It was a miraculous landing, the pilots were simply brilliant!

1. Anyone know what will happen to the Airbus now stranded in the river?

2. How likely is it to be repaired and flown again?

3. When being removed from the river, will they have to dismantle the plane?

Also, if they cannot get it flying again wouldn’t it be wonderful if they stored it in some museum?

Airless Paint Sprayer

Aviation industry :  Back into the ‘friendly skies’ by Farnborough 2010 ?

                                           SUNIL KEWALRAMANI                  February 18, 2009

As investments, airlines are best left to relentless optimists and colourful egomaniacs. Over the long term, a diversified portfolio of airline stocks has reliably lagged behind broader market averages. Airlines’ long-run operating margins have averaged just 2 per cent since 1950, says UBS.

In 2007, during the Paris Air Show, the aviation industry was flying high….the world economy was booming and credit was plenty.  Customers who had booked from Boeing and Airbus could get a premium for waiving their bookings in favour of companies interested to jump on the aviation industry growth story.  Today, airlines are happier returning their aircraft than taking delivery.  In 2008, the Amex Airline Index has plunged more than 70 %.   Not only has the game changed, the dominant players have changed as well. At Farnborough this year,  Middle-East’s Etihad Airways has ordered 45 aircraft from Boeing and 55 from Airbus, worth about $ 20 Billion at list prices.  It reinforces Middle East’s position as one of the few regions where airlines have the financial clout to expand aggressively.

Singapore Airlines, which reported its third-quarter results on 10th February 2009,, is one of the less terrible operators. It has the two qualities every carrier needs to withstand troughs: a strong brand and a patient majority shareholder (state-owned Temasek, in SIA’s case). On top of that, it has one of the world’s better-looking balance sheets: cash in the bank exceeds long-term liabilities by more than three to one; a youngish fleet of fuel-efficient aircraft; and one of the most highly rated management teams around. As such, the world’s largest airline by market capitalisation is an industry benchmark. If SIA is struggling, pity the rest.

SIA is indeed suffering. The September to December period, traditionally its most profitable, saw net income almost halve. Operating metrics were solid: passenger load factors down only 3 per cent, while costs (excluding fuel) fell 5.5 per cent. But it came a cropper on hedging, locking in purchases of jet fuel at much higher rates than the period’s average of $99 a barrel. Losses should widen: 44 per cent of fourth-quarter fuel requirements – well above the industry average – have been pre-bought at $131 a barrel, compared with today’s spot price of $56.

As those hedges fall away, however, SIA has a real opportunity to stand out from the pack by protecting its dividend. China Eastern had recently rejected Singapore Airlines’ bid to expand its operations. What is more, cash flow after capex over the first nine months almost covers last year’s dividend. In an industry that oscillates between varying degrees of over-capacity, preserving the payout would really hammer home the difference between the leaders and the laggards.

For Vijay Mallya—the self-proclaimed “king of good times” who patterns himself after Richard Branson, the launch of Kingfisher Airlines three years back seems to have come as a cropper. Slower economic growth due to unexpected world crisis along with dramatic fuel price rise earlier this year has taken the tails out of the airline industry. There are urgent demands being made for reducing sales taxes from 26 per cent to 4 per cent which could help reduce air fares.  A sanguine Mallya has called for India to ease its restrictive FDI policies, which currently prohibit foreign airlines from holding stakes in domestic Indian carriers.

Although oil prices have retreated of late, threats by OPEC to cut production coupled by the threat of inflation which could return in the wake of extremely expansionary monetary policies of the world central banks, could cause fuel prices to go up again.  Fuel costs make up about 65 % of costs on long-haul flights but only about 30 per cent of costs for short-haul flights. Qantas, one of the world’s most profitable airlines has recently grounded aircraft, suspended routes, chopped capacity, cut jobs and struck a deal with its long-haul pilots to lock in the company’s 3 per cent per annum wages policy until 2013.  In the wake of 9/11 and SARS, the Australian carrier had performed better than its peers, picking up market share as well as aircraft abandoned by airlines who could not afford them.

