Rockwell Collins facing weaker business aviation conditions in 2016

Rockwell Collins, has announced guidance for fiscal year 2016, revising its business aviation expectations in line with weak market conditions.

According to Rockwell Collins chief executive officer and president, Kelly Ortberg, “At this time, we don’t expect to see these conditions improve significantly in the next year so we are re-setting our near-term expectations for that business. Our fiscal year 2016 guidance incorporates the previously announced production rate reduction on the Global 5000/6000 aircraft. In addition, we have assumed additional rate reductions in both the mid-size and light segments of the business jet market in our guidance. The resulting effect is that we now expect our overall business and regional jet OEM sales to decrease low-double digits from fiscal year 2015. In addition, we expect business and regional jet aftermarket sales to continue growing at a fairly modest level, similar to what we’ve seen in fiscal year 2015."
However, he added, "While the decline in business aviation will make for a challenging year for our commercial systems business, we remain focused on executing the business to drive long-term growth in both operating margin and cash flow. We will be taking action through the first half of fiscal year 2016 to right-size our business to these new market conditions."
The company’s business & regional aviation electronics sales are expected to decrease mid-single digits. Sales will decline primarily due to lower production rates of the Global 5000/6000 as well as the expectation of production cuts on other business jet platforms, partially offset by increases for the CSeries and Legacy 450/500 production ramps and higher aftermarket service and support and cabin retrofit sales.
In addition, sales of wide-body in-flight entertainment products and services are expected to decrease by about 35%, or approximately US$20 million, due to the company’s decision to cease investing in this product area.
On a brighter note, the company expects its commercial systems, which provides aviation electronics systems, products and services to air transport, business and regional aircraft manufacturers and airlines worldwide, to show an increase in revenue of low-single digits compared to 2015, and high-single digit growth in air transport aviation electronic sales.

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