains.

In its previous incarnation, Socata contributed “less than 1% of EADS’s turnover”, recalls Nicolas Chabbert, senior vice-president of Daher-Socata’s airplane division. “At less than 1%, it is impossible to be watched correctly or understood,” he says. “TBM is 15% of Daher’s activity. Socata is representing 25% of the entire group. The attention level has been changed with this move.” Yet EADS remains a 30% partner in Socata, which continues to collaborate with other companies in the group, adds Chabbert.

Daher Socata
© Daher-Socata

The new majority owner, Daher, has certainly felt the sting of the crisis in business aviation. The company confirms that “roughly 50%” of scheduled Socata deliveries for the year so far have been deferred.

Some comfort can be drawn from the fact that business is falling from its highest peak on record: in 2008, Socata delivered a record 60 of its latest aircraft type, the seven-seat TBM 850 launched in 2006. European deliveries accounted for a 20% share, reflecting a broad trend in Socata’s business. Where in the past the USA accounted for more than 90% of Socata’s business, its share is now closer to 70%. Europe has meanwhile grown its portion, while business has also been won in Australia, Brazil and South Africa.

As of April 2009, 156 TBM 850s had been delivered, “almost half” of them equipped with the Garmin G1000 glass cockpit, intended to reduce pilot workload and ease maintenance. The first G1000-equipped TBM 850 was rolled out in January 2008. Serial number 508 will be on display at EBACE.

Named for its horsepower (850shp), the TBM 850 has a maximum cruise speed of 320kt (590km/h) at 26,000ft (7,930m) and a range of just over 2,600km (1,400nm). It represents an upgrade of the TBM 700, of which 323 were delivered following certification in 1990. The TBM 700 was developed with Mooney Aircraft as a 30% partner, but the Texan company withdrew from the programme around the time of the first delivery.

These are just the recent iterations in a history that stretches back almost a century. Only slightly younger than Flight International, Socata grew out of Morane-Saulnier, a manufacturer founded in 1911. During the Second World War occupation of France, Germany’s Focke-Wulf 190 was produced at Morane-Saulnier’s plant at Tarbes, until the Allies bombed it in 1944. In 1945 Morane-Saulnier unveiled the MS 470 two-seat trainer, which it had been developing in secret. The company gained the name Socata when it became a division of Sud Aviation in 1966, and it later merged into Aerospatiale and then EADS. Over the full course of its history it has built more than 17,000 aircraft.

© Daher-Socata
© Daher-Socata

Today, a burgeoning aerostructures business runs alongside the aircraft manufacturing operation at Tarbes. With capabilities ranging from traditional craft skills and hand finishing to advanced composite technologies, Socata manufactures aerostructures for a diverse range of programmes: nose lower structures and composite landing gear doors for the Airbus A380, composite fairing sponsons and nose landing gear doors for the A400M, belly fairings for the A330/A340, engine pylons for the A320, upper fuselages for the Dassault Falcon 7X, body fairings for the Falcon 7X and 2000, rear sections for the Embraer 170/190, and airframes for the Eurocopter EC130 and EC350. It has also been confirmed as a tier-one partner in the A350 programme, for which it will provide the main landing gear doors.

WHAT NEXT?

In spite of the doom and gloom plaguing business aviation in 2009, Socata-Daher has not abandoned plans to add a 10-seat, twin-engined jet to its product range. The new jet, code-named the NTx, could be formally launched in 2010. However, investment partners must first be found, as Daher is prepared to fund only one-third of the programme’s €250 million ($324 million) cost, says the company, which also confirms that the prospective new jet has already been pitched to the French military.

An internal review of the business plan for the new jet is under way at Socata. “We are at the stage of reviewing the technical solutions,” says Chabbert. “We have a good feel for the marketing challenge.”

