Aerospace Industrial Development Corp (AIDC, 漢翔航空工業), the nation’s largest civilian and military aircraft manufacturer, yesterday said the company expects to see stable earnings growth next year as it balances revenue streams from the military and civilian sectors.
The company reported that net income in the third quarter dipped 23.07 percent annually to NT$1.16 billion (US$38.7 million) in the light of challenges faced by its customers, with sales falling 5.23 percent to NT$19.4 billion. Earnings per share in the first nine months were NT$1.23.
The company’s engine casing sales were affected as aircraft and engine designers continued to phase out the CFM56 engine for the LEAP engine, AIDC president Lin Nan-chu (林南助) said at an earnings conference in Kaohsiung.
Other challenges include the announcement by Mitsubishi Heavy Industries Ltd in January that delivery of its Mitsubishi Regional Jet would be delayed by two years to complete required design changes, Lin added.
Whether aircraft or engines, long development cycles and delays are quite common in the aerospace industry, Lin said, adding that the company has been striving to replace lost civilian sector sales with military contracts.
While designers have improved fuel efficiency by 25 percent in designing the LEAP engine, they are seeking further refinements before beginning to mass produce the engine, he said.
There is also a shortage of the advanced alloys used in the engine casing, and this lack of materials has delayed production, he added.
The company took a similar hit recently when rock-bottom oil prices stifled demand for helicopters, as oil producers stopped surveying activity in the field.
The revenue breakdown for the first 10 months showed that 46 percent of sales were civilian aircraft and 53 percent were military jets, compared with civilian sales of 51 percent and military sales of 48 percent last year, Lin said.
The main focus of the company is military contracts, in particular a contract with the nation’s air force to build a new fleet of trainer jets, Lin said.
The trainer jet contract is backed by a NT$68.6 budget from the Ministry of National Defense, with 66 aircraft due to be delivered by 2026.
Most of the machinery used at the company’s new engine casing plant is made by Taiwanese companies, AIDC chairman Anson Liao (廖榮鑫) said.
Having 90 percent of it made in Taiwan represents an early milestone of a vision to form an “A Team” alliance of tier-1 local suppliers to compete together in international markets, he said.
Still, some alliance members have dropped out.
“Some just lack the will to commit to the cost of elevating their standards for the international market and are unable to deliver the required quality at the stipulated time frame and price,” Liao said.
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