Volvo 2006 Annual Report Download - page 78

Volvo Aero
– skilled business partner
Many important milestones
Volvo Aero is in the midst of an expansive period
with many new production start-ups for aircraft
engine components. During 2006, some 20
new production starts were initiated, the larg-
est number ever in a single year. The company
has invested heavily in research and product
development and in a modern machine park.
Development continued during the year on
the GEnx engine, the single, largest investment
in Volvo Aero’s history. At the beginning of the
year, it was clear that Volvo Aero would be pro-
ducing six different components for the GEnx
engine. The first ground tests of the engine
were carried out in March, with successful
results and on schedule.
Volvo Aero has also continued working with
assuming a role in the new engine programs
that in a few years will be installed on aircraft
replacing the popular Airbus 320 and Boeing
737. It was also finalized during the year that
Volvo Aero will be involved in demonstrating
technology in the US engine manufacturer
Pratt & Whitney’s new geared turbofan engine.
This new cooperation is a first strategic step
toward positioning Volvo Aero for the future in
this important market segment.
Through the acquisition of Aero-Craft, based
in Newington, Connecticut, in December 2004,
the specialized product portfolio was expanded
with fan cases. A number of contracts for fan
cases have been signed, for example for engines
such as the GEnx, Trent 1000 and GE90.
Building commenced in 2006 for the expansion
of Aero-Craft’s plant in Newington.
Volvo Aero Services signed a five-year agree-
ment with Emirates Airlines that gives the com-
pany exclusive rights to sell Emirates entire sur-
plus spare parts inventory for aircraft and aircraft
engines. In conjunction with this, Volvo Aero
Services will open a distribution center for spare
parts in Dubai. Volvo Parts will handle the logis-
tics service, as assigned by Volvo Aero Services.
Specialized competence
>>> Lightweight design is one of Volvo Aero’s
strengths and has a major impact on fuel con-
sumption and, consequently, the environment,
an aspect that is highly in focus in the aero-
space industry today.
Through applying Volvo Aero’s expertise in
lightweight structures, simulation and newly
patented production methods, engine manu-
facturers can reduce lead times for complete
engine development, while at the same time
engines becomes quieter and lighter. The
results are reduced costs and lower weight,
two decisive parameters for future aircraft
engines. Reduced weight means lower fuel
consumption and, consequently, the emission
of carbon-dioxide and nitrogen oxide.
The technologies are based on successful
synergies between the commercial and military
businesses and with space, in which Volvo Aero
plays an important role in the European space
industry.
Volvo Aero offers its customers and partners responsibility for the
development and manufacture of advanced engine components
for aircraft and space rockets. Volvo Aero’s technologies, includ-
ing a world-leading role in lightweight structures which is an
expertise that is increasingly in demand in the aerospace industry
and which contributes to Volvo Aero’s greater involvement in new
aircraft engines.
Market fundamentals remained strong in 2006.
World airline passenger traffic increased by 4.5%
in 2006.
Net sales as percentage
of Volvo Group sales Net sales1, SEK bn Operating income (loss)1, SEK M Operating margin1, %
05 06
8.0
0302
8.8 6.98.0 7.5
04
05
11.1
06
4.3
03
(0.5)
02
0
0.1
04
5.8
05 060302
0
04
5(44) 403 836 345
1 Years 2004, 2005 and 2006 are reported in accord-
ance with IFRS and 2002 and 2003 in accordance with
Swedish GAAP. See Note 1 and 3.
3%
74Business areas 2006