Investment in the new jet is part of a two-phase investment programme in progress at Daher Group. In the first phase, €250 million of internally generated Daher funds were allocated to acquiring the Socata stake, opening new plants in Australia and Mexico, and financing non-recurring costs arising from A350 programme involvement. The second phase will bring investment of €300 million across the nuclear, aerospace and defence sectors. This will be part-funded by an €80 million capital increase, to which French state investment fund FSI subscribed, gaining a 17% stake.

In the meantime, Socata has maintained a consistent sales strategy focused on pilot-owner customers, despite the downturn. “The basics, for that type of customer, are to be excellent in customer service – that’s what we are committed to,” says Chabbert. “That doesn’t change much, whether it’s an economic downturn or economic growth.”

Socata has, however, taken the step to introduce a new co-ownership programme, which is intended to reduce the capital outlay for a $3 million TBM 850 for potential owners who do not have sufficient capital to acquire an aircraft outright or cannot raise enough finance. Developed in collaboration with distributors, the “Fly and Share Your TBM” (Fast) programme can accommodate up to three shareholders per aircraft, with each gaining a minimum 100 days of exclusive use per annum on an unlimited flight hour basis.

© Daher-Socata
© Daher-Socata

“We try to present the product in a new light for people who may not have thought that this was an available option,” says Chabbert, who adds that some of the interest initiated by the Fast programme has led to sales on a full-ownership basis.

Additionally, Socata’s drive to grow TBM 850 sales has targeted the burgeoning surveillance market. Efforts in this area will be stepped up during the Paris air show in June. “We have a strategy developed that is going to have a high point at Le Bourget, where we will have a multi-mission aircraft…equipped with a solution for surveillance,” says Chabbert. “This is a strategy which we started about two and a half years ago. It takes a long time to get set up.”

The TBM’s core constituency – conceived as executives deploying aircraft as a business tool – is expected to expand, as corporate belt-tightening forces a move to smaller models, but Chabbert cautions that the pace of change could be slow. “You don’t change overnight things that take months or years to establish…but we see the trend. There is a trend of not being seen as the ‘jet buyer’ or ‘jet user’.”

By Chabbert’s reckoning, general aviation plays an essential role in filling out the transport network, filling gaps in the airlines’ coverage. He is dismissive of the notion that general aviation is a luxury, citing its role in business travel, medevac and transport of small goods. “I’m not a defender of excessive use,” he insists. “When I use a TBM I calculate if it’s worth doing it… When you are putting it [forward] as a business tool, you have to think: is it efficient? Is it justifiable? Is it something you can afford?”

On the subject of affordability, he makes the point that many of Socata’s target owner-pilot customers are heavily invested in the stock market and greatly expanded their wealth during the boom times. “Yes, the stock is down, but they made a fortune!” he says, arguing that the years of growth more than offset more recent declines. In this context, the barrier to new sales is “psychological”, in Chabbert’s view.

Another barrier to growth arises from an ongoing regulatory issue: European rules forbid the operation of single-engined turboprops in commercial public transport. An option to sell tickets might not in itself be enough to justify a purchase, but would be “plenty enough to offset some of the cost and therefore create more traction for this aircraft”, says Chabbert. “Cessna [manufacturer of the single-engined Caravan range] and ourselves are united in a joint front to present single-engine data to the European Union. EASA said that there is a timeframe that they will study the file, but I think that expediting this would certainly help the European market.”

A resolution would “incentivise drastically the single-engine turboprops market”, he adds. “Many companies – in Bulgaria, in Germany, in the UK – if they didn’t have the TBM they couldn’t conduct their business. That could be increased with regulation that could help people go more for co-ownership.”


Socata sticks to plans despite surge in deferrals

By Niall O’Keeffe

For Socata, Daher’s decision to take a majority stake in the company could scarcely have been better timed. News of the deal broke at the end of June 2008, just three months before the global banking system collapsed, sending business aviation into a tailspin.

