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The Wednesday Report
Canada's Aerospace and Defence Weekly
Volume 7, Number 25                   June 23, 1993

Special Report: 
Thirty million dollars richer than they were a year ago, enthusiastic shareholders of Canadaís $4.5-billion transportation giant, Bombardier Inc., met at the Sheraton Centre in Montreal for the companyís annual shareholder meeting. 
While corporate North America hemorrhaged red ink, Bombardier Inc., in the fiscal year ending this past January 31, paid aggregate dividends on its Class A shares of $9,100,000. On its Class B subordinate shares it paid dividends of $23,000,000 for a grand total of $32,100,000.
Amidst awesome expansion, growing the number of Bombardierís outstanding shares must have seemed appropriate. The meeting combined a special powwow to vote on amendments to Bombardierís Articles Of Incorporation, a change requiring two-thirds shareholder approval.
The Board of Directors had decided it wanted to increase from 224,000,000 to 374,000,000 the authorized number of each of the Class A shares -- multiple voting shares -- and the Class B shares -- a subordinate voting class of shares. Directors also sought shareholder approval for a new class of shares, an unlimited number of non-voting participating preference shares, issuable in series from time to time as may be decided by the Board.
The new shares will rank subordinate to existing preferred shares (1,600,000 issued) and ahead of Class A and Class B shares as to the payment of dividends and the distribution of assets in the event of liquidation or dissolution of the corporation.
Bombardierís 1992-1993 profit before income tax totalled $150.9 million, up 24 percent from $121.4 million in the previous year. Revenues excluding the financial and real estate services group (Bombardier Capital Group), were $4.45 billion compared to $3.06 billion in the previous year. 
A $1.39 billion (and a whopping 45.4 percent) increase in revenues is substantially attributed to the consolidation of acquisitions including UTDC Inc., and Constructora Nacional de Carros de Ferrocarril, S.A. in Mexico as well as a 51 percent interest in the net assets and operations of the de Havilland division of The Boeing Company. (Bob Raeís Ontario government owns the other 49 percent.) The accounts of these operations were consolidated on February 7, 1992 for UTDC; March 9, 1992 for de Havilland; and May 6, 1992 for Constructora Nacional de Carros de Ferrocarril, S.A.
But according to Laurent Beaudoin, the corporationís chairman and chief executive officer, even without the addition of the aforementioned three acquisitions, the corporation would have achieved a remarkable 23 percent increase anyway. 
Aerospace is half the company. Bombardierís aerospace related operations contributed some $2.23 billion to the overall $4.45 total, slightly more than half. Aerospace operations of Bombardier include Canadair, de Havilland and Learjet in North America as well as Short Brothers plc in the United Kingdom. This performance represents a $0.71 billion increase over the previous yearís $1.52 billion total sales.
But aerospace income is not apace with sales growth. Sales increased 46.7 percent whereas income increased only 31.63 percent over the previous year, which amidst a nasty recession had less than dazzling profitability to start with. 
1992-1993 Profit before taxes for the aerospace operations reached $180.6 million (on $2.23B sales) or 8.2 percent compared to $137.2 million (on $1.5B sales) or 9.2 percent in the prior year. Backlog stood at $3.3 billion at January 31 compared to $2.7 billion at January 31, 1992.
Aircraft deliveries reflect strong market share with room to grow:
Despite a global Ďbiz-jetí slump of 9 percent, the Business Aircraft Division of Bombardier delivered 21 Challengers, on par with the previous year. Fifteen of the aircraft were sold to the U.S. compared to only 11 of the same total of 21 delivered in 1991-1992. The company estimates that the Challengerís share-of-market has risen to 33 percent in 1992 from 25 percent in 1991.While Canadair maintained its rate of deliveries in a down-sloping marketplace (thus increasing its market share), Learjet did not fare quite as well and its export business was affected considerably in 1992 by the worldwide aviation industry recession. An increase in U.S. orders filled in most of the international shortfall and the company managed to deliver 27 aircraft as compared to 28 in the year prior. Of the 27 units delivered, 5 were the new, medium-size, transcontinental Learjet 60 model, 22 units were from the 30 Series including 31A and 35A models. Like Canadair, Learjet also managed to increase its market share, but to a lesser degree. Its 1992 deliveries represented 19 percent according to the firmís calculations, compared to 17 percent in 1991.

