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Vector set to grow with boost from military market

Dec. 9, 2009 – Vector Aerospace is set to increase its earnings and revenues as the aircraft services company diversifies its markets and cashes in on strong demand from the military for helicopter repairs and upgrades, CEO Declan O'Shea said Tuesday.

The Toronto company, which recently reported higher third quarter profits and revenues, has become more efficient and is growing its revenues and profits on new orders, O'Shea said in an interview after a presentation to Bay Street analysts.

The rosy forecast comes in the wake of a Conference Board of Canada report earlier this month that predicted a recovery in the aerospace industry won't come until 2011, mainly because of weak demand for business jets.

However, Vector's market is diversified, with a 50-50 mix of commercial and defence business so the company has managed to weather the recessionary storms well, the CEO said.

"We don't see bad news in 2010," O'Shea added. "We see a continuation of what we have been doing in 2008 and 2009 when we had the worst of the recession. We know the market . . . is flat but not for us. We are looking for top line and bottom line growth and market share gains.''

In its third quarter ended Sept. 30, Vector reported net earnings of $7.8 million or 21 cents a share, up from $6.5 million or 17 cents a share for the same year earlier period.

Revenues edged higher to $141 million from $135.1 million.

O'Shea said the company is winning new business and has successfully integrated the acquisition of aircraft services operations acquired from Britain's Defence Ministry, improving efficiency and adding to the company's recent growth.

The Toronto company is also benefiting from strong demand for helicopter repairs from defence forces around the world.

"A lot of the manufacturers, a lot of people who are making new things for new helicopters or new aircraft they're having poor outlook because there's not a lot of new buying out there," O'Shea said.

"The corollary of that is that we're getting a lot of fleet enhancement programs, a lot of modernization programs a lot of airframe work to keep those older aircraft flying ."

Vector, which employs 2,500 people, is a global provider of aviation maintenance, repair and overhaul services. The company also provides information technology services to an international customer base in North America, Europe and Asia.

In Tuesday trading on the TSX, Vector shares fell five cents to close at $6.05.