According to a report by Frost & Sullivan, the price of Indian fuel is based on international parity pricing, despite the fact that international crude is refined in India.  Aviation turbine fuel (ATF) rates in India, represent 40-45 % of ticket costs as compared to the global standard of 35 %.  In the backdrop of high fuel prices, domestic passenger numbers has fallen significantly from a year ago according to the Indian aviation industry.  Jet Airways  recently laid off 10 % of its workforce, only to relent and take them back under duress.  GoAir has laid off a significant chunk of its expatriate pilots. SpiceJet has announced reductions in its daily flights from 117 to 100.  Kingfisher Airlines is negotiating sale of two of the five A340-500 aircraft it had committed to buy from Airbus in 2007.  Both Spicejet and GoAir are returning planes to lessors.  It is also contemplating deferring taking deliveries of 29 narrow-bodied A320s .  In response, some have adopted the use of winglets on the wing tips to reduce fuel consumption, others are flying their aircraft at higher altitude, choosing parking bays closer to the runway to reduce taxing time.  Some are cutting down the amount of water in toilets and for human consumption they carry while others are carrying lighter plastic cutlery, food trays etc. Even the Indian government has recently pitched in by withdrawing the customs duty of 5 % on jet fuel.  In addition, oil companies are reducing ATF prices by Rs 9429.87 per kilo litre with immediate effect.

American, Continental and Delta have reduced flights to various destinations. Pratt and Whitney estimates that its EcoPower engine-washing process saves Hawaiian $ 1 million in fuel annually across 31 Boeing 767 engines.  Eight senior pilots and the US Airline Pilots Association have filed complaints with the Federal Aviation Administration stating that US Airways is pressuring pilots to use less fuel than they feel is safe, in order to save money. By removing six seats, JetBlue reduced an A 320 weight by approx 904 lbs.  Air Canada is considering removing paint and primer from its 767s to save 360 lbs per plane.   Alaska Airlines indicated in 2004 that removing just 5 magazines per aircraft could save $ 10,000 annually in fuel.  It’s new beverage cart, at 20 lbs lighter, could save $ 500,000 in annual fuel costs.  Yet, fashion favouring turbo-prop aircraft, the most fuel-efficient and environmentally friendly in the skies, should help sustain order books for the same. ONEWORLD alliance of various airlines will jointly explore options for collective buying of fuel. 

Mergers and Acquisitions enable capturing abandoned  territories :

In 2003, Air France bought rival KLM Royal Dutch Airlines and has succeeded in luring passengers away from European rivals by offering long-distance connections through its Paris and Amsterdam hubs.  Lufthansa acquired Swiss International Air Lines Ltd in 2005. It aims to match last year’s record profit by capitalizing on rivals’ weakness and by harvesting routes abandoned by competitors.  This is analogous to Southwest’s model, where Southwest is capitalizing on players who have pulled off during the downturn in the aviation industry precipitated by high oil prices. Delta Air Lines and Northwest Airlines are planning to merge.  Continental and United Airlines are also planning a close alliance.

Elite class of rising carriers emerges on the scene :

According to an article in The Wall Street Journal, the strength of this club (which includes Southwest, Emirates, Singapore Airlines, Ryanair and Deutsche Lufthansa) underscores the growing gulf between the haves and the have-nots. These powerful players are able to hedge costs, borrow money, buy new planes and pamper high-paying customers while their poorer rivals cut routes and seek cash infusions. On Singapore Airline’s five new Airbus A 380 super-jumbo jetliners, first-class passengers sleep on sheets made by French fashion house Givenchy, while coach passengers have USB ports for connecting their own electronic devices next to their seat-back video screens.  In the face of a severe industry downturn, Singapore Airlines’ operating profit rose 60 % in the fiscal year ended March 31, 2008.