New designs fill gaps and lead the industry:
Bombardier shareholders yesterday were treated to more exciting news in the form of a report on Canadairís Global Express project which seeks to develop a world-class, ultra long-range business jet. The full-scale mockup of the aircraft was first presented to the aviation community last September at the National Business Aircraft Associationís (NBAA) annual conference and show in Dallas, Texas. 
Bombardier-owned Learjet is also advancing a new model, the Lear 45, which fills a gap in the Bombardier business aircraft line by nailing down the niche between the small Lear 31A and the mid-sized Lear 60 which received certification during the period.
Last week during the Paris Air Show, Canadair launched the Challenger 604, a long-range business jet with a target non-stop range of 4,000 nautical miles. Designed to connect such city pairs as London-Chicago, New York-Moscow and Riyadh-Singapore, "it will be powered by new General Electric CF34-3B engines, feature a new glass avionics suite -- and still cost less than $20 million after interior outfitting to continue the Challenger business jet tradition of value and versatility," said Bryan Moss, president of the business aircraft division. 
Maximum takeoff weight of the 604 is targeted at 47,700 pounds incorporating a 328-U.S. gallon increase in fuel capacity. Fuel will be stored in new saddle tanks, an increased-capacity tail tank and an extended forward fuselage tank. Other improvements include new landing gear and rolling assembly (brakes, wheels, tires); new pitch trim system; hydraulic system relocation and introduction of electrical pumps used in the Canadair Regional Jet; structural strengthening of the empennage; new wing-to-fuselage and underbelly fairing; and a modified fueling system to optimize in-flight centre of gravity and to reduce drag.
The de Havilland deal:
On March 9, 1992, newly incorporated de Havilland Inc. -- in which Bombardier Inc. purchased a 51 percent interest and the province of Ontario the remaining 49 percent interest for cash considerations of $51 million and $49 million respectively -- acquired from Boeing for a cash consideration of $61.63 million, all of the net assets and operations of de Havilland. As part of the acquisition, Bombardier Inc. obtained the right to buy, during the period from February 1, 1996 to January 31, 1997, all of Ontarioís interest in de Havilland for a maximum amount of $49 million. At the time of the acquisition, de Havillandís accounts receivable were $50.3 million; prepaid expenses including inventories, contracts and programmes (less advances) stood at $278.5 million; fixed assets were valued at $67.3 million, while overall liabilities were $165.3 million. The Ontario-based plane maker had a backlog of roughly 40 aircraft.
As part of the de Havilland transaction, the federal government and Ontario government promised to provide Bombardier Inc. with various financial assistance programmes during the five-year period following the acquisition date, including an amount of up to $200,000,000 under specific government programmes; and the reimbursement of restructuring costs up to a maximum amount of $370,000,000. Consequently, Canadairís evaluation and restructuring of operations began in March 1992.
A big player in the regional aircraft game:
Thereafter, in the category of regional aircraft, Bombardierís operations shifted to adjust to its holdings in de Havilland. The Bombardier Regional Aircraft division was formed by integrating into one unit the marketing, contracts and product support arms of the Canadair Regional Jet and the de Havilland Dash 8. All engineering and manufacturing remain at their respective facilities in Saint-Laurent and Dorval, Quebec and in Downsview, Ontario in the case of de Havilland. 
Flight testing for the Canadair Regional Jet was completed in fiscal 1992-1993 at Learís test facility in Wichita, Kansas and six aircraft (5 to a single overseas customer) were delivered during the period. Two training centres went into operation in 1992, one in Canada (Montreal), the other in Germany (Berlin). Fiscal year-end backlog for the Regional Jet was 30 aircraft with 36 options. There were also Letters-Of-Intent (LOI) for 64 more.
From March 9 when Bombardier acquired its interest in de Havilland, to year-end at January 31, 1993, Dash 8 deliveries totalled 39 aircraft. Of these, 25 were 37-passenger Series 100 aircraft and 14 were the larger 50-passenger Series 300. During the same period the corporation received firm orders for 11 Dash 8s, including three Series 300 and eight Series 100 as well as one option on a Dash 8-300. Dash 8 backlog at year-end was 38 firm orders and 15 conditional orders for a total of 53. Of this total backlog, 22 (14 firm and 8 conditional) have since collapsed leaving de Havillandís backlog in April at only 27 aircraft. Shortly thereafter, USAir Group ordered 10 Series 100 aircraft, thus refilling the pages of de Havillandís shaky order book. According to Bombardier, the de Havilland Dash 8 holds better than a 22 percent share of a market in which it has 5 competing manufacturers. 
