B/E Aerospace Is Sitting Prettier Now Since Solving Production Problems

For B/E Aerospace, this past year was a time to solve what it described as "major production problems in its Seating Products Group" and get back on track as one of the world's most important suppliers of aviation interior products. It appears that B/E has started to turn the corner.

Net earnings were $4.7 million for the second quarter of fiscal 2001, as compared to $13.7 million for the second quarter a year ago. Though the number is down, B/E CEO Robert Khoury says the company turnaround has begun.

"As expected, we again increased our gross profit margin, despite lower sales this year from our seating and galley structure product lines," he said. "We expect strong quarterly earnings comparisons during the second half of this fiscal year. We also expect earnings in the second half of this year to be stronger than in the first half, driven by substantial additional margin improvement."

Backlog was about $450 million as of August, essentially unchanged from the backlog at the end of spring.

At the NBAA Convention, B/E's Business Jet Products group is displaying an array of seats, cabinetry and other furniture products. And on static, B/E is showing its own in-house-customized company Challenger jet.

Also displaying products at NBAA is B/E's Interior Systems group, whose primary products include food and beverage preparation/storage and oxygen systems. The 'Beat The Clock' display features the quick-donning capabilities of B/E's full-face crew oxygen mask.

B/E's latest product for the business aircraft market, also on show at NBAA, is an LED reading light that the company says consumes only 50% of the power of existing lights while lasting up to 12 times longer. The new light features a patent-pending temperature compensation circuit, and can be mounted in the same footprint as traditional incandescent or halogen lights.

Beside the LED light, B/E is showing the following in New Orleans: smart dimmer and smart control panel; En Vogue line of 16g business jet seats; 16g Galaxy Aircraft seating; Global Express and Boeing Business Jet 16g side-facing divans; Falcon 50/900/2000 Electraberth tilting seating products; BBJ high-gloss, high-end cabinetry products; STC'd Challenger interior kit; and SJ30-2 and Citation CJ2 21g seating.

Even with that extensive line of business jet-related products, it is B/E's airliner business that brings most of its sales. And more than 60% of last year's sales came from the aftermarket rather than from new aircraft. All indications are that those sales will continue to be strong now that the company is getting its manufacturing problems solved.

"Several factors indicate healthy demand for cabin interior products," said Khoury. "The airlines continue to demonstrate strong demand for aftermarket products; a number of our major customers are planning significant refurbishment programs. In addition, the Boeing Company recently increased its forecast of new commercial aircraft to be delivered in calendar 2001 and 2002.

"These factors, coupled with the operating improvements we have made to date and expect through the balance of this year, form the basis for the outlook for healthy growth in B/E's earnings for the balance of this year and in fiscal 2002."

The operating improvements Khoury referred to related to lean manufacturing and information technology. To improve manufacturing efficiencies, B/E has dedicated a team of experts to facilitate implementation of lean manufacturing at the company's principal manufacturing facilities.

In the area of information technology, B/E implemented common, shared platforms for information management, financial reporting and engineering design. That helped the company simplify and standardize business practices, implement its lean initiatives and launch and e-commerce initiative.