Southwest Airlines  as a role model :  It’s discount-model has kept it profitable for 35 years.  It aggressively hedges fuel costs and thus has avoided current high fuel prices, to which most of the other carriers have succumbed.  It has hedged fuel at $ 51 a barrel.  The efficient hedges have enabled Southwest produce gains of $ 455 million in 2004, $ 892 million in 2005, $ 675 million in 2006 and $ 439 million for the first nine months of 2007.  It  has $ 3.7 Billion of cash in the bank and a market capitalization of $ 9.9 Billion, more than the combined market value of the six-largest conventional U.S. carriers. 

Next-Generation aircrafts :  Airbus has demonstrated its ability to fly its A380 aircraft with a synthetic liquid fuel processed from a gas called gas-to-liquid (GTL) in a three-hour flight between Filton, UK and Toulouse, France.  The new A380 has fuel efficiency of 2.9 litres a passenger for every 100 kms and carbon emissions of just 75g per passenger per km—17% less than that emitted by the Boeing 747.  Boeing 777 is the most fuel-efficient plane in its class.  The 747-8 will be 16 % more efficient than the 747-400 (and 11 % more efficient than the A380).  The A350 is the Airbus’s response to the Boeing 787 Dreamliner. Besides, EADS’s A400 M, once in service,will be capable of carrying a payload of up to 37 tonnes over ranges of up to 4700 nautical miles. Launched on July 8 2007—7/8/7 in US date format (date was chosen for impact), demand for the high-tech and futuristic 787 Dreamliner—a long-range 250 to 300-seat jet whose carbon-fibre body is set to make it 20 % more fuel-efficient than comparable models has been astounding. Dreamliner’s advanced aerodynamics (smooth wiring technology, spoilers that droop when flaps are deployed, and laminar flow nacelles lower drag) increase efficiency and reduce fuel consumption.  Higher bypass ratio allows engines to be quieter. Boeing has received orders from more than 60 customers for 892 aircraft, worth $ 145 Billion at list prices. Boeing’s energy use and carbon dioxide emissions at its major facilities are believed to have fallen 24 % between 2002 and 2007.  The Chinese white 90-seat ARJ21-700 jet is called “Xiang Feng” or “Flying Phoenix” and its appearance broadcast live on state television. 100 of the 180 bookings have come from Kunpeng Ailrines, a new venture between China’s Shenzhen Airlines and the US-based Mesa Air Group.  The arrival of the “Flying Phoenix” will truly mark the ascent of China as a leading world superpower and will energize growth in the Asian subcontinent.

Green Ross to SpiceJet’s rescue : indicative of sound contrarian call

Spicejet of India has chose as its suitor W L Ross & Co.  W L Ross has made his reputation on contrarian calls — buying into the steel industry in the US when no one would touch it, for example, and snapping up a Japanese bank when it was saddled with bank loans in 2000.

Low cost model here to stay

Air Deccan pioneered new ticketing channels at internet kiosks, petrol pumps and India post offices which helped bring down distribution costs by 12%-15% as compared to opting for a GDS (Global Distribution System) and for travel agents through the legacy system. If the motive is to cater to the large inclusive consumer base at the bottom of the consumer pyramid then the business model must create a scaleable product that delivers higher volumes at lower price points above very low costs with wafer thin margins.  The low cost model is about innovations, efficiency and enhanced asset utilization which are increasingly necessary in times of high fuel prices. The cost per available seat km of a low-cost carrier is significantly lower than that of full-service carrier.  The average revenue per seat for Ryanair, Europe’s biggest budget carrier, is Euro 39, as against Euro 247 for British Airways and Euro 57 for EasyJet, another low-cost carrier. It therefore implies that the airline with the lowest revenue per seat is at a comparative advantage and has significant cushion to tide over this rather cyclical industry.

The Indian aviation is still one of the country’s sunrise industries and both airlines and investors consider India as a compelling market. In my opinion, the oil bubble would have burst due to more durable demand destruction by the time the next Farnborough show is held in 2010.  The fundamentals viz. that India’s 1 billion people generate just 16 million domestic trips a year, is still very much intact.  This, coupled with the emergence of investors with deep pockets will ensure that the industry emerges stronger after the chastening shock. Equilibrium is expected to be found in the next two years as airlines are working to optimize capacity, rationalize routes and cut loss-making routes.

