Recaro Aircraft Seating sets new sales record
Aircraft seating manufacturer continues its growth in 2011
Recaro Aircraft Seating sales revenues reached 304.3 million Euros in 2011. This represents a growth of about six percent over the previous year (2010: 288 million Euros). The company also set a new record for the number of units delivered: In the past year, Recaro Aircraft Seating produced more than 85,500 seats at its three worldwide production sites (2010: 70,000). “Thanks to various programs aimed at expanding our capacity, we have been able to increase our rate of production while maintaining on-time delivery rates of 100 percent. Correspondingly positive ratings from Airbus and Boeing confirm this success,” explains Chief Executive Officer Dr. Mark Hiller.
The company’s BL3520 seat model was its bestseller by far. With its combined features of lightweight design, comfort and enhanced living space, the seat is exactly what the market demanded. Recaro Aircraft Seating delivered nearly 34,000 units of the BL3520 seat to the Lufthansa Group in the last year alone. In the meantime, many other airlines have also opted for this product, so that Recaro Aircraft Seating has received orders for more than 100,000 PAX since the seat’s market launch in late 2010. Additional highlights of 2011 were major orders from Qatar Airways, which included the delivery of several thousand CL3620 seats. These will be installed in the airline’s new B787 and A350 aircraft.
The company also increased its workforce in 2011. By the end of the year Recaro Aircraft Seating employed some 1,630 people worldwide (2010: 1,480). “In our Schwaebisch Hall headquarters alone, our employee base has grown about 16 percent in the past year – that corresponds to 110 new jobs,” reports Chief Sales Officer Andreas Lindemann.
Expanding Capacity
The company intends to stay on this course over the long term. “In the near future, we are going to have our own production facilities in all three key air transport markets – Asia, Europe and America,” says Lindemann. The company is currently building a new factory in the Chinese city of Qingdao. As the first international aircraft seat supplier, Recaro Aircraft Seating will use the facility to produce seats for the Chinese market starting in 2013. To strengthen its leading position on the international market, the company is also expanding its worldwide capacities at all existing locations. By the end of 2012, expansions of its sites in Germany, Poland, the United States and South Africa will be completed. “We intend to secure our plans for growth by adding personnel around the world,” says Lindemann. “In the coming year, we will create about 90 new positions at our headquarters in Schwaebisch Hall. By the end of the year, we want to have about 890 employees in Germany and 1,800 worldwide.”
In regard to forecast sales revenues for the current year, Dr. Mark Hiller seeks to counter exaggerated expectations: “We have a good contract base – our order books are full. At the same time, there is a lot of movement in the market, which demands maximum flexibility from us.” The reasons for this lie in the persistent high oil prices, which are a real challenge for the airline industry. According to the IATA (International Air Transport Association), fuel costs account for 34 percent of airline operating expenses. Since the price of aircraft fuel is expected to increase further, the IATA anticipates that airlines will face falling profits this year. The airlines are responding with short-term measures, such as cancelling or delaying aircraft deliveries.
“Therefore, we expect our revenues to remain constant through this business year,” explains Dr. Hiller. “Regionally speaking, these high fuel costs will not affect all airlines to the same degree. Because we have a very balanced mix of orders from premium international carriers and low-cost carriers, we will be able to compensate for this development.”
According to Recaro Aircraft Seating, the industry will develop favorably over the long term: “The market will begin to grow stronger in the foreseeable future – and accordingly, we will keep to our present course.” Strong increases in passenger numbers and therefore increases in the size of aircraft fleets are expected in the coming years. To save weight and thereby cost, airlines will retrofit their existing fleets and invest in new, fuelefficient aircraft. The high fuel prices are also accelerating the demand for new, innovative lightweight seats. “With our portfolio, we offer the airlines exactly the answers they are looking for,” explains Hiller. “By means of reducing weight, stateof- the-art materials and ingenious design, we are supporting the airlines’ efforts to fly more economically and environmentallyfriendly. In addition to our high sales figures in 2011, our numerous industry awards demonstrate that our seats are the right solution for the airlines. Our BL3520 seat, for example, has already won four prizes for innovative design, such as the ‘red dot award 2012’.”
On this basis, the company is anticipating a positive trend in the years to come: In five years, Recaro Aircraft Seating expects to have revenues of 500 million Euros and production capacity for more than 120,000 seats. The company’s worldwide workforce is planned to rise to 2,200 employees. The aircraft seat supplier intends to invest more than 80 million Euros in the expansion of the company as well as research and development over the next years.