The transfer of a 70% Socata stake from EADS to fellow French industrial group Daher was formally completed at the beginning of this year, and Daher’s aerospace activities have since been organised into a division named Daher-Socata, of which Socata represents the airplane subdivision. Socata manufactures the TBM range of single-engined turboprops at its base in Tarbes, a south-western French town nestled amid perennially snow-capped Pyrenees mountains.

In its previous incarnation, Socata contributed “less than 1% of EADS’s turnover”, recalls Nicolas Chabbert, senior vice-president of Daher-Socata’s airplane division. “At less than 1%, it is impossible to be watched correctly or understood,” he says. “TBM is 15% of Daher’s activity. Socata is representing 25% of the entire group. The attention level has been changed with this move.” Yet EADS remains a 30% partner in Socata, which continues to collaborate with other companies in the group, adds Chabbert.

Daher Socata
© Daher-Socata

The new majority owner, Daher, has certainly felt the sting of the crisis in business aviation. The company confirms that “roughly 50%” of scheduled Socata deliveries for the year so far have been deferred.

Some comfort can be drawn from the fact that business is falling from its highest peak on record: in 2008, Socata delivered a record 60 of its latest aircraft type, the seven-seat TBM 850 launched in 2006. European deliveries accounted for a 20% share, reflecting a broad trend in Socata’s business. Where in the past the USA accounted for more than 90% of Socata’s business, its share is now closer to 70%. Europe has meanwhile grown its portion, while business has also been won in Australia, Brazil and South Africa.

As of April 2009, 156 TBM 850s had been delivered, “almost half” of them equipped with the Garmin G1000 glass cockpit, intended to reduce pilot workload and ease maintenance. The first G1000-equipped TBM 850 was rolled out in January 2008. Serial number 508 will be on display at EBACE.

Named for its horsepower (850shp), the TBM 850 has a maximum cruise speed of 320kt (590km/h) at 26,000ft (7,930m) and a range of just over 2,600km (1,400nm). It represents an upgrade of the TBM 700, of which 323 were delivered following certification in 1990. The TBM 700 was developed with Mooney Aircraft as a 30% partner, but the Texan company withdrew from the programme around the time of the first delivery.

These are just the recent iterations in a history that stretches back almost a century. Only slightly younger than Flight International, Socata grew out of Morane-Saulnier, a manufacturer founded in 1911. During the Second World War occupation of France, Germany’s Focke-Wulf 190 was produced at Morane-Saulnier’s plant at Tarbes, until the Allies bombed it in 1944. In 1945 Morane-Saulnier unveiled the MS 470 two-seat trainer, which it had been developing in secret. The company gained the name Socata when it became a division of Sud Aviation in 1966, and it later merged into Aerospatiale and then EADS. Over the full course of its history it has built more than 17,000 aircraft.

© Daher-Socata
© Daher-Socata

Today, a burgeoning aerostructures business runs alongside the aircraft manufacturing operation at Tarbes. With capabilities ranging from traditional craft skills and hand finishing to advanced composite technologies, Socata manufactures aerostructures for a diverse range of programmes: nose lower structures and composite landing gear doors for the Airbus A380, composite fairing sponsons and nose landing gear doors for the A400M, belly fairings for the A330/A340, engine pylons for the A320, upper fuselages for the Dassault Falcon 7X, body fairings for the Falcon 7X and 2000, rear sections for the Embraer 170/190, and airframes for the Eurocopter EC130 and EC350. It has also been confirmed as a tier-one partner in the A350 programme, for which it will provide the main landing gear doors.

WHAT NEXT?

In spite of the doom and gloom plaguing business aviation in 2009, Socata-Daher has not abandoned plans to add a 10-seat, twin-engined jet to its product range. The new jet, code-named the NTx, could be formally launched in 2010. However, investment partners must first be found, as Daher is prepared to fund only one-third of the programme’s €250 million ($324 million) cost, says the company, which also confirms that the prospective new jet has already been pitched to the French military.

