A snippet on the aerospace market from HOneywell's pserpsective. Received from a friend of mine:<snip>Throughout the last year, we've been watching and anticipating that air travel would return to pre-September 11 levels, for airlines to begin increasing the number of flights they offer and return parked aircraft to service, and for other such concrete signs that the economy is fully recovered. I'm sure you've been disappointed, as have I, to see in the news that such improvements are just not materializing as quickly as many expected.Most concerning for us right now is the impact of the airline industry and its affect on airplane orders, as well as spares, repair and overhaul. Although many are reporting an increase in passenger travel since last September, traffic and capacity are still down over 9% from June of 2001. Recently, U.S. Airways declared bankruptcy. United Airlines is looking at severe cutbacks in order to avoid bankruptcy. Continental, Delta and American are cutting their capacity by 7-9%. Combined airline losses are estimated to be nearly $7 billion this year. And while the number of parked airplanes has decreased from 2,026 in February, to 1,860 in June, this is still a significant number of aircraft not being flown.In addition, business and regional aircraft manufacturers are also anticipating a slower recovery than planned earlier this year. Bombardier, for example, recently cut its earnings forecast for the year by 21%. Business and corporate operators are also subjected to the many cost pressures associated with the general economy and uncertainties that all companies are facing today.So what does this mean to our Aerospace business? We're not going to grow at the rate that we hoped in for the rest of 2002 and for at least some portion of 2003. We're going to have to continue to manage our cost base. We're also going to adjust our Annual Operating Plan to what we think the realities are and align our resources to execute to this ever-changing environment. This will have different impacts in different parts of our businesses. Some show modest growth, while some show continued declines.That said, there continues to be reason for optimism in the long run. The picture beyond 2003 is much brighter and we continue to expect steady growth that should fuel the business aviation market in the years ahead. At the National Business Aviation Association (NBAA) convention this week, Honeywell presented our annual outlook for this segment, anticipating more than 7,600 new business aircraft deliveries, valued at up to $121 billion, over the next 10 years. We also continue to see many positive signs in defense and space, and expect modest growth in our D&S businesses in 2003. We also expect that as the economy does recover that commercial airlines will return to profitability and restore flying rates and schedules to previous levels.And, let's not overlook our outstanding performance in the first half -- especially in operating income and free cash flow. Our emphasis on managing working capital and controlling costs made this happen and will remain a critical focus in the days ahead. We must continue to aggressively manage our costs to retain our strength and stay in position to capture the opportunities available to us as the economy and aerospace industry improve.We continue to prove it by sustaining a win rate of 86% despite this difficult economic environment.</snip>September 13, 2002
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