The future of the Regional Aircraft Division
is promising says the company, despite the recent recession. An increase in demand for efficient regional aircraft is anticipated and the company is currently studying a 37-passenger Series 200 addition to the Dash 8 line as well as the much acclaimed 70-passenger Series 400, and a 70-passenger Regional Jet, the RJX.
Firefighting -- a niche within a niche: 
Canadairís CL-415 made headlines
in 1992 when the government of Quebec ordered eight of the impressive, turboprop, fire-fighting amphibians. The Quebec order followed Franceís order of 12 aircraft. The first CL-415s will be delivered in 1994. Meanwhile, the precursor to the CL-415 was getting a new lease on life. Operators of Canadairís famous CL-215 can now upgrade their aircraft from piston-engine powerplants to turboprop engines. Work on fifteen such retrofits for a Spanish customer continued into 1992. In March 1992, the bulk of the retrofit work was transferred to de Havilland in Downsview. Four units were delivered to Spain in 1992.
...And a niche within a niche of a narrow market: 
Canadairís amphibious aircraft division is now developing the CL-415M, a highly specialized variant of the CL-415. The CL-415M amphibian is designed to perform military and quasi-military tasks that take advantage of the aircraftís amphibious capabilities including search and rescue, drug interdiction, fisheries protection, control of illegal immigration, environmental protection, disaster assistance, and passenger and cargo transportation. According to Canadair, the CL-415M has several features that make it an effective and affordable complement to both rotary- and fixed-wing aircraft currently used for these tasks. Pierre-Andrť Roy, president of the amphibious aircraft division said last week the market potential for the CL-415M is in excess of 50 aircraft.
Aerospace component manufacturing: 
Contributing to aerospace sales in 1992-1993
was Bombardierís component manufacturing. The firmís Canadair, Shorts and Learjet units each manufacture components for other firmís aircraft as well as in the case of Shorts, for in-house products. 
Canadair has manufacturing contracts for Boeing 767 components, Airbus A330/340 parts, and for the McDonnell Douglas F/A-18A. Short Brothers, with Canadair, manufactures components for Boeingís 747, 757 and 737; and the Canadair Regional Jet. Shorts has a build-to-print future in Fokker 100 components and will soon participate in the Lear 45 programme. Lear manufactures parts and tooling for Boeing as well as tank components for NASAís shuttle programme. 
New subcomponent manufacturing developments in 1992 included an additional 100-shipset order for Boeingís 767, thus feeding that production line until the second quarter of 1998; and selection of Shorts teamed with Hurel-Dubois of France by BMW/Rolls-Royce GmbH to provide nacelles for the BR70 jet engine. Plans are afoot to bring de Havilland into the component manufacturing sector as well. Although impacted by reduced aircraft sales, overall, component manufacturing has contributed significantly to Bombardierís total aerospace sales.
Bombardierís defence sales -- comprising operations at Canadair and Shorts in the fields of surveillance systems, general defence systems, and logistics support -- totalled $366.5 million in 1992-1993, virtually the same as in 1991-1992 ($366.2 million). Bombardierís backlog at year-end in the defence sector stood at $500 million, also unchanged from the previous year. Despite slumbering sales, income increased substantially to $6.9 million from $2.0 million in the prior fiscal year. Forecasts for future sales include Shortsí activity in the close air defence regime, including laser-guided Starburst and the high-velocity Starstreak missile. In January, Shorts received an export order form the Malaysian government for Starburst. In 1992, production began on a U.K. order for Starstreak.
Under Bombardierís defence banner are Canadairís technical services operations including work on the CF-18 and the CF-5 as well as the new Canadian Aviation Training Centre at Portage La Prairie, Manitoba. 
The training centre embodies a privatized version of the Canadian Forcesí ab initio training syllabus. The contract was awarded to Canadair in September 1991 and initial courses began in September 1992. 
Also under the defence banner at Bombardier is Canadairís CF-18 Systems Engineering Support (CF-18 SES) contract with the Department of National Defence. In April 1992, Canadair received a follow-on contract from DND. Since the programme began in 1986, and by January 31, 1993, some 98 CF-18s had undergone inspection, modifications and fly-in repairs.
