Market commentary
Business and General Aviation (B&GA)
67% of BBA Aviation's revenue in 2011 was associated with business and general aviation (B&GA).
B&GA covers a wide spectrum. Worldwide there are more than 17,000 business jets, 12,000 turboprops and 17,000 turbine civil helicopters in operation, with the service demands of operators principally driven by the flying hours of the aircraft they operate and manage.
B&GA is a valued business efficiency tool and, over the long-term, B&GA flying and the industry's long term structural growth is closely correlated to GDP and anticipated corporate earnings.
Long term projections for GDP continue to be positive. However, the muted general recovery in North America and Western Europe together with continuing economic uncertainty represent headwinds to short-term growth in B&GA flying. BBA Aviation's businesses support the in-service fleet and therefore flying hours and movements, particularly in North America, are the key indicators of demand.
Whilst 2011 was another year of growth, building on growth in 2011, B&GA Aircraft movements in North America remain 22% below their peak and it is difficult to see when we will see accelerated growth in B&GA flying.
Medium-term market indicators such as the number of new jets sold continue to improve.
External commentators forecast that 2011 should prove to be a trough in new aircraft sales with a modest recovery expected in 2012 and steadily increasing growth projected for OE sales from 2013-17. It is expected that 10,000 new business jets will be delivered between 2011 and 2020.
Outside of North America, growth in the B&GA fleet continues, with strong demand for aircraft in emerging areas, notably Asia and Latin America. Over the next five years, some 45% of business jet production is expected to be delivered outside the US.
Commercial aviation
27% of BBA Aviation's revenue in 2011 was associated with commercial aviation.
Demand for the services we provide - fuelling, ground handling, technical services and aftermarket support - is driven by commercial aviation movements and the trend towards outsourcing of non-core services.
World airline passenger traffic continued to expand during 2011 and airline flight hours are at an all time high. The geographical shift in capacity continues to move towards areas such as Latin America and Asia Pacific, with modest declines in aircraft movements in both North America and Europe.
We continue to see favourable outsourcing trends as commercial airlines seek means to control costs by shedding non-core services such as into-plane refuelling.
Military aviation
6% of BBA Aviation's revenue in 2011 was associated with military aviation, primarily the support of legacy military platforms.
Reductions in defence procurement budgets in the US and Europe are expected to continue with the largest reductions in modernisation programmes. Increased flying for older out-of-warranty equipment is likely to result in service extensions that will require additional maintenance and overhaul support.
