The role of asset management
A British Aerospace case study

Page 1: Introduction

British Aerospace is a world leader in aerospace and defence with annual sales exceeding £8 billion and an order book of more than £22 billion. The Company employs more than 46,000 people in the design, development, manufacture and testing of civil and military aircraft, guided weapon systems, artillery and ammunition, together with other high technology systems and equipment.Over...
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Page 2: What is asset management?

Asset management is the process of making best use of an organisation’s assets in order to maximise shareholder value and to provide the best possible returns to other stakeholders in the organisation. All business organisations have a range of assets. These include highly fixed assets, such as buildings and plant equipment, more liquid assets, such as goods in stock, and highly liquid...
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Page 3: The business becomes more competitive

During the 1950s and 1960s, aircraft manufacturers operated in a relatively stable environment. Airlines, such as BOAC and Air France, were largely government-owned and would buy their aircraft outright from the manufacturers, meaning that producers had little financial responsibility for the aircraft once they had been sold.However, during the 1980s, the environment changed. Airlines were subject...
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Page 4: Taking steps forward

British Aerospace needed to take dramatic steps. It did this by cutting the production rate for new aircraft, shutting down the Company’s Hatfield factory and creating a new company which has now become British Aerospace Asset Management. The function of the new company was to manage existing assets effectively in order to maximise growth potential. The new Asset Management business was...
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Page 5: The lease cycle

At the outset, a new aircraft will be delivered to a customer in line with his specification requirements. Contractual management involves setting out detailed requirements for the way in which the customer will look after the aircraft in service, i.e. maintenance standards to be met and dealing with modifications that the customer may make to the aircraft.Customer support from British Aerospace...
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Page 6: Conclusion

The underlying aim of British Aerospace Asset Management has been to develop long-term links with airlines, rather than to strike the one-off deals of the past. In 1992, British Aerospace recognised the need to rethink its operating methods. British Aerospace Asset Management quickly established a method of reducing its idle fleet to zero and enhancing the reputation of its aircraft to meet the...
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