Aerospace Industrial Development Corp (AIDC, 漢翔航空) yesterday said it is looking to new orders to mitigate the effects of potential revenue losses if Boeing Co were to stop production of its 737 MAX aircraft.
The US aerospace giant last month said that it might have to suspend 737 MAX production if the grounding of the jet continues much longer.
AIDC has yet to receive such notice from Boeing, general manager Ma Wan-june (馬萬鈞) said.
“Instead, we have been told that Boeing would cut its orders for components such as doors for the time being. As no one, including Boeing, knows exactly when the grounding will be lifted, it is difficult to forecast when we will see orders return to normal,” Ma said.
AIDC’s revenue might be reduced by up to NT$100 million (US$3.18 million) for this year if Boeing continues trimming its orders, Ma said.
However, the company has gained more orders for aircraft engine cases by negotiating with General Electric Co and other clients, he said.
AIDC manufactures Leap engine cases for CFM International, which is jointly owned by General Electric and Safran Aircraft Engines.
The demand for engine cases remains high because there has been a shortage since 2017, the company said.
Although Boeing might reduce its demand for 737 MAX engines, the move would barely affect sales of Leap engines, as they also power jets manufactured by another major aerospace company, Airbus SE, Ma said.
AIDC is therefore upbeat about its engine case business and expects sales from the division to account for one-third of its overall revenue this year, he said.
The company hopes that the new orders could offset the loss in revenue from reduced Boeing orders, Ma said, adding that it hopes full-year revenue would be flat from a year earlier.
AIDC reported a 5 percent annual increase in revenue for the first seven months of the year to NT$15.68 billion, company data showed.
However, net profit during the same period dropped 8.37 percent year-on-year to NT$855 million, which translates into earnings per share of NT$0.91.
The company is to finish building a prototype of an advanced trainer jet next month, with a local-content rate of 55 percent, and is slated to deliver 66 military aircraft to the government from 2023 to 2028, it said.
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