Volvo 2001 Annual Report Download - page 50

BUSINESS AREAS
was SEK 653 M (621), which means that for
the fifth consecutive year Volvo Aero could
report a record, in terms of sales as well as
operating income.
The decline in air traffic after September
11, 2001, had an effect on income during the
last quarter of the year as the aviation indus-
try aftermarket declined. Volvo Aero
Services (which mainly purchases and sells
spare parts for aircraft and aircraft engines)
and Engine Services (which overhauls
engines) were affected by the decline.
Aerospace Components (which produces
components and spare parts for new aircraft
engines) continues to report full production
in its plants and, accordingly, can report con-
tinued favorable profitability. However, dur-
ing the second half of 2002 a sharp decline
in workload is anticipated, as a result of
which the company announced a prelimi-
nary lay-off notice to 310 employees in
Trollhättan. Volvo Aero Services, headquar-
tered in Florida, released about 70 of its 350
employees during the autumn, closed its
warehouse in New York and discontinued its
operations in Ireland.
Production and investments
During 2001, Volvo Aero signed a strategi-
cally important agreement to become a risk-
and-revenue sharing partner in two of Rolls-
Royce’s engine programs, the Trent 500 and
the Trent 900. For Volvo Aero, this was the
largest investment ever made in an engine
series.
Through an agreement with the world’s
largest airline, American Airlines, Volvo Aero
Services obtained the right to sell the surplus
of American Airlines’ spare parts. Volvo Aero
Services already held the exclusive right to
sell the spare parts surplus for all of Boeing’s
commercial aircraft models.
Volvo Aero and the Swedish Space
Corporation established a joint company,
(ECAPS) for the development of an envi-
ronmentally friendly fuel for satellites and
rockets. During the year, Volvo Aero was also
selected by Pratt & Whitney to become its
strategic partner in the development of its
new RL60 rocket engine. At the same time,
the decision entails a breakthrough for Volvo
Aero’s “sandwich nozzle,” an entirely new
and patented manufacturing technology.
Ambitions for 2002
The entire airline industry is currently repo-
sitioning itself for a period of lower demand.
During this decline, Volvo Aero will endeav-
or to increase its market shares and to
strengthen the position of the company in
both the components and service segments.
With regard to the latter, efforts are
currently under way across business areas
within aftermarket services with the goal of
becoming a Multi-Service Provider for the
airlines.
In engine overhaul, a strategic focus is
being made, comprising the large JT8 and
JTD9 engines, among others. A major order
from Pratt & Whitney, secured in the
autumn of 2001, shows that the company is
on the correct path.
Following the decision by the Hungarian
government to lease 14 Gripen aircraft from
Sweden, the Czech government has decided
to initiate negotiations for the acquisition of
24 new Gripen aircraft. Volvo Aero supports
Saab/BAE’s efforts to secure this and other
export orders for Gripen. During 2002 and
2003, Poland, Austria, Brazil and other coun-
tries are expected to reach decisions regard-
ing military aircraft investments.
Net sales per market Aero
SEK M 1999 2000 2001
Western Europe 4,560 4,651 4,788
Eastern Europe 16 42 87
North America 4,557 5,040 5,841
South America 193 134 187
Asia 491 701 708
Other markets 136 145 173
Total 9,953 10,713 11,784
In May 2001, Volvo Aero signed an
agreement to become a partner in two
of Rolls-Royce’s engine programs, the
Trent 500 and the Trent 900.