Naval and land-based CL-227 Sentinel (you know... the "Peanut") was advanced in 1992 through ongoing operational development at a dedicated flight test facility in Oklahoma. Canadair was recently awarded a $10 million contract to operationally evaluate the CL-227ís automatic landing capabilities on a U.S. Navy frigate, in 1994. 
Canadairís defence systems division was recently awarded a $26 million subcontract
by Lockheed Canada Inc. in support of Lockheedís recent $128 million contract for the Canadian Forces Electronic Support and Training (EST) programme. The EST system will provide individual and force level training in air, maritime and land scenarios by emulating hostile electronic action against radar and communications systems from an airborne platform. Under the five-year contract, Canadair will modify three of the federal governmentís Challenger 600 business jets to accommodate Lockheedís electronic warfare (EW) training equipment. Canadairís subcontract work will include design, aircraft modification and complete integrated logistical support, as well as stringent quality assurance throughout performance of the contract.
Short Brothers delivered six Sherpa C-23 (modified SD-330 in olive drab) a
ircraft to the U.S. Army National Guard in 1992, and 43 license-built Tucanos to the U.K. Royal Air Force (RAF).
A blip in steep, positive slope of transportation equipment:
While aerospace and defence fared as well as could be expected in both sales and profits, not all of Bombardierís units met their expectations in 1992. Transportation equipment unit UTDC Inc. ran into multiple frustrations on its English Channel tunnel shuttle-train contracts. The customer, claims Bombardier, sought numerous unscheduled modifications and caused numerous delays in its approval and authorization process for work in progress and work completed. The resulting damages to Bombardier total some $450 million which it claimed last December in a letter to TransManche-Link. Bombardier says it intends to pursue this claim through either negotiation or litigation if needed. Nonetheless, despite this short term hiccup in the transportation sector which overall contributed some 19 percent of 1992 profitability, Bombardier logged an additional $3 billion in 1992 agreements for its transportation equipment units, bringing total backlog in the sector to $4 billion. 
Future prosperity in big numbers:
In aggregate, Bombardierís total operating units finished the 1992-1993 fiscal year with a backlog of $8 billion. The company drew business from all around the world into its diversified transportation operations on two continents. By the start of 1993, Bombardierís world headquarters at 800 Rene-Levesque Blvd in Montreal commanded wholly and partly owned subsidiaries in four provinces of Canada as well as in Austria, Belgium, England, Finland, France, Mexico, Northern Ireland, and in the United States. 
As North America waits for Washington to end its contortions over the North American Free Trade Agreement
(NAFTA), Bombardier is well positioned to surge into a free-trading North America as the only transportation equipment company to operate plants in all three countries: Canada, the United States and Mexico. The companyís plans see future developments leading to completion of its Paris subway contract; reaching profitable production rates on the English Channel shuttle-train cars; realization of the dream of a North American high-speed (TGV) train; and continued growth of its consumer recreational products, the Sea-Doo and the Ski-Doo (which is already in the process of gaining back its forefront market position). 
In the high-technology half of its operations, while defence sales can at best
be expected to maintain a slumbering pace, aerospace sales, over the long term, should be headed for the roof. The companyís currently enterprising R&D programme and its careful marketing plans should eventually yield the launch of a successful "Global Express", a top-of-the-line biz-jet; a niche-filling Learjet 45; the genealogical growth of a proven product in the Dash 8 200-Series and 400-Series; further market gains and even a breakthrough into the quasi-military law-enforcement regime for the CL-227; new markets for Starstreak and Starburst; expansion of the CL-415 market; and the expansion of its 20-to-90-pax biz-jet market-share in a growing 7,000-unit market (now to 2010).
All things considered, with continued cooperation of the federal government and for as long as Bombardierís management properly steers and controls the corporationís colossal rate of expansion, this firm is destined to become a trimmer, more profitable version of Americaís United Technologies. A world-class Canadian giant.
Mike OíBrien