By simply raising fares, the distinction between low-cost and full-fare airlines will diminish, resulting in an undifferentiated business model. The government, on its own part, has to up its ante and improve its infrastructure. It is not uncommon to witness planes circling over destination zones in Mumbai and Delhi several times before being allowed to land, thus causing wastage of precious fuel.

The current scenario is almost reminiscent of the last downturn in the aftermath of 2001 terrorist attacks on the US.  That setback proved short-lived and so I believe will this one be.

Oil prices have retreated under the impact of unwinding of speculative positions by hedge funds and demand destruction is taking centre stage. The future belongs to the bold and daring, and not the timid and weak. The stage is set for survival of the fittest.  In the process, men will be separated from the boys.  The ongoing turbulence presents a tremendous opportunity for aviation industry players to emerge stronger than ever before.  The 2010 Farnborough air show promises to be dominated by a new set of industry players, ones that emerge victorious after trial by fire.

Note : Mr Sunil Kewalramani is a WHARTON BUSINESS SCHOOL MBA and CEO, Global Capital Advisors.  He may be reached at worldequity@sunilkewalramani.com. 

Bullet Points :

1)      The arrival of the Chinese “Flying Phoenix” will truly mark the ascent of China as a    leading world superpower and will energize growth in the Asian subcontinent.

2)          For Vijay Mallya—the self-proclaimed “king of good times”,  the launch of Kingfisher Airlines three years back seems to have come as a cropper.

3)          Launched on July 8 2007—7/8/7 in US date format (date was chosen for impact), demand for the high-tech and futuristic 787 Dreamliner—a long-range 250 to 300-seat jet whose carbon-fibre body is set to make it 20 % more fuel-efficient than comparable models has been astounding.

4)          The fundamentals viz. that India’s 1 billion people generate just 16 million domestic air trips a year, is still very much intact. 

5)          Rather than lean on the government for largesse, the aviation industry players need to pull up their socks, adopt global best practices, learn the art of effective hedging of fuel requirements, stimulate consumer demand and capitalize on battle-routes abandoned by their weaker rivals to strengthen their position in the world aviation industry. 

Water Vending Machines

We’ve been stroking our collective chin at my industrial design firm over Patrick Smith’s broadside on the aesthetic flaws of the new Airbus A380 for a over a week now. We’ve also been cogitating on Felix Salmon’s response:

“I do hold out some romantic hope that an ugly design can never be the best design; that something truly efficient is likely also to be good-looking. Maybe the A380 isn’t ugly because it’s efficient.  And just maybe there’s a solution out there which would have made it both better-looking and cheaper to construct and operate.”

Maybe. In any case, all of this takes us to the “form follows function” debate that has been haunting the world of architecture and design since the 19th century and continues to rage as you read this. Just ask superstar architect Frank Gehry, currently being sued by his ex-friends at MIT for one of his flamboyant, but apparently other than practical, designs. (And, as John Maeda points out, the ultimate 20th century architectural superstar, Frank Lloyd Wright, could be downright arrogant on the subject. Function be damned.)

As an engineering and industrial design firm operating in the real world, this is a needle that we have to thread on a daily basis. It’s important to design products that are aesthetically pleasing; consumers will always prefer a pretty product to an ugly one. It’s essential to design something that actually works and doesn’t create grief; no one will tolerate a product that ruins their day. And, finally, it’s utterly crucial for our work to make business sense — otherwise, functional or not, beautiful or not, it will never find its way to the market. Three hard-to-please taskmasters, but we manage it.

