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LUCAS' FRANK TURNER SPEAKS ON CONSOLIDATION OF THE INDUSTRY

 RESTON, Va., June 21 /PRNewswire/ -- Frank Turner, Lucas Industries managing director-aerospace, told London city analysts last week during an evening briefing at the Paris Air Show that Lucas was well-positioned to take advantage of the industry consolidation which would take place during the next three to five years as a result of recession. Speaking on trends in the global aerospace industry, Turner said that a reduction in industry capacity was necessary to balance the effects of the recession on demand, which would inevitably mean a reduction in the number of players in the marketplace. He saw this as an opportunity to further strengthen the current Lucas portfolio.
 After the recession, pressures on costs and prices would reinforce the need for fewer players. "While revenue passenger miles (RPM) will grow, so also will the average size of aircraft offsetting the impact of RPM growth. Customer demand for lower seat prices will also drive a reduction in the cost of airframes and engines. Cost will be the major driver," said Turner, "and Lucas is positioning itself now to respond positively."
 As projects to develop new aircraft become more expensive, risk- sharing partnerships will be more common. Financing of the industry will be more difficult, adding to the long-established aerospace industry practice of alliances, joint ventures, consortia and licensing. The weaker companies would inevitably be driven out of the market or their product lines acquired.
 "Traffic growth will be lead from Asia/Pacific carriers, whose customer requirements will become more important in determining the types of aircraft produced. The role of Eastern Europe will be important, but it is very hard to predict," he added.
 "Opportunities for growth will exist as the airframe and engine companies outsource to a smaller group of preferred suppliers. Companies which prosper will have a record of safety critical experience and a reputation for reliability. Lucas is well positioned to take advantage of these developments in pursuit of its vision to become the global leader in the provision and support of high integrity control systems. Targeting a 50 percent improvement in operational performance, we aim to transform further the financial return."
 During the week of the show, Lucas announced a number of contracts and preferred supplier agreements with its customers, including a Revenue Sharing Partnership Agreement on the Rolls-Royce Trent engine series in which Lucas has also taken a 3.5 percent share and an agreement in principal with Pratt & Whitney for a three year contract to develop and produce engine-mounted accessory drive gearboxes.
 Lucas Industries is a leading international supplier of advanced technology systems, components and services to the world's aerospace, automotive and other selected markets.
 -0- 6/21/93
 /CONTACT: Renate Zelko-Myles of Lucas Industries, 703-264-2387/


CO: Lucas Industries ST: Virginia IN: ARO SU:

DC-xx -- DC008 -- 3986 06/21/93 10:47 EDT
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Publication:PR Newswire
Date:Jun 21, 1993
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