AVwebBiz - Volume 8, Number 48

December 15, 2010

By The AVweb Editorial Staff
 
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AVflash! TCM Under Chinese Ownership back to top 
 

Teledyne-Continental Bought by Chinese Interests

Teledyne Continental Motors has been sold to Technify Motors, a subsidiary of AVIC International, a Chinese government-owned holding company with diverse business interests in the aerospace sector. The sale price, according to AVIC and Teledyne Technologies, was $186 million, and terms of the sale included a commitment to remain in Mobile, where Continental has been on the former Brookley Air Force base since the 1960s.

The sale will result in an infusion of new capital to rapidly develop the diesel technology Continental bought from SMA last spring, for both the Chinese and the international market, according to Teledyne's Jason VanWees, Teledyne Technologies' vice president for business development. He said that once the sale has cleared regulatory hurdles, it should become final by the end of the first quarter of 2011. Until then, Teledyne will continue to oversee TCM.

VanWees said Tuesday that AVIC executives met with Mobile city officials recently and committed to keeping TCM on its large Brookley site, where it shares a complex of former military facilities with a number of aerospace companies on what is now Mobile Downtown Airport. He said AVIC is also impressed by other business interests in Mobile, including a potential EADS plant to build A330 tankers for the U.S. Air Force and an expanding ThyseenKrupp steel mill.

Although TCM's business has fallen off dramatically since 2008, it has remained in the black, but only through aggressive cost control. TCM's sales represent only a tiny fraction of Teledyne's $1.8 billion in revenues but, according to VanWees, as the corporate parent has acquired more technology companies, aerospace manufacturing is not considered its core competency.

Of the 34 acquisitions Teledyne has made, most are in the electronics and instrumentation segment, with a smattering of defense-related businesses.

"You have to have an international strategy. We're not an aviation company," VanWees added. He said that with its extensive business relationship with companies like Boeing and Honeywell, AVIC represents a much better fit for TCM.

One immediate goal, says VanWees, is an infusion of capital to rapidly develop the diesel technology TCM bought last spring from SMA. Although no one is sure of the timing, the Chinese general aviation market is seen as a significant growth opportunity, and the diesel engine could be pitched into that market in the two- to five-year time frame.

"We've been talking to the OEMs, and most of them would like to have a diesel engine," VanWees said. As for keeping the plant in Mobile, VanWees said AVIC has made a strong commitment to do so.

"This is Chinese ownership, no doubt. We've got a great low-cost lease at the former Brookley. How are you going to build a fully FAA-certified manufacturing facility in China? Why do that?" he said.

VanWees told AVweb that the current TCM management team will remain in place and that neither company expects any changes before March and perhaps not after that, either.

Although capital will spur the diesel development, VanWees said TCM will continue to face the challenge of high-mix, low-volume manufacturing because the stability of the business depends on the legacy aftermarket. But the growth will likely come in the international market with new products.

"I don't think the plant is ever going to look like a car plant, where you have only a bunch of robots touching things," VanWees said. Nonetheless, TCM has invested in new manufacturing and quality control technology and is expected to continue to do so.

 
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Staking Claims in the Burgeoning Chinese Market back to top 
 

Dassault Targets Deal With China's AVIC

Reuters says Dassault Falcon is eyeing a major manufacturing presence in China as a way of tying up 40 percent of the said-to-be burgeoning market for business jets in the country. Reuters says the New Jersey company is negotiating with the Chinese government-owned AVIC to either set up shop in China or work on the development of an indigenous Chinese business jet. "There should be a decision in 2011/12. We will then know, yes or no, whether we will collaborate more seriously with them," Reuters says Dassault Falcon Chief Executive Jean Rosanvallon told La Tribune in an article to be published on Wednesday. Reuters says Dassault believes that in the long term China will be home to 3,000 business aircraft and he hopes to sell $500 million worth there in 2011.

The company also announced the opening of a sales office in Beijing on Tuesday. The Global Times Rosanvallon spoke at a news conference in Beijing at which the Times said he hoped to sell 10 aircraft a year there.