It’s all trade-offs and the three-way balancing act is not always equal, though it should be. Some products skate by entirely on beauty and offer only mediocre functionality. If you’ve ever driven a Jaguar from the 1980s or early nineties, you’ll know what we’re talking about, but that’s a poor trade-off and Jaguar ultimately paid the price, but not before countless wealthy buyers were seduced by the old Jag’s gorgeous lines. Conversely, the Airbus 380 may be ugly on the outside, but if it offers fliers a good enough experience for their money and provides airlines with smooth operation, Patrick Smith may find himself a voice in the wilderness.

Fenwick Fishing Rods

Yes! Gimme! Now! Free! On the Internet, people look for instant gratification. They don’t have the patience to wait two weeks for their requested product to come to life and be shipped afterwards. Amazon rabbits on about its special offer of one-day delivery. The Triaminic website, a medicine for kids’ colds and allergies, offers downloadable coloring books, ringtones with animal sounds and online games for spontaneous satisfaction.

Your E-now substitute

We know the nature of your products limits instant delivery. To compensate for that, you can create your own award winning e-newsletter to feed the E-now hunters with company culture insights, testimonials of happy clients, the latest technicalities in your industry. That will open a continuous communication channel, and silent the “here and now” drive.

Even if you convince prospects to join your mailing list, e-newsletter writing is like rope walking. You can lose your readers at any second, at the first wind blow, or “Honey!”-call from the bedroom. Attention is horribly volatile on the Internet. You’re still here, aren’t you?!

Gifted copywriting services providers are able to squeeze benefits out of solid rock, prioritize information, and structure his text according to the journalistic method of the “inverted pyramid” can do miracles with your sales. The “inverted pyramid” requires placing the vital information at the beginning, gradually descending to background details, so as the reader always grasps the essence. No matter at what point he abandons the story.

“The customer is not a moron. He’s your wife.”

First, placing your e-newsletter subscription form on every page of your website - not just on the home page - multiplies the number of registrations tremendously. Your top-landing page can be the work portfolio, for instance, and some readers may never click on your Home section. Secondly, applying quotations to the subject line

Submerged in the creative act, an experienced copywriter never loses sight of the increases response rate by 27% owing to the impression of a decisive citation. See? We’re already putting it into practice…David Ogilvy will never sink into oblivion. AIDA model. Walking along the creative boulevard works wonders, but advertising kneels to salesmanship. Now Claude Hopkins is talking through us.

A – Attention: Use a sizzling headline to capture attention

I – Interest: Intrigue interest with the industry’s latest discoveries and controversial topics

D – Detail: Provide details about your products and services, special offers, success stories

A – Action: Include call for action in your speech

To nurture brand loyalists, you need to generate the feeling of exclusivity. “PREMIUMIZATION” is one of the 2008 trends, as described by trendwatching.com. People crave for status and they desire to be the unique beneficiaries of a certain product or service. In 2008, every product is subject to a premium version, from bottled water to airline services. For outstanding success, train your copywriter into making each and every prospect feel that he’ll be offered the best, the scarcest, the most prestigious product.

Bling H2O is a limited edition of 750 ml glass bottles garnished with Swarovski crystals. Noticing that “you could tell a lot about a person by the bottled water they carried”, a Hollywood producer came up with this idea in 2005. More of a jewelry for VIPs, the bottles are priced between $ 17–480.

Driven by the same exclusivity obsession, Prince Alwaleed bin Talal of Saudi Arabia has just ordered himself an Airbus 380 valued at $ 320 million. For a small supplementary charge of $ 100 million, the plane will be decorated with private lounges, a steam bath, a fitness room, three bedrooms, fancy bathrooms and offices. To the Prince’s misery, estimates show that Airbus will sell at least 20 more A380s… so bye-bye “I am the king of the world!”

Last, but not least, resort to sub headlines for scan able content in your e-newsletter, and never try to trick prospects through bombastic brand promises. “You don’t tell lies to your own wife. Don’t tell them to mine!” (David Ogilvy).

In the online environment, it’s words that matter. Not deeds. Consult us before choosing copywriting services, if you aim for the best.

