Volvo 2011 Annual Report Download - page 68

Since the 1980s, Volvo Aero’s civil operations
have grown steadily in terms of sales and sig-
nificance, while the company’s military opera-
tions have decreased in a corresponding fash-
ion to the present figure of about 5% of sales.
Since Volvo Aero has an independent role,
the company can sign agreements with all major
manufacturers in the aircraft engine industry. As
a result, Volvo Aero’s engine components are
now found in more than 90% of all new large
civil aircraft.
Volvo Aero can now also claim the role as a
designer of new engine components. The com-
pany has assumed a leading role in the field of
light-weight structures, which is now gaining
significance in the industry since less weight
leads to lower fuel consumption and, in turn,
lower emissions from aircraft – two vital issues
for the airline industry.
A key component in the light-weight venture
is the composite company ACAB, which Volvo
Aero acquired in 2007. During the year, ACAB
secured a strategic contract with Korean Air
concerning future collaboration in the areas of
radomes, wing structures and other composite
components.
The continued success of Volvo Aero’s focus
on high quality is confirmed by the fact that, in
2011, the single-engine military aircraft Gripen,
with a Volvo RM12 engine, exceeded 160,000
hours of operation with no engine-related
breakdowns or serious incidents. This is unique
for all air forces worldwide.
Total market
According to the airline industry’s international
trade organization, IATA, passenger traffic
increased 5.9% in 2011 while air-freight declined
0.7%, compared with the preceding year.
Airbus and Boeing reported 2,529 new orders
during the year, nearly a two-fold increase com-
pared with the preceding year (1,269). The order
book for large civilian aircraft rose from 6,995
aircraft at the end of 2010 to 8,208 at the end
of 2011. The aircraft manufacturers delivered
1,011 aircraft in 2011, a 4% increase compared
with the preceding year.
Product renewal
An agreement signed with aeroengine manu-
facturer Pratt & Whitney in June makes Volvo
Aero a program partner in the PW1100G engine,
which is built with geared turbofan technology.
The engine will power the A320neo aircraft
and has been listed by TIME Magazine as one of
the 50 best inventions of 2011. The PW1100G
engine was the most significant development in
the aerospace industry during the year.
Boeing’s new 787 aircraft, Dreamliner, com-
menced operation in 2011, as well as Boeing’s
modernized version of the 747 (747-8). Both air-
craft are offered with a GEnx engine, in which
Volvo Aero is a program partner.
Development of the Rolls-Royce engine,
Trent XWB, for the A350 XWB Airbus aircraft
continues as planned and several major milestones
were passed during the year. Volvo Aero is
a program partner in the engine.
Earnings trend
Sales totaled SEK 6,509 M compared with SEK
7,708 M in the preceding year. Operating income
was SEK 336 M compared with SEK 286 M in
the preceding year. The operating margin was
5.2% (3.7).
On March 31, Volvo Aero acquired all of Pratt
& Whitney’s shares in Volvo Aero Norway and
thus became the company’s sole shareholder.
On November 21, AB Volvo announced – as
part of its efforts to further refine the Group’s
focus on heavy commercial vehicles – that it had
initiated a process to divest Volvo Aero.
Production and investments
In just a few short years, Volvo Aero’s North
American subsidiary, VACT, outside Hartford in
Connecticut in the US, has established itself as
one of the market’s leading players in the field of
fan cases for large aircraft engines. The most
recent example is a fan case for the GP7000
engine in the Airbus A380. The company already
manufactures fan cases for the Trent 900 for
the same aircraft. Similarly, VACT has signed a
contract for manufacturing both of the engine
options offered with the new Boeing 787: the
Rolls-Royce Trent 1000, and GEnx 1B. Volvo
Aero has also signed a contract concerning the
manufacture of GEnx 2B fan cases for the new
Boeing 747-8. Other assignments include the
GE90 for the Boeing 777 and V2500 for the
Airbus A320.
Volvo Aero develops and manufactures advanced components for rocket engines, and civil and military
aircraft engines. The company also carries out maintenance and repair on aircraft engines and stationary
gas turbines.
VOLVO AERO
IMPROVED PROFITABILITY
Volvo Aero offers advanced components for aircraft
engines and space applications, with a focus on light-
weight technology for reduced fuel consumption.
Services for the aerospace industry and for stationary
gas turbines are also offered.
Number of employees
2,904
Position on world market
Volvo Aero holds a leading posi-
tion as an independent producer,
with engine components in over
90% of all new, large commercial air-
craft delivered in 2011.
BOARD OF DIRECTORS’ REPORT 2011
64