June 28, 2015: Rockwell Collins, a major supplier of aircraft systems, said in its FY3Q2015 earnings call Friday that aftermarket parts and provisioning sales were below expectations in part because the Boeing 787 and the Rockwell parts are proving so reliable in service.
Fewer airlines introduced the 787 into service in the third quarter, also driving down provisioning, Rockwell said.
Although Rockwell’s emphasis was on its own products, the news from a third party such as Rockwell must be sweet music to Boeing’s ears after all the program difficulties and a three-and-a-half month grounding of the 50 787s then in service beginning in January 2013 after two battery fire and smoke incidents. It is, after all, Boeing’s name on the side of the airplane, not Rockwell’s. There are now about 300 787s in service.
“The commercial aftermarket has not lived up to our expectations this year, and we’re seeing a couple dynamics play out here. First, in business and regional systems, business jet flight hours are just not growing. We came into the year expecting that flight activity would continue to recover at last year’s rate and unfortunately, it just hasn’t. This past quarter, the activity was relatively flat. Interesting, we are seeing relatively reasonable flight activity grow in the newer jets, but really weak utilization in the older models,” said Robert Kelly Ortberg, president of the supplier. “Our air transport aftermarket business was down about 4%, due primarily to lower entry into service spares for the 787. Now this surprised us a little bit, but we do know why it’s happening, and it’s not all bad news here. We knew going into the quarter that there weren’t a lot of new airlines taking 787 aircraft, but we did expect some additional spare sales that didn’t materialize. The reason they didn’t is that airlines are now recognizing that they don’t need as many spares as first estimated supporting their aircraft. And why is that, well, it’s because our products are performing very well in service, and are exceeding even our reliability expectations.”*
Rockwell provides systems for the Boeing KC-46A, 737 MAX and 777X, the Bombardier Global 5000/6000 and C Series, the Mitsubishi MRJ, the Embraer KC-390 and the Airbus A350. Several of the programs have been delayed, but as these kick in, Rockwell will see its provisioning business pick up.
*Quotations via Seeking Alpha transcript.