Collectable Kitchen Plates

I know how to use the GPS and tell what airport i want to go, but how do i have an Airbus A321 fly by itself to the Airport i chose? I already set the plane to GPS instead of NAV, and i put the crusing altitude, but it still wont work. PLEASE HELP!

Fishing Tackle And Accessories

Manchester is the UK’s largest airport that does not service London. As such it has flights to destinations around the world and a host of auxiliary services such as car hire desks, shops and restaurants. This year it was voted the UK’s best airport in a survey conducted by Travel Weekly. With two runways, three terminals and a railway station as well as considerable links to the road network it is definitely well connected. Last year Manchester airport handled around twenty two million passengers. But what is the history of this airport that services the UK’s second city?

The airport was constructed throughout the mid nineteen thirties and was originally named the Ringway Airfield as it was located in the parish of Ringway. The inaugural flight form Ringway was to Amsterdam and took place in the summer of 1938. The war however ended the civilian uses of the airport as it was requisitioned for military purposes. As a military base it was used for both flying sorties and training through the war years. In terms of training Manchester was instrumental in the advancement of parachute troops. During this period the site also saw a large number of test flights for a variety of planes constructed by the British manufacturer Avro.

After the war the airport was returned to civilian uses, by the late fifties half a million passengers were using the site annually. As with many airports in this period expansion and development were an important part of planning. The runways were extended to accommodate the larger new jet planes and terminals were built to cope with increased passenger numbers. In the early seventies the site experienced a name change adopting the title ‘Manchester International Airport’.

During the eighties the airport’s executives decided to court the international long haul flights; this however meant that the runway needed yet another extension for the large long haul planes. The plan clearly worked and by the late nineties almost ten million passengers were using the airport annually. Because of these greater passenger numbers a second terminal was rapidly built in the early nineties filled with car hire desks, shops and cafes; as well as this a link to the national rail network was added. The late nineties saw the addition of a second runway. This second runway allowed the airport to reach the twenty million passenger mark whilst also allowing for the huge Airbus A380; the largest plane to enter circulation in generations.

The government’s white paper on the future of air transport meant that all airports, including Manchester had to put down a plan for expansion over the next thirty years. Subsequently the site is now undergoing a process of development including the demolition of old buildings to allow for greater apron space and aircraft movement. In addition, while planning has not yet been granted the airport chiefs want to construct another taxiway for the second runway to increase the operational capacity. Naturally the terminals will be enlarged and modernised, especially to cope with the Airbus’ gargantuan size. Part of this terminal expansion will include increasing the number of shops, cafes, restaurants and car hire desks for the large amount of revenue they bring the airport.

Today Manchester has secured its place as the major airport in the north of England. While Stansted, Gatwick and Heathrow all fight for government backing for expansion Manchester has no such worries and can rest assured that its position as the UK’s favourite airport outside of London will not be overtaken in the foreseeable future.

Plumbing Tips For Homeowners

Domestic Indian Airlines came into being with the enactment of the Air Corporations Act, 1953. It was renamed “Indian” on December 7, 2005. Domestic Indian Airlines started its operations from 1st August, 1953, with a fleet of 99 aircraft and was the outcome of the merger of seven former independent airlines, namely Deccan Airways, Airways-India, Bharat Airways, Himalayan Aviation, Kalinga Air Lines, Indian National Airways and Air Services of India. The year 1964 saw the Domestic Indian Airlines moving into the jet era with the introduction of Caravelle aircraft into its fleet followed by Boeing 737-200 in the early 1970. Along with its wholly owned subsidiary Alliance Air, it flies a fleet of 70 aircraft including Airbus A300, Airbus A320, Airbus A319, Boeing 737, Dornier Do-228, ATR-4, Airbus A319, A320 & A321. Alongwith Indian cities, it flies to many foreign destinations which include Kuwait, Singapore, Oman, UAE, Qatar, Bahrain, Thailand, Singapore, Malaysia, Myanmar besides Pakistan, Afghanistan, Nepal, Bangladesh, Sri Lanka and Maldives.

