Honeywell 2007 Annual Report Download - page 36

(principally to aircraft operators). The United States Government is also a major customer for our defense and
space products.
Economic and Other Factors
Aerospace operating results are principally driven by:
•
Global demand for air travel as reflected in new aircraft production, as well as the demand for spare parts
and maintenance and repair services for aircraft currently in use;
•
Aircraft production by commercial air transport, regional jet, business and general aviation OE
manufacturers, as well as global flying hours and airline profitability; and
•
Level and mix of U.S. Government appropriations for defense and space programs and military activity; and
•
Availability and price volatility of raw materials such as titanium and other metals.
Results of Operations
2007 2006 2005
(Dollars in millions)
Net sales $ 12,236 $ 11,124 $ 10,496
% change compared with prior year 10% 6%
Segment profit $ 2,197 $ 1,892 $ 1,676
% change compared with prior year 16% 13%
Aerospace sales by major customer end-markets were as follows:
Customer End-Markets
% of Aerospace
Sales % Change in
Sales
2007 2006 2005
2007
Versus
2006
2006
Versus
2005
Commercial:
Air transport and regional original equipment 16% 16% 15% 10% 14%
Air transport and regional aftermarket 22 22 23 8 4
Business and general aviation original equipment 11 12 11 16 16
Business and general aviation aftermarket 10 10 10 16 1
Defense and Space 41 40 41 8 3
Total 100% 100% 100% 10% 6%
Aerospace sales increased by 10 percent and 6 percent in 2007 and 2006, respectively. Details regarding
the net increase in sales by customer end-markets for both 2007 and 2006 are as follows:
• Air transport and regional original equipment (OE) sales increased by 10 percent in 2007 and 14 percent in
2006 driven by increased deliveries to air transport customers primarily due to higher aircraft production
rates at major OE manufacturers.
•
Air transport and regional aftermarket sales increased by 8 percent in 2007 and 4 percent in 2006. The 2007
increase was a result of increased sales volume and price of spare parts and maintenance activity relating
to the approximately 6 percent increase in global flying hours. The 2006 increase over 2005 was a result of
increased sales of spare parts and maintenance activity relating to a more than 5 percent increase in global
flying hours which more than offset the anticipated decline in the sales of upgrades and retrofits of avionics
equipment to meet certain mandated regulatory standards.
•
Business and general aviation OE sales increased by 16 percent in both 2007 and 2006 due to continued
demand in the business jet end market as evidenced by an increase in new business jet deliveries, as well
as the launch of new aircraft platforms in 2007 and high demand in the fractional ownership market in 2006.
In both 2007 and 2006, sales to this end-market primarily
25