Continued solid airline financial returns could keep the current boom in cabin retrofit demand going, feedback from interiors specialist B/E Aerospace (BEA) suggests.
“We had really strong retrofit sales in the quarter,” BEA CEO Amin Khoury told analysts on a Jan. 30 earnings call, adding that the recent uptick hasn’t slowed the pace of new inquiries.
“We are having significant ongoing discussions with our customers about retrofit programs in the future,” Khoury says. “I would say there is a step-up in activity.”
BEA grabbed the lion’s share of a $770 millioncabin upgrade project announced in early January that will include 225 in-service aircraft. Other carriers with major cabin upgrades in progress include and , which, like Delta’s, include some capacity-boosting thanks to slimline seats. also is in the midst of a multi-year upgrade effort that focuses on premium seating up front and adding Wi-Fi.
Last weekadded some color to plans revealed last summer to put more seats on certain models. It confirmed plans to boost -800 capacity by either 10 or 14 seats and put at least 13 seats—and potentially more—on -200s (Aviation DAILY, Jan. 29).
After netting an estimated $13 billion in 2013, airlines are on track to net nearly $20 billion in profits in 2014, the(IATA) projects (Aviation DAILY, Dec. 16, 2013). North American carriers will deliver the bulk of 2014 profits, at about $8.3 billion.
While the aircraft manufacturers are getting their fair share of the profits—and combined to deliver 1,274 aircraft in 2013, with each setting new output records—carriers clearly are not skimping on their existing fleets.
Canaccord Genuity expects “overall modifications spending” to rise more than 10% in 2014. “Much of this will be focused on the interior segment, driven by increased inflight entertainment spending and weight-savings opportunities,” wrote analyst Ken Herbert in a mid-January research note.
Meanwhile, B/E Aerospace continues to benefit from the new aircraft boom. The company boosted full-year revenues 16% in 2013, led by a 15% jump in its commercial aircraft segment, which provides seats, galleys, and other interiors products for both new and in-service models. Commercial revenues were $1.8 billion for the year, up from $1.6 billion 2012.
The company’s business jet segment overcame a flat fourth quarter to boost annual revenue by 15%, to $419 million from $363 million.
“Fourth-quarter business jet segment revenues were adversely impacted by customer requests to pull forward previously scheduled fourth-quarter deliveries into the third quarter to meet customers’ requirements,” Khoury explains.
The segment is expected to snap back and post year-over-year sales gains both for the first quarter and all of 2014.