Air India Domestic Flights

Domestic Indian Airlines Flight free run over the Indian skies ended with the entry of private carriers after the liberalization of the Indian economy in the early 1990’s when many private airlines like Jet Airways, Air Sahara, East-West Airlines and ModiLuft entered the fray. The entry of low-cost airlines like Air Deccan, Kingfisher Airlines and SpiceJet has revolutionized the Indian aviation scenario.

Indian has been a pioneer in the aviation scene in India. It was the first airline in India to introduce the wide-bodied A300 aircraft on the domestic network, the fly-by-wire A320, walk in flights and easy fares. It flies to 76 destinations - 58 within India and 18 abroad. It has a total employee strength of around 19,300 employees along with Alliance Air and carries over 7.5 million passengers annually, along with Alliance Air.

The main base of the Domestic Indian Airlines are Chatrapati Shivaji International Airport, Mumbai; Indira Gandhi International Airport, Delhi; Netaji Subhash Chandra Bose International Airport, Kolkata; Chennai International Airport, Chennai.

After being granted permission from the Government of India, on 15 July 2007, Domestic Indian Airlines and Air India merged and started to operate as a single entity. Post-merger the new airline will be renamed as Air India. This new airline is also a member of the Star Alliance, the largest airline alliance.

Mitchell Fishing Rods

Im trying to make sure my carry on luggage is in agreement with jet blue reqirements but i’m not sure if my flight is on an airbus or embrear and they have different requirements. how do i know which one is my flight?

Custom Closet Doors

I rather Airbus, all the airbus I have been in seems modern.
All the airbus I have been on seems modern than Boeing.

Tankless Hot Water Heaters

Titanium Metals (TIE) is poised to rebound after experiencing a near meltdown caused by the recession and significant delays by Boeing in development of their 787 Dreamliner. Deliveries of other aircraft will increase the demand for titanium for the next five years.

In July 2009, The Airline Monitor, a leading aerospace publication, issued its semi-annual forecast for commercial aircraft deliveries. Aggregate annual deliveries for both Boeing and Airbus are expected to reach record numbers of aircraft during each year from 2009 through 2013 (totaling at least 960 aircraft deliveries each year during the period). Forecasted deliveries for twin-aisle aircraft through 2013 have declined 4% from 1,450 to 1,390 since The Airline Monitor’s January 2009 forecast primarily due to production delays on the Boeing 787. Changes to production schedules for certain other commercial aircraft resulted in a 22% increase in forecasted deliveries of Boeing and Airbus single-aisle aircraft through 2013.

Based on the increases in number of aircraft there should be a net increase in expected titanium consumption over the next five years compared to The Airline Monitor’s January 2009 forecast for titanium consumption. Beyond 2013, projected aircraft deliveries remain strong as fuel efficiency and expansion of the global fleet in developing countries, such as Asia, provide key drivers of long-term demand for titanium within the commercial aerospace industry. 

VSMPO-Avisma from Russia has 31% of the milled titanium market followed by TIE with 18%, Allegheny with 16% and RTI with 7%.

The Company’s net sales were $205.7 million for the second quarter of 2009 compared to $297.3 million for the second quarter of 2008, a decrease of 31% principally resulting from lower volumes and average selling prices. Average selling prices are lower due to competitive pricing pressures resulting from lower demand for titanium products and declines in raw material costs, primarily titanium scrap, which have contributed to lower selling prices for products under long-term customer agreements, in part due to raw material indexed pricing adjustments included in certain of these agreements.

Operating income of $15.6 million for the second quarter of 2009 was down from $68.8 million for the same period in 2008, primarily reflecting the effects of lower volumes and average selling prices for melted and mill products. In addition, the favorable impacts from declining raw material costs, primarily titanium scrap, on the Company’s gross margins were offset by higher per-unit overhead costs resulting from lower production volumes.

Titanium Metals reported net income attributable to common stockholders of $8.6 million, or $0.05 per diluted share, for the quarter ended June 30, 2009, compared to $47.3 million, or $0.26 per diluted share, for the quarter ended June 30, 2008.