On June 15 from Paris, Spar Aerospace Limited announced the signing of a licence agreement with the Canadian Space Agency (CSA) relating to the technology developed under the space station mobile servicing system (MSS) programme. Effective March 16, 1993, the agreement permits the effective commercialization of MSS technology. The CSA will continue to own the MSS technology under the terms of the agreement and has granted Spar a 20-year royalty-free, worldwide, non-exclusive licence to use or sub-license the technology.
Spar is actively seeking licencing opportunities in Canada and internationally
for the approximately 60 technologies that have been identified with potential forestry, marine, mining and automotive applications. The technologies include intelligent robots, advanced software and simulations.

The Canadian Space Agencyís unflagging faith in the prospects of space station Freedom
appears to have been vindicated last week when U.S. President Bill Clinton endorsed a scaled-down version of the orbiting laboratory. However, while the June 18 announcement was undoubtedly a relief to Canada and the programmeís other international partners, a host of technical and administrative details still remain to be resolved.
"The immediate reaction of our shop is that this option theyíve chosen
is by far the best from our point of view," science minister Tom Hockin told TWR. "But just how much robotics will be needed and how much redesign will be needed is for further negotiation. And most people are relatively optimistic about that."
Early in June NASA provided Clinton with three new alternative designs
for the space station in response to the Presidentís demand that the US agency cut costs on the programme: option A cut down on development costs by borrowing propulsion and attitude control technology developed for US military satellites; option B was a simplified version of the current design; and option C was a radically different concept consisting of one module that could be placed in orbit in a single launch. Opinion on the three options was divided. NASA was strongly pushing C, Congress favoured A, while Canada, Japan and Europe preferred B. Clinton selected a design that will combine option A with elements of option B to produce a design with simplified power and data management systems. 
"Itís now up to NASA and the partners to work out the space station
that will do the job," Karl Doetsch, the CSAís space station programme manager, said. "I suspect that what weíre really talking about is a combination of the best of A and B."
According to Doetsch the decision apparently renders redundant several components of the Mobile Servicing System (MSS), Canadaís contribution to the space station. Gone are the mobile transporter that would have moved the large manipulator along the stationís truss structure, the mobile servicing base, a work centre for both the robot and the crew wherever needed on the truss structure, and the maintenance depot that would have housed on-orbit spares for the Canadian robotic system. However, he believes that some of these were designed out with more enthusiasm for cost cutting than awareness of operational requirements and could be put back into the design.
The new concept also means additions to the MSS.
Because of the simplified data management system, Canada will have to develop an end-to-end system dealing with the data management stream between the robot and the crew compartment, including the work stations that would control the robots.
"From a technical point of view there are advantages,"
said Karl Doetsch "From the cost point of view we have not yet identified whether or not thatís going to be a major hit."
Firming up the actual design and how to deal with the resulting cost increases
will be the subject of negotiations during the next 90 days, Doetsch said.
"We havenít yet worked out the details of precisely what will happen during this 90-day period,"
he explained, "but our intention obviously is to re-establish the programme requirements, to which everybody is building, to have them baselined fully so that each party understands what the requirements and the interfaces are that theyíre designing to. And then weíll look at the whole question of costs to the programme and how we can deal with offsets in that arena."
Doetsch said that there are two main areas of cost increases to Canada.
The first stems from changes to the Canadian design, and the other from an anticipated 18 month to 2 year schedule slippage.
"Those are the two areas that we will be looking at pretty hard," he said. "Actual development costs in terms of changes
to our system design and manufacture, and schedule costs which have the effect of relieving your immediate cash flow demands but they inevitably add to the total development cost of the programme."
The CSA has said in the past that the total programme costs, both development and operations,
could not be increased. So during the forthcoming negotiations, Canada will seek to balance any cost increases with offsets against later phases in the programme, astronaut flights, or possibly NASA procurements in Canada. 
However, any agreements that are reached on offsets,
and even the new design itself, are not carved in stone, and could be subjected to another review in the future.
"Whether one can ever get anything that is more ironclad when youíre dealing
with appropriations that are done on an annual basis, I donít know, because of course the political environment continually changes in each country," Doetsch said. "But all of the partners have indicated that increased funding stability for the programme would help enormously to both contain costs and to allow us to maintain schedule. Whether the US would be in a position to react to that because of its own appropriations and authorization process I donít know."
The two houses of the U.S. Congress will consider the new design this summer
, and if it is approved, draft a bill for Clintonís signature in the fall. Sources in Washington expect a tough fight in both houses. Hockin, though, is optimistic.
"A lot of the other ministers expressed doubts, misgivings, lack of confidence, but I donít feel that way. When I look these people in the eye I think I can trust them, that they will follow through," he said. "But I have to tell you that the Europeans and Japanese are not as sanguine as I am."

