Edac Technologies (EDAC)

[MikeDDKing]

Here is an interesting article on how the supply chain for the aviation industry is under stress. I believe this bodes well for EDAC.

Mike

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Demand soars for Bombardier's executive jets
But stress on the supply chain a worry, business jet executive says
By Aude Lagorce, MarketWatch
Last Update: 9:56 AM ET Jun 18, 2007


LE BOURGET, France (MarketWatch) -- Tighter airport security and healthy corporate profits worldwide are driving demand for Bombardier's "flying boardrooms," Pierre Cote, head of Bombardier's business jet division, said in a Monday interview.

"We've seen an increase in demand since 9/11," said Cote, speaking on the sidelines of the international air show that runs on the outskirts of Paris through this week. He said that entrepreneurs in China, Russia and India are also waking up to the additional comfort and productivity that private jets can deliver.

Bombardier (CA:BBD.PRD: news, chart, profile) , which has long dominated the market for executive jets, has easily captured that increased demand via its range of aircraft, from the very light Lear Jets to the large, long-range Global family of aircraft. See slideshow of Paris offerings.

Although Cote was mum on whether the Canadian jet maker has a new platform in the works, saying only that development is "very expensive and risky," he was keen in the interview with MarketWatch to emphasize the improvements Bombardier has made to the existing Lear Jet, Challenger and Global families.

The Challenger 605, for instance, now boasts larger windows, which is something customers had been requesting for some time.

But the top request relates to range, Cote said. People want to go further and they want to fly nonstop. The Global Express, for instance, can already fly nonstop from Paris to Los Angeles or Beijing. See air show preview.

To extend that range even further, Cote said engineers are looking at reducing the weight of the aircraft by using more composite materials. Composites are lighter, which means they allow the aircraft to burn less fuel, a key advantage at a time of high oil prices. They're also easier to maintain and can be easily shaped to optimize performance, said Cote.

Bombardier has set up a center of excellence focusing on composites in Belfast, Northern Ireland.

Stress on the supply chain

While Bombardier is enjoying a strong backlog, it's concerned about the stress the current peak in the aviation cycle is putting on suppliers.

"The market is really good. We have a healthy backlog...but how fast we can build those planes is a problem. The supply chain is under stress," said Cote.

Boeing is just beginning production of its new midsize long-range 787, while Airbus is ramping up production of the single-aisle A320 and of the A380 superjumbo. Both companies have also said they're wary of lifting production because of supply chain stress.

New entrants are another element of concern for the more established players. While the Chinese and Russians are building regional jets, they've made little noise about entering the business jet market.

"On the commercial side, the momentum is building," said Cote. "On the business side, it will happen...We need to keep our eyes opened."

He said that the 2008 Olympics in Beijing will be an important test of how ready the Chinese are to open their airspace. "Our biggest concern at the moment with the Chinese is market access," said Cote.

Bombardier on Monday signed a memorandum of understanding with China Aviation Industry Corp. (AVIC I) to cooperate in the market for 90- to-149 seat airliners, and said it would invest $100 million in AVIC's regional jet program.

AVIC I President Lin Zuo Ming said the company plans to launch the ARJ21-900 regional airliner this year and expects it to enter service in 2011.

Aude Lagorce is a reporter for MarketWatch in London.

http://www.marketwatch.com/news/story/bombardier-air-show-sees-healthy/story.aspx?guid={9AD81C18-97A...