Aerospace business overview

1. Aerospace
Business 2 Business
Breaking News Breaking News Breaking News
February 10, 2000
Big GE Unit to Offer Services,
Sell Parts on a New Web Site
By MATT MURRAY
Staff Reporter of THE WALL STREET JOURNAL
General Electric Co.'s largest single unit, GE Aircraft Engines, plans Thursday to unveil a
new business-to-business Web site that will enable commercial airlines and military
customers to buy parts, among other functions, via the Internet. The site launch is the
latest flowering of GE's company wide move to integrate the Internet into its daily
operations in an effort to speed transactions and reduce costs.
Kyriakos Leonidou, Francis Montet, Linda Moya,
Ridzwan Nordin, Andrew O'Shaughnessy, Priscilla Pang

2. February 16, 2000 2
The Aerospace Industry
• “Aerospace” term coined in the 1950’s, when the space race was
heating up
• Impetus for growth was war and the Cold War
• Since the demise of the Cold War, companies have found it necessary
to merge with or acquire competitors
• Since 1989, downsizing and cost-cutting have been rampant
– streamlined operations, cut R&D, reduced inventories, employment slashed
by 50%
• Today Aerospace is a $1B industry. Major players are the following plus
Airbus Industrie - a European consortium expected to go head-to-head
with Boeing:
0
10,000
20,000
30,000
40,000
50,000
60,000
Revenue
$
millions
Boeing Lockheed
Martin
United
Technologies
Raytheon Northrop
Grumman
B.F. Goodrich

3. February 16, 2000 3
Major Players and B2B Players
Parts Suppliers Intermediaries Manufacturers Customers
Military /
Government
Airbus Industrie
Boeing
Lockheed Martin
Northrop Grumman
Raytheon
Current Online B2B
Commercial
Carriers
AARCorp
Sita
BF Goodrich
GE Aircraft
Honeywell
United
Technologies
Aerospacemall.com
Aviabid.com
Partsbase.com

4. February 16, 2000 4
What They Do
Parts Suppliers
• Aircraft engine sales &
leasing and overall
• Aircraft overall
• Made-to-order equipment
systems
• Auxiliary power units
• Commercial avionics
• EGPWS warning systems
• Flight control systems
• Environmental control
systems
• Landing systems
• Interior and exterior lighting
Intermediaries
• Portal for aerospace, aviation and
industrial information
• Auction community to buy and
sell aviation parts, aircraft,
services, and equipment.
• Career brokering
Manufacturers
• Short, medium, long-haul aircraft
(military and commercial)
• Defense electronics, systems
integration, military aircraft
systems, commercial aircraft
assemblies
• Business aviation and special
mission aircraft, engineering and
consultation

5. February 16, 2000 5
Where They Do Business
Parts Suppliers
• AAR – North America, Europe and Asia
• BF Goodrich – North America, Europe and Asia
• GE Aircraft – North America, Europe and Asia
• Honeywell – North America, Europe, Asia
• United Technologies – Worldwide
Intermediaries
• Primarily North America
Manufacturers
• Airbus– Europe, North America, Middle
East/Africa, Far East/Asia/Pacific, Latin America
• Boeing – United States, Asia, China, Europe,
Oceania, Africa and Western Hemisphere
• Lockheed Martin – Government and commercial
customers around the world
• Northrop Grumman – primarily US
• Raytheon – primarily US

6. February 16, 2000 6
Who are the Customers?
Parts Suppliers Intermediaries Manufacturers
• International
markets
• Commercial
markets
• Military, defense,
civil, government
markets
• Aircraft leasing
companies
“Our Space and
Aviation Control
business serves
customers that
range from aircraft
manufacturers and
business aircraft
operators to prime
space contractors
and the U.S.
government”
Source: Honeywell
SEC –10K, March
1999
• Airplane OEM
• Small parts
companies
• Aviation consumers
and professional
buyers and sellers
• Aviation
professionals
looking for a job
• Air carriers looking
for airplanes

7. February 16, 2000 7
What is the Value Proposition of
Online B2B?
• Intermediaries provide “level playing field” for small and medium
parts suppliers with large parts suppliers
• Parts Suppliers B2B and Intermediaries B2B enable reduced
costs for Manufacturers
– Reduced procurement staffs and costs
– Reengineered procurement process
• Eliminate manual paper process
– Common history of business transactions between buyer and seller
• Intermediaries provide Manufacturers up-to-date product
comparison information across suppliers
• Intermediaries broker effective relationships between aviation
professionals looking for jobs and aerospace companies
• Intermediaries provide Airline Carriers opportunity to by
airplanes, through auctions for example, “comparison” shop
across manufacturers

