Volvo 1997 Annual Report Download - page 35

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33
Com m ercial Engines: Increases in
volum es of existing engine
program s
The sharp increase in income in the
Commercial Engines sector was attri-
butable primarily to increases in the
volumes of existing engine programs
and to a strong trend of the U.S. dol-
lar.
At midyear 1997 Volvo Aero sig-
ned a joint-venture agreement with
MTU, the German aircraft engine
manufacturer. The companies will
coordinate technological and product
development of low-pressure turbines
for commercial aircraft engines. With
this agreement Aero is consolidating
its strategy of specialization.
Engine Services: continuing heavy
com petition
Competition in the commercial air-
craft engine maintenance field con-
tinued to be severe despite increased
demand. Aero’s operations in this
field underwent the first part of a
comprehensive restructuring in 1997,
at the same time that lead times for
maintenance of large engines were
reduced.
Space Propulsion: launch of Ariane 5 rocket
A second test launch of the new European Ariane 5 rocket was conducted in
1997. Aero concluded an agreement covering development of exhaust nozzle
extensions and fuel pump drive turbines for the next-generation engine, the Vulcain
2, for the Ariane 5 rocket.
Aviation Support Services: a new business area
With the acquisition of AGES, a new business area was formed within Aero;
it comprises the maintenance and leasing of aircraft engines and aircraft, as well
as the sale of spare parts related to these operations. The acquisition of AGES
is strategically important for Volvo Aero’s commercial Engine Services business.
It provides access to a much larger segment of the after-sales market and ensures a
supply of certain spare parts that Volvo Aero requires.
Volvo Aero has chosen to
specialize in a sm all num-
ber of critical engine com -
ponents. It is one of the
European com panies that
has made the m ost pro-
gress in specializing in
products for com m ercial
aircraft engines.