 
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Fallout from Flight Planning Patent Decision back to top 
 

RunwayFinder Shuts Down Over Patent

RunwayFinder, a popular online flight planning Web site announced Tuesday that it was shutting down in the face of a lawsuit from FlightPrep, an Oregon company that successfully patented online flight planning almost a year ago. RunwayFinder developer Dave Parsons said he had hoped to reach a licensing deal with FlightPrep which included the dropping of the lawsuit, which claims damages of $3.2 million per month from RunwayFinder. FlightPrep did offer RunwayFinder a temporary free license while it negotiated terms of a permanent one but Parsons said the lawsuit was a deal breaker. He said FlightPrep arrived at the $3.2 million figure by multiplying the number of unique visits his site receives each month (22,500) by the $149 annual subscription cost for FlightPrep's service. FlightPrep calls the resulting $3.2 million "lost revenue." Parsons said FlightPrep wouldn't drop the suit so he's closing the site, which is used by other sites as a source for information for their own products. In a podcast interview with AVweb, FlightPrep Vice President and General Manager Ross Neher said it's not his company's goal to shut down sites or otherwise disrupt aviation services but RunwayFinder ignored written notification of the patent enforcement. He said taking Parsons to court was a last resort and the only option open to his company under the circumstances.

AVweb reported almost a year ago, the company got the patent after an eight-year application process with the Patent Office. At one point the patent had apparently been rejected but it was finally awarded last Dec. 29. Neher said that while online flight planners are common these days, his company's was the only one in 2001 when the patent application was filed and that, apparently, is what counts. In the podcast interview, Neher suggested the revenue derived from online flight planners would be a factor in assessing licensing fees and that some free services could remain that way. It has already reached a deal with SkyVector ,which is paying a royalty. Neher said many other organizations offering online flight planning have been contacted regarding licensing agreements but declined to discuss the details of those negotiations.

 
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U.S. Tax Bill: GAMA Optimistic back to top 
 

Advocates Say Tax Plan Good For GA

The tax bill now working its way through Congress will help to boost manufacturing and restore lost jobs in the general aviation industry, the General Aviation Manufacturers Association said this week. The plan will also provide tax benefits to companies that invest in business aircraft, according to the National Business Aviation Association. Businesses will be allowed to expense 100 percent of their investments in new capital assets through Dec. 31, 2011, retroactive from Sept. 8, 2010, plus claim a "bonus" depreciation allowance of 50 percent during 2012, said NBAA. In addition, the bill extends the research and development tax credit for two more years, says GAMA. "These proposals are extremely well-targeted to create jobs, stimulate innovation, and get production lines moving again at manufacturing plants," according to GAMA CEO Pete Bunce.

Investments eligible for the depreciation credit include aircraft, engines, avionics and other upgrades. "We believe the expensing provision will encourage sales of airplanes, engines, and avionics in a market that continues to experience a very slow recovery from the recession," said Bunce. "It will also benefit companies and employees of maintenance and completion centers that overhaul aircraft and install equipment." The R&D credits also have been "very effective" at encouraging technical advancements and sustaining economic growth in the industry, according to GAMA. The tax plan won a positive vote from a Senate committee on Monday, and is expected to pass in both the House and Senate by the end of this week.

 
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The Future of Engines Ain't Cheap back to top 
 

P&WC Announces $1 Billion Research Program

Pratt & Whitney Canada says it will spend up to $1 billion to create a new generation of fuel-efficient and lighter-weight engines. It confirmed the program in a news conference Monday. Although no actual engine projects were announced, the research cuts a swath across P&WC's traditional market. "P&WC is developing the most advanced propulsion technologies for improved environmental performance, including reduced fuel consumption, lower emissions and less noise," the company said in a news release. "These technologies will be leveraged across P&WC's product lines for new turbofan, turboprop and turboshaft engines for business, regional and helicopter applications." The company is already engaged in some cutting-edge stuff at the higher end of its market, including the geared turbofan that will power the Bombardier Cseries and the PW800 that will go in big bizjets. P&WC got a big boost from the Canadian federal government in putting together the five-year research program.