8. February 16, 2000 8
Online Basics
• Computer Sciences Corporation recently conducted a study of
the e-business strategies of the major players in the aerospace
industry. All the IT executives of these companies “said they had
Web sites, however 55% said those sites were strictly
informational, with 18% interactive, 18% able to deliver
information and 9% percent able to make transactions.”
Source: AerospaceOnline http://www.aerospaceonline.com (November 1999)
• Parts suppliers
– Generally provide company and product information as
educational content
– More advanced sites have capabilities to
• place orders (GE, AAR)
• search products, track orders, check inventory availability,
technical support, customized pages for customers and other
suppliers (GE, AAR, Honeywell, United Tech)
• purchase online (GE)

9. February 16, 2000 9
Online Basics (cont.)
• Intermediaries
– Information about the aviation market
– Revenue plan
• Free registration
• Commission based
• Advertising commission
• Manufacturers
– About the company (all)
– Company history / milestones (all)
– Meet the executives (all)
– Company financial information (Boeing)
– Career opportunities (all except Airbus)
– News and events (all)
– Product information (all)
– Online procurement processes (Airbus, Boeing, Lockheed Martin)
– Supplier relations information (Boeing, Lockheed Martin)
– Investor relations information (all except Airbus)

10. February 16, 2000 10
Sample Online Value Added Web Pages
Online
training
offered by
Honeywell
Airbus member-
based service:
check parts
availability,
interchangeability,
excess material,
prices
Auction community
/ marketplace to
buy and sell
aviation parts,
aircraft, services
and equipment

11. February 16, 2000 11
Online Value Added –
Parts Suppliers
 Personalized pages
 E-mail subscription to news and new
product information
 1 hour guaranteed delivery at select
airports
 View pictures of ongoing repair work
 Online training
 Options to either exchange or borrow
parts

12. February 16, 2000 12
 Web design consulting services
 Discussion boards
 Personalized pages - account status, monitoring
auction items, end an auction early, edit personal
information, feedback
 Auctions allow members to set their own
price
 Escrow payment services
 Multiple auction schemes - English Auction|
Dutch Auction, Japanese Auction, Sealed Bid
 Multiple shipping options
 Allow search for parts and aircrafts
 Aviation news
Online Value Added –
Intermediaries

13. February 16, 2000 13
Online Value Added –
Manufacturers
• Market status update / stock quote
• Online publications THE LINK, quarterly
newsletter, Above & Beyond magazine
• Photo or Video gallery
• Kid’s page
• Gift store
• Philanthropy
– Education, grants, scholarships,
donations to not-for-profits…
• EDI interconnection for online e-
commerce
• Latest multimedia technology (FLASH)
• Small business relations (women and
minority owned)

14. February 16, 2000 14
Online Opportunities
Opportunity
• Multilingual interfaces
• Attract undiscovered
customers
• Recruitment of smaller
carriers and private
owners
• Provide tools for EDI to
B2B transformation
Benefit
• Increased global reach
• Increased revenues
• Cost reductions,
enlarged supplier &
customer network

15. February 16, 2000 15
Online Opportunities (cont.)
Opportunity
• Purchase contract
negotiation via the web
– Password protected work
area where account
executive and customer
can negotiate terms
• Ongoing
communications via the
web
– 1:1 Bboard between
customer and account
executive
– History of all online
conversations
Benefit
• Customer access to
information on their
terms
– Access web
– Call their account
representative
• More powerful
communications than
paper or e-mail
– Can be secured
– Version control
– Common history of
business relationship

16. February 16, 2000 16
Industry Issues
• Transfer of design and technology base
– This does not necessarily mean giving up the most advanced
technology. It could involve something as simple as showing foreign
workers how to operate a particular piece of equipment. To
maintain technological and informational superiority, companies
restrict what they make available online.
• Government involvement in the industry
– In the international arena, the US aerospace industry is competing
against companies that are directly or indirectly owned by foreign
governments. Asian and European governments have a strong
influence in the aerospace industry and this is a barrier of entry for
US companies trying to increase their market share.
• Some European countries condone bribes for solicitation of
contracts, this is some thing US companies cannot offer.
• Trade barriers and sanctions also limit international transactions.