On the Record with
BOB JOHNSON, PRESIDENT, HONEYWELL AEROSPACE

'Even Now, Business Aviation Is Robust'

The recession may be overhanging many parts of the economy, but for many in the aerospace industry, including business aviation, the downturn will prove to be a blip.

That's the opinion of Bob Johnson, president of Honeywell Aerospace, who believes that while 2003 prospects remain under pressure, many positive factors will combine to bring a strong recovery in 2004.

"Even now, business aviation is pretty robust," he says. "The TFE-powered business jet fleet is down only 5% compared with the airline segment, which is down 10 to 20%," he told Show News. "Business jet flying hours are up 2%, and charter activity is growing, as are fractional sales-though not as fast as they were."

While next year is in question, in the long term people need to travel and become even more time-efficient, Johnson says. Referring to Honeywell's annual survey of purchasing intentions (see page 44), he noted that the forecast of 7,600 business jet deliveries worth $121 billion between 2003 and 2013 is just a slight reduction from the 8,200 forecast a year before.

"It's really not inconsistent with what's happening," he says. "This is a time when people are looking at their cash positions and deciding they want a little more accumulation. That's just a lull. If someone is going to order a new business jet they will just put it off until three to six months later."

Insecurity caused by questions of corporate integrity, high fuel prices because of President Bush's continued talk of war with Iraq, and issues over safety, security and cash flows should all be behind us by 2004, Johnson predicts. "This will have proven to be just a blip, a very unusual convergence of negative factors," he says.

Mr. Buffet's Aunt Is a Trend-Setter
Retirees may become a driving force in the fractional ownership market-but don't look for discounts from the AARP (American Association of Retired People).

"I bet you not one CEO or chairman in a Fortune 200 company, nor people who work directly for them, isn't making some kind of deal on how they can buy a share in a business jet when they retire," says Honeywell Aerospace president Bob Johnson.

"People who have had the opportunity to fly first class or in corporate jets are thinking how they are going to adjust when they get to retirement."

Top executives are increasingly negotiating use of a business jet in their retirement package, the most notable being Jack Welch's right to use GE's Boeing BBJ, and the trend is extending further down the line.

One of the most celebrated examples of a retiree with a share in a business jet was Warren Buffett's 90-year-old aunt.
Buffett told Show News in 1999 that her one-sixteenth share in an EJI Hawker 800XP allowed her short-notice, at-will and hassle-free travel between her home in Omaha, Neb., and her friends in Florida.

$40 Billion in 40 Months
Honeywell Aerospace has won $40 billion worth of orders in the last 40 months, including $6 billion worth in the first eight months of this year, according to its president, Bob Johnson.

"This is really unbelievable," he says, while claiming it points to the underlying strength of the aerospace industry and its-and Honeywell's-overall resilience to blips, untoward events and economic cycles. While adjusting to the short term, industry should remain focused on the long term, he avers.

"If a company focuses on things a customer needs to be successful, it will win," Johnson told Show News.
Honeywell, he says, hasn't wavered from its strategy of improving life for the pilot, the passenger and the operator with new products in avionics, communications, engines, auxiliary power units, safety and situational awareness, and integrated aircraft systems.

"We stayed the course, and when things got tough we didn't slow down either the Primus Epic or the AS900 engine," Johnson says.

Honeywell's performance has been achieved in the face of many challenges, any single one of which could have derailed it.

"Think of it," says Johnson, "In the last couple of years we have been through the Honeywell/AlliedSignal merger, we passed through the GE experience [when GE tried unsuccessfully to buy Honeywell], then 9/11 happened, and the economy turned down.

"But even in this pretty tough environment, an executive traveling with NetJets or any other business jet has to have his high-speed dataline and e-mail on his aircraft."