Chrysler 2002 Annual Report Download - page 59

Operating performance
2002 was characterized by the continuing weakness in
worldwide demand for air travel, which started during the last
quarter of 2001. Demand for new engines and overhaul services
from commercial aviation customers felt the negative impact of
the downsizing imposed by airlines, especially in the West. The
governmental market, however, is expanding, both because
European Governments need to renew their military fleets and
because of the increased defense spending in the United
States.
Of importance, in the commercial aircraft market, is the entry
into service of the Trent 500 engines on the Airbus A340-600
and PW308 on the Dassault Falcon 2000 Ex, in addition to the
completion of flight certification activities on the GE90-115B
engine for the Boeing B777-200ER and of the T700-T6E1 engine
for the Italian helicopter NH90.
In the United States, in spite of the weak demand for power
generation units that use aircraft energy to produce electricity,
aletter of intent was signed with General Electric for the
development and manufacture of an innovative industrial
turbine with a power of over 100 MW (LM7000) whose initial
entry into service is expected for 2005–2006.
Work performed under government programs included
continued series production of EJ200 engines for the Typhoon
European fighter and collaboration with Honeywell for the F124
GA 200 turbofan engine for the Aermacchi M346 advanced
trainer. In 2002 FiatAvio also defined important collaboration
agreements with General Electric and Rolls-Royce North
America for the development and production of the F136
engine destined to the American fighters F-35 (JSF).
Naval programs continue with the delivery of the propulsion
system for the Italian Navy’s new aircraft carrier and for the new
Orizzonte Class frigates for the Italian and French Navies (a total
number of 12 LM2500 Turbines). The first “Power by the Hour”
contract for services integrated with the ISIS (In Service
Information System), was signed with the Italian Air Force.
Positive developments in the Commercial Engine Overhaul
Division included agreements reached for the maintenance of
JT8D-200 engines with customers in Asia (Indonesia) and North
America (United States). The maintenance agreement with Air
Dolomiti for the PW100 engines was extended to five years.
Moreover, the first contracts with Italian operators for the
overhaul of CFM56-7 and CFM56-3 were signed.
As to the Space Business Unit, Arianespace maintained a market
share of 50%, completing 4 launches with the Ariane 5 and 7
with the Ariane 4.
Following the problems with the new cryogenic engine, noted
during the Ariane 5 launch of December 2002, corrective actions
are underway and flights are due to resume with the standard
version of the launcher.
Within the “VEGA” program, detailed design of the Zefiro 23
and Zefiro 9 engines began in the fourth quarter of 2002, while
the design of the solid fueled rocket P80 has entered the
operative phase.
Results for the year
In 2002, the Sector had revenues of 1,534 million euros, down
6.2% from 2001 mainly due to the slowdown in the commercial
aircraft market.
The year ended with an increase in operating income,
amounting to 210 million euros (13.7% of revenues) as opposed
to 186 million euros (11.4% of revenues) of 2001, thanks mostly
to the efficiency gains achieved and the containment of
operating expenses.
Depreciation and amortization totaled 69 million euros (89
million euros in 2001) and research and development outlays
amounted to 145 million euros (132 million euros in 2001).
Net income for the year amounted to 116 million euros, down
from 425 million euro posted the previous year, which however
benefited from a capital gain of 328 million euros achieved by
the contribution of Fiat Energia to Italenergia.
Cash flow in 2002 was 185 million euros, lower than 2001 when
the Sector had benefited from the aforesaid extraordinary
capital gain.
57 Report on Operations
Aviation — FiatAvio
(in millions of euros) 2002 2001 2000
Net revenues 1,534 1,636 1,491
Operating result 210 186 143
EBIT 183 495 164
Net result before minority interest 116 425 83
Cash flow 185 514 173
Capital expenditures 130 41 36
Research and development 145 132 104
Net invested capital 618 587 71
Number of employees 5,049 5,243 5,362
Highlights
050% 100%
Revenues by geographical
region of destination
Italy Rest of Europe Rest of the world
Employees by geographical
region