Pilatus supply chain solution bodes well for future

Pilatus announced its full-year results earlier this month, with revenue and profitability growth and an increase in backlog. But perhaps the most important element of its earnings call was the discussion of how the company is moving to solve supply chain problems. Pilatus Earnings Highlights from the earnings call include: Revenues up 10.5% year-over-year to CHF 1.633 billion ($1.8 billion) Ebit up YoY by 1.3% to CHF 243 million New orders up 44.9% to CHF 2.193 billion Deliveries of 153 aircraft, including 96 PC-12 NGX, 51 PC-24s, and six PC-21 military trainers, up from 148 aircraft in 2023. Order backlog up 25.5% from the beginning of the year to CHF 2.917 billion The company had a good year across the board, with new military orders for 19 PC-21s from the Royal Canadian Air Force and an order for eight PC-7 MKS trainers from the Netherlands Air Force. Pilatus Supply-Chain Solution Pilatus leadership discussed the increasing challenges caused by supply chain delays in receiving parts. Management has decided to invest and will “insource” manufacturing to alleviate supply chain issues. Pilatus is already in the process of acquiring Ruag Aerostructures, which has extensive tooling and production expertise. The 230-employee operation should be able to meet Pilatus's production needs for components under Pilatus's direct control. The company is investing in Spain with a new company, Pilatus Aircraft Ibérica in Seville, which will provide additional manufacturing capacity. These two acquisitions should help alleviate some supply chain delays. On the environmental front, the company has a strategic collaboration with Synhelion, a spin-off of ETH Zürich, as a shareholder. The goal is to accelerate the scaling up of solar fuels for aviation, and Pilatus has agreed to purchase 200 tons of solar fuel per year over five years beginning in 2027. The fuel will be used for Pilatus's own fleet. The company is also investing in the aftermarket, building a new sales and service center in Bradenton, Florida, and acquiring the former Aero Center Epps sales and service facility in Atlanta. “Despite the challenges, we achieved important milestones in 2024, with yet more portfolio development,” said Pilatus chairman Hansueli Loosli. “We are pursuing targeted investment in our infrastructure and sustainability, and we continue to improve the terms of employment we offer our staff, whom we regard as our most important resource of all.” The Bottom Line Pilatus has taken decisive steps to integrate more of its supply chain into its production capabilities and eliminate risks of production delays. Investing in addressing problems and ensuring access to critical manufacturing capacity that would otherwise be in short supply has demonstrated how a proactive management team can solve problems rather than accept shortfalls and not take mitigating action. If only some major players in our industry took similar actions, delivery delays and shortfalls in the commercial sector could also be eliminated.

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