An internal review of the business plan for the new jet is under way at Socata. “We are at the stage of reviewing the technical solutions,” says Chabbert. “We have a good feel for the marketing challenge.”

Investment in the new jet is part of a two-phase investment programme in progress at Daher Group. In the first phase, €250 million of internally generated Daher funds were allocated to acquiring the Socata stake, opening new plants in Australia and Mexico, and financing non-recurring costs arising from A350 programme involvement. The second phase will bring investment of €300 million across the nuclear, aerospace and defence sectors. This will be part-funded by an €80 million capital increase, to which French state investment fund FSI subscribed, gaining a 17% stake.

In the meantime, Socata has maintained a consistent sales strategy focused on pilot-owner customers, despite the downturn. “The basics, for that type of customer, are to be excellent in customer service – that’s what we are committed to,” says Chabbert. “That doesn’t change much, whether it’s an economic downturn or economic growth.”

Socata has, however, taken the step to introduce a new co-ownership programme, which is intended to reduce the capital outlay for a $3 million TBM 850 for potential owners who do not have sufficient capital to acquire an aircraft outright or cannot raise enough finance. Developed in collaboration with distributors, the “Fly and Share Your TBM” (Fast) programme can accommodate up to three shareholders per aircraft, with each gaining a minimum 100 days of exclusive use per annum on an unlimited flight hour basis.

© Daher-Socata
© Daher-Socata

“We try to present the product in a new light for people who may not have thought that this was an available option,” says Chabbert, who adds that some of the interest initiated by the Fast programme has led to sales on a full-ownership basis.

Additionally, Socata’s drive to grow TBM 850 sales has targeted the burgeoning surveillance market. Efforts in this area will be stepped up during the Paris air show in June. “We have a strategy developed that is going to have a high point at Le Bourget, where we will have a multi-mission aircraft…equipped with a solution for surveillance,” says Chabbert. “This is a strategy which we started about two and a half years ago. It takes a long time to get set up.”

The TBM’s core constituency – conceived as executives deploying aircraft as a business tool – is expected to expand, as corporate belt-tightening forces a move to smaller models, but Chabbert cautions that the pace of change could be slow. “You don’t change overnight things that take months or years to establish…but we see the trend. There is a trend of not being seen as the ‘jet buyer’ or ‘jet user’.”

By Chabbert’s reckoning, general aviation plays an essential role in filling out the transport network, filling gaps in the airlines’ coverage. He is dismissive of the notion that general aviation is a luxury, citing its role in business travel, medevac and transport of small goods. “I’m not a defender of excessive use,” he insists. “When I use a TBM I calculate if it’s worth doing it… When you are putting it [forward] as a business tool, you have to think: is it efficient? Is it justifiable? Is it something you can afford?”

On the subject of affordability, he makes the point that many of Socata’s target owner-pilot customers are heavily invested in the stock market and greatly expanded their wealth during the boom times. “Yes, the stock is down, but they made a fortune!” he says, arguing that the years of growth more than offset more recent declines. In this context, the barrier to new sales is “psychological”, in Chabbert’s view.

Another barrier to growth arises from an ongoing regulatory issue: European rules forbid the operation of single-engined turboprops in commercial public transport. An option to sell tickets might not in itself be enough to justify a purchase, but would be “plenty enough to offset some of the cost and therefore create more traction for this aircraft”, says Chabbert. “Cessna [manufacturer of the single-engined Caravan range] and ourselves are united in a joint front to present single-engine data to the European Union. EASA said that there is a timeframe that they will study the file, but I think that expediting this would certainly help the European market.”

A resolution would “incentivise drastically the single-engine turboprops market”, he adds. “Many companies – in Bulgaria, in Germany, in the UK – if they didn’t have the TBM they couldn’t conduct their business. That could be increased with regulation that could help people go more for co-ownership.”


