Farnborough Show News - July 14, 2008 - (Page 18)

FA R N B O R O U G H 2 0 0 8 P&WC Celebrates 80th Year Is Soaring Price of Oil a Market Bubble, One About to Burst? Show News posed this big question to Markus Brunnermeier, a professor of economics at Princeton University, one of three economists at the university now specializing in the study of market bubbles. He was hired by now-chairman of the Federal Reserve Ben Bernanke when Bernanke was at Princeton. Brunnermeier says that the question of whether the current run-up in the price of oil is a bubble is much less obvious than it Brunnermeier. was for Internet stocks in the late 1990s, or housing prices more recently. When it comes to oil prices, there is no commonly accepted evaluation ratio like the price-earnings ratio for stocks or pricerent ratio for house prices, he says. “At the end of the day, the oil spot price is given by demand and supply on the spot market. The fact that we do not see extra speculative demand in the oil spot market due to physical hoarding of oil (e.g. buying oil, storing it and hoping to sell it at an even higher price in the future), speaks against the ‘bubble hypothesis.’ This is in contrast to the housing market, where people bought second homes purely for speculative purposes—-creating additional demand,” he explains. Oil, unlike stocks and housing, is a consumable rather than a long-run asset. “On the other hand, trading activity in oil futures derivatives markets is very high. High trading volume typically goes hand in hand with bubbles,” he notes. One reason why oil prices can be very high in the short run is that people only slowly find substitutes for oil and change their consumption patterns—behavior that will mitigate the high price of oil. “This is not to say that the oil price can’t go down in the future, but the predictability is less clear-cut compared to Internet stocks in the late 1990s and to the housing frenzy bubble in mid-2000s.” —David Hughes Eighty years ago James Young, a Montreal businessman, founded Canadian Pratt & Whitney Aircraft Company with six employees as a service center for Pratt & Whitney (Hartford, Connecticut) engines built in the U.S. and operated in Canada. Eventually it took over the production of Wasp radial engines; then, in the 1950s it developed Canada’s first gas turbine, the PT6, and delivered the first production model to Beech Aircraft in 1963. Since then it has delivered more than 65,000 engines (with 42,000 still in service), and today has over 9,000 customers in 195 countries. PT6 turboshaft engines have accumulated more than 330 million flight hours. The PT6B-37A turboshaft, launched in 1996 for the A119 Koala helicopter, is shown here. P&WC is at Stand F14 in Hall 4 (United Technologies). BAE Taps GE Aviation for RAF VC10 Spares In a $14 million five-year agreement, BAE Systems has selected GE Aviation to provide spares, inclusive of repair and overhaul, for RAF VC10 transport aircraft’s powered flight control units (PFCUs). The agreement is a part of the latest JAVELIN (Joint Approach to VC10 Engineering and Logistics Integration) contract award from the UK Ministry of Defence, and sees BAE Systems take overall responsibility for VC10 availability at the front line and their capability to meet all operational requirements. GE is at Stand B7 in Hall H4. Avio-Diepen and Orcon Blanket the Sally B Avio-Diepen of the Netherlands and Orcon Aerospace have sponsored insulation blankets for the cockpit of the Sally B, the last remaining airworthy B-17 Flying Fortress in the UK. The Sally B flies regularly at air shows, memorial flypasts and commemorative events such as a memorial to the 79,000 Allied airmen who gave their lives during World War II. “We are extremely grateful for this important sponsorship, said B-17 operator Elly Sallingboe. “Maintaining this huge vintage aircraft is incredibly expensive, and without help like this it would be impossible to keep this unique aircraft flying.” Avio-Diepen is at Stand C6 in Hall C. Saab Gets Orders for Gripen EW Units Saab has received orders from the Swedish Defence Materiel Administration, FMV, for electronic warfare systems and supplementary weapons pylons for the Gripen. The aircraft will be equipped with antennas, transmitters and computers to interfere with enemy air and ground forces. Deliveries will be made during this year and in 2009. The supplements for weapons pylons mean that the aircraft will be able to use GPS-equipped weapon systems. The order is valued at 250 MSEK, or about $42 million,and deliveries will take place from 2009 to 2011. Saab is at Chalet C22-23. Embraer Concludes Acquisition of ELEB Embraer has confirmed the acquisition of the remaining 40% of the capital of Embraer Liebherr Equipamentos do Brasil S.A., formerly owned by Liebherr Aerospace S.A.S., concluding the deal announced on Dec. 21, 2007. The company’s name will be changed to ELEB Equipamentos S.A. to reflect the new corporate structure. ELEB was founded in 1999, and develops and manufactures aircraft landing gear, hydraulic components and precision equipment. It has 18,710 square meters of facilities and some 750 employees in São José dos Campos. Embraer is at Chalet C33-35. Moog Acquires QuickSet International Moog Inc. has purchased QuickSet International, Inc., a manufacturer of precision positioning systems and pan and tilt mechanisms for military, homeland security and commercial surveillance applications. The products are used to position surveillance cameras, thermal imagers, sensors and communication antennas. East Aurora, N.Y.-based Moog is at Hall H4, Stand F11. 18 July 14, 2008 www.aviationweek.com/shownews http://www.aviationweek.com/shownews

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Farnborough Show News - July 14, 2008 Contents Thirty More Years CFM Reveals New Engine Boeing Reduces Forecast UAVs’ Quiet Revolution Finmeccanica: U.S. Success A Plethora of AESAs BAE North America Plus L-3 Becomes a Prime Better Late Than Never A Peek Behind the Curtain China’s J-10 Revealed Boeing’s 787 Dreamliner Breaking LM’s Hegemony

Farnborough Show News - July 14, 2008

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