Canadaís purchase of the ERYX short-range antiarmour missile system from Aerospatiale
-- a burp in the life of the federal Opposition which declared last week in the House of Commons that it had never heard of the widely publicized, six-year-old project -- is expected to provide approximately $100 million in industrial regional benefits (IRBs) to Canadian companies over the course of the programme. The 4,500 missiles and 425 firing posts under the first export contract for ERYX are expected to be delivered to DND between December 1993 and March 1998 at a cost of $83 million.
Certain components of the ERYX system will be produced by firms across Canada. Cellpack Aerospace Ltd.
in Lunenburg, Nova Scotia, for example, will manufacture the fire unit tripods; AlliedSignal Aerospatiale Canada Inc. (formerly called Bendix Avelex Inc.) in Montreal will develop and manufacture the night sight with Thomson-TTD; Canadian Marconi Company in Montreal will manufacture 50 percent of the hybrid circuits for the munitions; Primetech Electroniques in Dollar-des-Ormeaux, Quebec will participate in the development of an ERYX fire simulator based on video disk technology; Hughes-Leitz Optical in Midland, Ontario will manufacture day sights for the fire units in cooperation with SAGEM; and Amptech Corporation in Calgary, Alberta will manufacture munition plastic parts. Additionally, ADGA of Ottawa will participate in the integrated logistical support element of ERYX for the Canadian Forces.
The ERYX system is claimed to be the only hand-held, short-range antiarmour missile
that is capable of defeating any current main battle tank as well as lighter armoured vehicles, even when fired from an enclosed space (inside a room). 
ERYX has a range of 50-600 meters and resists electronic countermeasures. Lightweight, compact and portable, ERYX will provide the Canadian Forces with the ability to counter armoured threats worldwide in support of peacekeeping or other mandates.