BAE Systems wins UK Harrier GR7/9 maintenance deal

By Craig Hoyle

The UK Ministry of Defence has contracted BAE Systems to maintain its Harrier GR7/9 ground attack aircraft for the next nine years, but programme officials say the bulk of the fleet could fly until 2022 without major additional work.

Worth £574 million ($850 million), the Harrier Platform Availability Contract will deliver “depth” maintenance and technical support services for the short take-off and vertical landing type at Royal Air Force base Cottesmore in Rutland. Building on previous partnering agreements on the Harrier, the deal is expected to save at least £70 million by the aircraft’s planned out-of-service date in 2018.

“The contract represents a real win for the MoD, RAF, Royal Navy and industry,” says Steve Millward, BAE’s managing director, Harrier and Tornado. “We will deliver the right numbers of aircraft with the right capability at the right time.” The MoD signed a separate support deal for the Harrier’s Pegasus 105/107 engines late last year with Rolls-Royce.

Crown copyright
© Crown Copyright

Including RAF and RN squadrons, the UK’s Joint Force Harrier has 67 single-seat GR7/9s and nine Harrier T10/12 trainers, with 52 of these declared to the forward operating fleet.

The MoD currently plans to phase in its replacement Lockheed Martin F-35B Joint Strike Fighters from 2015 to 2018, and recently ordered three STOVL aircraft to participate in US-led initial operational test and evaluation activities.

However, “by the time we get to 2018 we aren’t necessarily going to be in the last throes of the aircraft, and if we needed to use it longer we believe we could”, says Harrier integrated project team leader Gp Capt Andy Ebdon. Each airframe is expected to deliver 6,000 flight hours, with the potential to grow this by 10%. “The aircraft are being managed carefully now to get to the 6,000h mark, but it doesn’t come in 2018,” says Ebdon.

The RAF’s 1 Sqn in April assumed close air support responsibilities at Afghanistan’s Kandahar airfield from 4 Sqn, which returned to Cottesmore after a four-month detachment. The Harrier’s five-year commitment to NATO’s Afghanistan mission will stop around mid-year, with RAF Panavia Tornado GR4s to be deployed to Kandahar after the completion of aircraft upgrades and delayed base infrastructure work.

BAE’s ongoing Harrier GR9 upgrade will see the aircraft receive Capability D- and EA-phase equipment from mid-2009, says Ebdon. This will include digital Joint Reconnaissance Pod integration and the addition of MBDA’s Brimstone air-to-surface missile, which has recently undergone during firing trials with the Harrier at the China Lake test range in California.


Gulf Air brings in 10 new A320s but rethinks 777 lease plan

By Olivier Bonnassies

Gulf Air‘s narrowbody fleet-renewal effort will see it introduce 10 new Airbus A320s over the coming year. However, the Bahraini airline has reversed plans to retain its newly introduced Boeing 777-300ERs through a dry lease.

The carrier last year ordered 15 A320s, and Flight International‘s sister publication Commercial Aviation Online understands that the first will be delivered in September, with another three arriving throughout the second half of the year.

Gulf Air chief executive Bjorn Naf told CAO that another six aircraft would be delivered in the first half of 2010. “One year from now we will have completely refleeted our A320 product,” he says.

Gulf Air
© Gulf Air

Meanwhile, in a sudden reversal of its strategy, Gulf Air is abandoning the planned dry-lease of four 777-300ERs from Jet Airways. It brought in the first of four 777s only last month, and intended to have all four by May on an initial six-month wet-lease from the Indian carrier and then move to a dry-lease arrangement.

Although it insists it has not cancelled any agreement with Jet Airways, because a firm dry-lease contract had not been signed, Gulf Air admits the switch to the dry lease was “subject to several business considerations”, including market conditions.

“After careful analysis of various commercial and other business considerations, Gulf Air has decided not to pursue the dry-lease option for the foreseeable future,” says the airline.