The government provided a $300 million "repayable investment" and is crowing about the job creation that will result. The company is already looking for 200 engineers and more jobs are expected to follow in the company's Montreal and Toronto plants. "The project we are investing in today will create or maintain Canadian research jobs, encourage public and private partnerships, and keep Canada at the forefront of the international aerospace industry," said Industry Minister Tony Clement.

 
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Opinion & Commentary back to top 
 

AVweb Insider Blog: AOPA — We're Just Asking

AVweb recently undertook a review of AOPA salaries and expenses. We're curious how the numbers parse out, but as Paul Bertorelli explains in the latest installment of our AVweb Insider blog, that doesn't mean we're at odds with the associatoin. In fact, we think critical reviews make for a stronger association, and that's something we can all benefit from in the current climate.

Read more and join the conversation.

AVweb Insider Blog: Eclipse Rising

If ever the stars were aligned for success, Eclipse Aerospace is an example. The investors bought the bankrupt wreckage of the previous company for four cents (or less) on the dollar, they're well on their way to sorting out the EA500's shortcomings, and aerospace giant Sikorsky has bought into the action. On the AVweb Insider blog, Paul Bertorelli concedes he may be a kook for thinking this ought to work.

Read more and join the conversation.

 
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AVweb Audio — Are You Listening? back to top 
 

Internet Flight Planning Patent Fallout Begins

File Size 12.3 MB / Running Time 13:30

Podcast Index | How to Listen | Subscribe Via RSS

When we first heard of FlightPrep's successful patent of online flight planning a year ago, we figured it would eventually be big news. It's now gathering some interest, and on Tuesday RunwayFinder announced it was shutting down its site because of a patent infringement lawsuit filed by FlightPrep. AVweb's Russ Niles spoke with FlightPrep general manager Ross Neher on Monday, before RunwayFinder pulled the pin, about how his company hopes to work with the GA community to make this uncharted (sorry) territory navigable.

Click here to listen. (12.3 MB, 13:30)

 
Bonus Depreciation Stories and Resources on AVweb.com
Fantastic Pricing and Tax Incentives make 2010 an ideal time to buy or upgrade an aircraft. We've compiled special offers on new or used planes, avionics, engines and more on the resource page. The pricing, rebates or incentives are available to everyone. Consult your tax advisor regarding the potential bonus depreciation benefits, and check our resources page for stories, podcasts, and videos related to bonus depreciation.
 
AVweb Media: Look, Listen, Laugh and Learn back to top 
 

Video: AVweb Flies the Kitfox LSA

Original, Exclusive Videos from AVweb | Reader-Submitted & Viral Videos

Everyone complains that light sport aircraft are too expensive, but Kitfox is doing something about it. AVweb recently went to Homedale, Idaho to try out Kitfox's new moderately priced LSA. Here's a full video report.

(And here's a link to last month's podcast interview with Paul Leadabrand about the Kitfox.)

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If that doesn't work, click here to download the video directly.

 
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The Top Reporter on Our Crack Staff ... Is You! back to top 
 

AVweb's Newstips Address ...

Our best stories start with you. If you've heard something 200,000 pilots might want to know about, tell us. Submit news tips via email to newstips@avweb.com. You're a part of our team ... often, the best part.

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Names Behind the News back to top 
 

Meet the AVwebBiz Team

AVwebBiz is a weekly summary of the latest business aviation news, articles, products, features, and events featured on AVweb, the internet's aviation magazine and news service.

The AVwebBiz team is:

Publisher
Timothy Cole

Editorial Director, Aviation Publications
Paul Bertorelli

Editor-in-Chief
Russ Niles

Contributing Editors
Mary Grady
Glenn Pew

Features Editor
Kevin Lane-Cummings

Webmaster
Scott Simmons

Contributors
Jeff van West

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