Last Thursday, Spar Aerospace Limited and Matra Marconi Space (MMS)
announced a long-term agreement to collaborate in the design and development of advanced earth sensing radar satellite systems. The agreement is aimed specifically at serving the commercial market for remotely-sensed data for such applications as resource management and environmental monitoring. MMS, which supplies more than 50 percent of the ERS 1 and ERS 2 remote sensing satellites, is prime contractor for the French national SPOT satellites and a main participant in the polar platform ENVISAT programme. Spar is prime contractor for RADARSAT, the worldís first commercial radar satellite, scheduled for launch in 1995.

Aircraft Appliances and Equipment Ltd. of Bramalea received two contracts to provide DND
with repair, overhaul and support services on automatic flight control systems on CP-140 Aurora aircraft. The first contract, worth $635,000, is to perform the actual repair and overhaul services, while the second contract, valued at $256,800, is for the required parts.
ISTEC Inc. of Hamilton received a $588,393 contract to develop and build a camera for Defence Research Establishment Valcartier which can be operated at low light levels and which will be used in an imaging system for search and rescue missions. The contract maintains six jobs until October 31, 1994.
Arnott Construction Ltd. of Collingwood won a $560,000 standing offer to provide DND
with rented engineering and excavating equipment. The offer runs until August 31.
Varian Canada Inc. of Ottawa received a $500,000
contract to repair, overhaul and modify electron tubes and accessories for DND until March 31, 1994.
Pylon Electronics Inc. of Ottawa received a $427,659
contract to develop a remote-control mine detection system for DND. The contract runs until August 31.
Bell Canada Info Pro of Ottawa won a $369,085
contract to provide communication engineering services support at Canadian Forces Communication Command Headquarters until March 31, 1996.
The University of Toronto won a $249,748
contract to continue work on incorporating helmet-mounted displays in a ground-based aircraft cockpit simulator for DND.
Commercial Grass Cutting & Snow Removal of Aurora won a $55,000
standing offer to maintain the grounds at CFB Toronto. The offer runs until March 31, 1994.

J & L Construction Ltd. of Happy Valley, Newfoundland won a $27,392 contract to replace existing blow-off lines used in steam heating at CFB Goose Bay. The work will be completed by August 30.

Air Canada and McDonnell Douglas have signed a letter of intent to undertake a joint study
to modernize and upgrade Air Canadaís fleet of 35 intermediate-range, twin-engine DC-9 jetliners. The study will develop technical and business details which will enable the companies to reach a decision on whether or not to proceed with the programme this fall.
The airline expects to add 15 years of operational life to its DC-9s
following incorporation of modernization features, while achieving maintenance costs and dispatch reliability levels similar to those of the first years of a new airplaneís life. McDonnell Douglas would warrant the aircraft and provide a new service life policy.
The programme would use Air Canadaís resources and those of other Canadian companies.
Air Canada estimates that over 700 jobs could be added to the Canadian economy over a three-year period, and with the possibility of additional jobs in support industries, that number could double.
Re-engining, re-wiring, new avionics and other system upgrades could potentially
be included in the modernization programme. The companies would evaluate and select a propulsion system configuration that would be capable of satisfying noise and emission requirements currently in effect and expected during the next decade.
Both companies would be open to using the modernization programme with other DC-9
operators. McDonnell Douglas estimates that there are more than 400 DC-9s operating in North America which could be modified to meet the stringent limits on engine noise and emissions that have evolved since the aircraft were delivered.
McDonnell Douglas and Air Canada
are discussing potential engine solutions with Pratt & Whitney and Rolls-Royce for the DC-9 modernization programme. Pratt & Whitney is offering three options -- noise kits for the conventional JT8D engines currently on the DC-9; the JT8D-218A; and the new Pratt & Whitney/GE/SNECMA/MTU engine announced at the Paris Air Show. Rolls-Royce is proposing the Tay 670 engine.

Solar Management Inc. of Calgary, Alberta won a $639,628
contract to provide janitorial services at Canadian Forces Detachment Penhold until March 31, 1994.
Standard Aero Limited of Winnipeg, Manitoba received a $374,500
standing offer to supply DND with spare parts for aircraft engines. The offer runs until March 31, 1995.
Pacific Granite Mountaineering Inc. of Edmonton, Alberta won a $363,358
contract to provide leadership instruction on mountaineering and water skills for cadets at the Banff National Army Cadet Camp. The contract runs until September 15.
ALC Airlift Canada Inc. of Pitt Meadows, British Columbia won a $347,536 contract to provide DND with helicopter service until September 30, 1994.
Beaver Foods Limited of Calgary won a $295,588
contract to provide food and food services at Canadian Forces Detachment Dundurn, Saskatchewan until August 15.

McDonnell Douglas Helicopter Co. has extended its licence agreement
with Italyís Agusta to include production of MD 520N helicopters with the "NOTAR" system for anti-torque and directional control. Under the agreement signed in Paris last Tuesday, Agusta will manufacture MD 520N helicopters in Italy and market them according to the licence agreement. The first Italian MD 520N will roll off the assembly line in mid-1994.
"We have been partners with Agusta on the MD 500 series
for more than 20 years," said Dean Borgman, president of McDonnell Douglas Helicopter Co. "Itís been a mutually beneficial business relationship that we now expect to be enhanced with the addition of the MD 520N."