Gulf Air indicates that the four 777s will leave the fleet once the wet-lease period expires, but says that “all options” are being assessed. It does not say whether the aircraft may be retained through a wet-lease extension.


Aerolineas E-190 deliveries could begin in 4Q

By Brendan Sobie

Embraer is prepared to begin E-190 deliveries to Aerolineas Argentinas late this year should the renationalised carrier finalize a pending deal for 22 E-190s.

Embraer, backed by Brazilian development bank BNDES, has been negotiating an agreement with the Argentine government during the last several months covering at least 20 E-190s. The Argentine government, which took back control of Aerolineas and domestic subsidiary Austral last year, reportedly has already signed a letter of intent for 22 E-190s and is close to signing a firm contract.

Embraer’s VP of commercial aviation for the Latin American market, Luiz Hamilton Lima, says an order has not yet been placed but there is a desire to begin deliveries “as soon as possible” after the deal is completed. “We have the flexibility to accommodate them towards the end of this year, in the fourth quarter,” Lima tells ATI.

Argentina’s purchase of E-190s is one part of a major fleet revamp that has been in the works for several months at Aerolineas and Austral. The Argentine government is also looking at acquiring new narrowbodies and widebodies, possibly by taking over part of the Airbus order placed in 2007 by Spanish travel group Marsans, which at the time owned Aerolineas and Austral.

According to Flight’s ACAS database, Aerolineas’ active narrowbody fleet consists of nine 737-200s and 17 737-500s while Austral currently operates 18 Boeing MD-80s. E-190s could be used to replace about half of these ageing narrowbodies while the other half could be replaced with A320s and/or Boeing 737-800s.

“We’re still negotiating with Argentina. There’s a lot of interest there,” Lima says. “They’re completely renewing the fleet for Aerolineas Argentinas and Austral. We’ll be part of that renovation.”


Aer Lingus to review long-haul order as demand collapses

By David Kaminski-Morrow

Aer Lingus admits that it is to review its long-haul aircraft orders as the Irish flag-carrier reshuffles its senior management in order to cope with a severe downturn in its business.

The carrier is forecasting full-year losses for 2009 that will be “materially below” the bottom of the range of current expectations.

“Ongoing cost reduction is critical for the viability of Aer Lingus in the current difficult market environment,” it says, adding that the board is reviewing options to generate a “sustained” reduction in operating costs.

Aer Lingus is examining the composition of its fleet and, in particular, is to “review its long-term requirement” for the long-haul capacity on order with Airbus and “any associated capital expenditure”.

The airline signed a purchase agreement in 2007 for 12 long-haul Airbus aircraft, including six A350-900s and six A330-300s. It has already started receiving the A330s, while the A350s are due to arrive from 2014.

Aer Lingus, whose long-haul services primarily cover six US destinations, reveals that it transported 12.5% fewer long-haul passengers in the first quarter of this year, and 5.7% fewer on short-haul routes.

As part of its review Aer Lingus is placing these two sides of the business under dedicated management to reflect their “different needs”.

Deputy chief executive Niall Walsh extends his duties to chief operating officer. Corporate planning director Stephen Kavanagh is to head long-haul operations while chief financial officer Sean Coyle will oversee short-haul operations. All three managers also retain their current responsibilities.

Aer Lingus is to look at capacity needs for winter 2009-10 in light of possible fleet and route changes and says it will provide an update to the situation around the time of its annual general meeting on 5 June.

“Against the backdrop of a severe deterioration in operating conditions the board is taking the steps necessary to safeguard the long-term viability of the group,” says Aer Lingus chairman Colm Barrington, who took charge of the airline after the sudden departure of chief executive Dermot Mannion earlier this month.

In its preliminary first-quarter figures, the carrier says that overall yields have declined sharply since the beginning of the year, down 14.5%.

Aer Lingus has slashed long-haul capacity by 19.5% in the first three months, raising load factor to 67.1%, and cut short-haul capacity by 4.5%, increasing loads to just over 70%.