Fundamental Assessment Fundamental Review     Stock Review   Risk Factors   Sector Industrial - Metal Manufacturing Beta 1.5 Dividend Yield 1.37% Insider Ownership 52.89% Earnings Announcement approximately 2-12 Nov 2009 before the market opens Institutional Ownership 25.8% Value Analysis   Growth Analysis   Return on Capital employed 13.5% PE Ratio 16.6 Earnings Yield 9.8% PEG Ratio n/a Free Cash Flow Margin 15.2% Enterprise Value/Free Cash Flow 12 Free Cash Flow Yield 6.8% Quarterly Revenue Growth (yoy) -30.8% Cockroaches none Quarterly Revenue Forecast (yoy) -40.3% Value

Titanium Metals is experiencing a substantial drop in sales that affects all relevant fundamental measures. However, the company’s ability to generate excess free cash flow is significant. Their free cash flow margin of 15.2% and their free cash flow yield of 6.8% are both quite good in normal times. The company has delayed several capital improvement projects to help conserve cash. However, they are benefiting from earlier capital programs that help to lower the company’s operating expense.

The low Return on Capital Employed reflects lower revenue and Earnings Before Interest and Taxes (EBIT). However, the high Earnings Yield indicates the market is valuing TIE at a relatively low price for the EBIT it is producing. This is an indication that any rebound in sales will have a positive affect on the price of the shares.

Growth

Titanium Metals growth is held back by their falling revenues. Their PE ratio reflects this. Their Enterprise Value to Free Cash Flow ratio indicates the company’s value has the potential to grow significantly when revenue growth turns up.

Conclusion

Once manufacture of the new airliners from Boeing and Airbus begin in earnest, TIE should see their sales grow and with it their ability to generate free cash flow. Until then TIE is likely to experience volatility in its share price as investors try to anticipate when these important events start to have an impact on the company. Remember, the price of a company’s stock tends to rise in anticipation of a significant change in the company’s fundamentals, usually by six months or so.

We could see a pick up in sales once Boeing demonstrates it is getting close to being able to produce the 787. In addition, as the economy recovers, airlines will start to replace their less efficient aircraft with more fuel efficient, lighter weight planes that contain more titanium. Until then TIE will remain at a low price.

Key Drivers and Barriers Drivers

Titanium Metals is being driven by:

The growing demand for high performance materials for aircraft (Boeing, Airbus and military) as well use of titanium in other products such as medical uses. They are the only titanium company with operations in the U.S and Europe, both very important markets for titanium. Barriers

Titanium Metals has created important barriers by:

Growing capacity in the important parts of the manufacture of titanium materials. Their 18% market share that is the largest outside of Russia. Risks

Titanium is susceptible to a slow down in spending within their markets, especially the United States, as well as a slow down in capital spending by their customers across the globe. Continuing delays in the construction of key airliners such as Boeing’s 787 Dreamliner will negatively affect TIE’s sales.

Guidance

Management at Titanium Metals does not offer guidance.

Other Considerations

Approximately 36% of the company’s net sales originate in Europe where they have extensive manufacturing and sales operations.

As of July 29, 2009, the company had approximately $58.1 million available for repurchase of our common stock.

The Bottom Line

Eventually Titanium Metals will benefit from the growing demand for titanium materials for airline, military and other uses. The recent problems Boeing is having with their production of the 787 Dreamliner has delayed demand for TIE’s products. Now that it looks like Boeing has ironed out their production problems and the economy begins to recover, airlines will replace their older aircraft for more fuel-efficient planes that contain more titanium.

Boeing is scheduled to fly the first 787 before the end of 2009. If that comes off as expected, then the first deliveries of the 787 will begin in late 2010. This means Boeing will begin to order more titanium in the early part of 2010 to meet their ramp up of production. Look to buy on dips in the price in anticipation of growing demand for titanium.

Used Vending Machines