A Boeing 737-300 scheduled for delivery to Southwest Airlines rolled out of the factory last Wednesday,
setting a new milestone in commercial aviation. With this aircraft, which is 737 number 2,500, Boeing becomes the first commercial aircraft manufacturer to have built 2,500 airplanes of the same type. Beginning with the programme launch in 1965, Boeing has produced two generations and five models of the 737 -- the first-generation 737-100 and -200 and, in the 1980s, the current generation 737-300/400/500 family of twinjets. To date, the twinjet 737 has won firm orders for 3,044 airplanes.

Last Friday, DND announced with regret that it had informed family members of the death of Corporal Daniel Gunther
. A soldier in the 2nd Battalion, Royal 22e Rťgiment, Corporal Gunther (24) died while serving with the U.N. Protection Force (UNPROFOR) in Bosnia-Hercegovina. Gunther was killed at approximately 12:40 pm local time while on a routine patrol of the road between Kiseljak and Visoko, where his regiment is stationed. Preliminary reports indicate that a mortar round hit the M113 Armoured Personnel Carrier from which the young corporal was carrying out observation duties. Two other soldiers in the vehicle were slightly shaken up. The incident is under investigation.

Last Wednesday, Spar Aerospace Limited announced at the Paris Air Show
that it has entered into a teaming agreement with International Submarine Engineering Ltd. (ISE) of Port Coquitlam, British Columbia to jointly pursue hardware, ground systems evaluation and verification in support of space robotic programmes. Spar is known worldwide for the U.S. space shuttle remote manipulator system, or Canadarm, and ISE has expertise in the design, development and production of autonomous and remotely-controlled submarines and robotic manipulators (see June 9, page 5, "DND Small Contracts Awarded In Western Canada").

June 28 -- A seminar on the "International Aerospace & Defence Research Study", co-sponsored by the Aerospace Industries Association of Canada (AIAC) and Ernst & Young, will be held at the Dorval Airport Hilton Hotel in Montreal. Ron Stahlschmidt and Richard Johnston from Ernst & Young will present a synopsis of the major trends and issues facing the global aerospace and defence industry. This seminar will be of particular interest to CEOs and senior officials involved in establishing corporate strategies; mergers and acquisitions; supplying to the industry; corporate planning; and human resources. Contact Belva Neale at (613) 232-4297.
August 4-8 -- Airshow Canada, North Americaís aerospace tradeshow, will take place in Abbotsford, British Columbia. Sponsored by the governments of Canada and British Columbia, accredited by the U.S. Department of Commerce, and supported by the Canadian aerospace industry, Airshow Canada í93 is expected to attract more than 500 exhibitors and 15,000 professional visitors from over 70 nations. For more information contact Airshow Canada at (604) 852-4600.
September 14-19 -- The Turkish Armed Forces Foundation is hosting "IDEF Turkey 1993", its first international defence industry and civil aviation fair, at the Turkish Air League Airport facilities in Ankara, Turkey. Government and army delegations from 108 nations are being invited. For detailed information, contact the TUYAP Fairs and Exhibitions Organization in Istanbul at (9-1) 2676704-05 2752350.
November 7-11 -- "DUBAI 93", an international aerospace exhibition, will be held at the Dubai International Airport in the United Arab Emirates. The exhibition is being presented in cooperation with the government of Dubai, Department of Civil Aviation and Dubai International Airport and in collaboration with the U.A.E. Armed Forces. Contact Fairs & Exhibitions in Dubai at 9714 822855/236155.
November 28 to December 1 -- The Aerospace Industries Association of Canada (AIAC) will hold its Annual General Meeting (AGM) at the Ottawa Westin Hotel/Ottawa Congress Centre. This is a change of date and venue from the earlier scheduled time in September, in Quebec City. A strike at the Quebec City Hilton caused the change in venue and timing. Members may contact Belva Neale at the AIAC (613-232-4297) if further details are required at this time.