B/E Aerospace Remains Bullish On Cabin Upgrade Market

By Sean Broderick sean.broderick@aviationweek.com
Source: AWIN First
January 31, 2014
Credit: B/E Aerospace

Continued solid airline financial returns could keep the current boom in cabin retrofit demand going, feedback from interiors specialist B/E Aerospace (BEA) suggests.

“We had really strong retrofit sales in the quarter,” BEA CEO Amin Khoury told analysts on a Jan. 30 earnings call, adding that the recent uptick hasn’t slowed the pace of new inquiries.

“We are having significant ongoing discussions with our customers about retrofit programs in the future,” Khoury says. “I would say there is a step-up in activity.”

BEA grabbed the lion’s share of a $770 million Delta Air Lines cabin upgrade project announced in early January that will include 225 in-service aircraft. Other carriers with major cabin upgrades in progress include Alaska Airlines and Southwest Airlines, which, like Delta’s, include some capacity-boosting thanks to slimline seats. United Airlines also is in the midst of a multi-year upgrade effort that focuses on premium seating up front and adding Wi-Fi.

Last week American Airlines added some color to plans revealed last summer to put more seats on certain models. It confirmed plans to boost Boeing 737-800 capacity by either 10 or 14 seats and put at least 13 seats—and potentially more—on Boeing 777-200s (Aviation DAILY, Jan. 29).

After netting an estimated $13 billion in 2013, airlines are on track to net nearly $20 billion in profits in 2014, the International Air Transport Association (IATA) projects (Aviation DAILY, Dec. 16, 2013). North American carriers will deliver the bulk of 2014 profits, at about $8.3 billion.

While the aircraft manufacturers are getting their fair share of the profits—Airbus and Boeing combined to deliver 1,274 aircraft in 2013, with each setting new output records—carriers clearly are not skimping on their existing fleets.

Canaccord Genuity expects “overall modifications spending” to rise more than 10% in 2014. “Much of this will be focused on the interior segment, driven by increased inflight entertainment spending and weight-savings opportunities,” wrote analyst Ken Herbert in a mid-January research note.

Meanwhile, B/E Aerospace continues to benefit from the new aircraft boom. The company boosted full-year revenues 16% in 2013, led by a 15% jump in its commercial aircraft segment, which provides seats, galleys, and other interiors products for both new and in-service models. Commercial revenues were $1.8 billion for the year, up from $1.6 billion 2012.

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