<p><img alt="Engineering plane March" src="/getasset/0a2b80c6-dd27-49f1-acd1-59315e4f60a7/" /></p>
<p> </p>
<p> </p>
<p>Phoenix, Arizona-headquartered Honeywell Aerospace is arguably best known for its major components or systems – for example, the T-55 engines that power the Boeing CH-47 Chinook helicopter. But running as it does from the flightdeck at one end of the aircraft to the auxiliary power unit at other, the firm’s product range is literally nose to tail. Not all of those parts are glamorous, but all are vital.</p>
<p>The past two years, of course, have been highly challenging for anyone in the sector. Honeywell Aerospace saw revenues in 2021 fall by 4%, to $11 billion, from $11.5 billion in 2020 – itself an 18% decline on 2019’s figure of $14 billion– as the aerospace industry lurched through the Covid-19 pandemic.</p>
<p>Navigating the business through the crisis is Michael Madsen, a Honey well veteran of more than 30 years, who became chief executive of the aerospace unit in 2019.</p>
<p>Madsen, an aerospace engineer by training, says the past two years have seen “the most acute set of circumstances I think any of us have ever faced in the industry”.</p>
<p>Although previous global crises– the financial crash of 2008, for<br />
example – threw up immense challenges, none weighed so heavily on<br />
one particular sector.</p>
<p>“I have been doing this a long time and I can’t think of a time when it has been more acute and more focused on the transportation industry. I mean, there is nothing to impact transportation like a global pandemic,” Madsen says.</p>
<p>But, he adds, there are “greenshoots” with the division’s return to profit growth: in 2021 profits rose by 5%, to $3 billion, improving on the $2.9 billion generated in 2020, and heading back towards 2019’s figure of $3.6 billion. </p>
<p>Honeywell’s broad and, crucially, multisector portfolio has helped: business aviation began recovering first, in 2020, followed by US domestic air transport last year; defence spending in the USA, although navigating a “transition year” in 2021, continued at a relatively steady state. However, longhaul international travel has yet to return to 2019 levels, and may not hit those heights again for several years. That will be an important milestone, Madsen thinks, as the widebody segment is “an important driver for the aftermarket” – the more aircraft fl y, the greater the need for spare parts – and will also drive the full return of shorthaul operations.</p>
<p>But while different sectors experienced varied levels of recovery across 2020 and 2021, Madsen feels 2022 will be more of a turning point. “This year I am really excited because we are going to grow in all segments of our business,” he says, noting that “people definitely want to get out there and travel”.</p>
<p>Despite Honeywell’s reputation as a ‘nuts and bolts’ business, it seems to have shifted subtly in recent years, becoming one more focused on software. Take, for example, Honeywell’s launch in 2021 of its Anthem flightdeck. Designed initially for the new breed of advanced air mobility (AAM) vehicles in development, Anthem feels like a departure from Honeywell’s current Primus Epic avionics suite.</p>
<p><u><strong>Processing capability</strong></u></p>
<p>Describing Anthem, Madsen uses words such as “connectivity”, “processing capability” and “user-defined content”, which sound more like the phrases you would use to sell a laptop than something at the business end of a business jet.</p>
<p>In fact, he likens its operation to that of a smartphone with a “user interface” and “click-through menus”. However, those features are key when considering who will actually be flying these aircraft five or 10 years from now.</p>
<p>“That all sounds sort of simplistic, but it’s actually quite important because when you think about the next generation of pilots, they are going to be used to systems like that. They are going to be used to operating an interface like a tablet, like a laptop, like a smartphone. And it’s important to make pilot<br />
training simple, easy, and quick.”</p>
<p>Anthem has so far been selected by Lilium and Vertical Aerospace for their respective Lilium Jet and VX4 vehicles, and for an undisclosed business aircraft, says Madsen, who is hopeful of securing additional positions on business and air transport programmes over the next 24 months. </p>
<p>Madsen says the shift in focus is intentional, allowing its customers to take advantage of "software applications that can help them solve problems". It may be a cliche to reference the internet of things and the potential benefits that connected components and predictive maintenance can bring, but it does not make them any less true. </p>
<p>He also argues that Honeywell Aerospace is perfectly placed to take advantage of the broader group's expertise in connected buildings or industrial process controls: "We think at Honeywell that we are better positioned to play in that space than anyone because of what we do on the ground", he says. "It's absolutely part of the future, it's very intentional".</p>
<p>But Madsen does not see it as Honeywell abandoning its engineering expertise for a shiny new toy, so much as marrying the two together for the benefit of the customer. </p>
<p>"Frankly, you are not going to fly an aeroplane just with software; you still need auxiliary power units (APUs), you still need controls. Those things will still be there. The way we see that evolving, though, is that as the software becomes embedded and part of those systems, it enables us to quickly adapt them, tailor them and, in many cases, it allows the user to adapt and tailor them".</p>
<p>He sees the potential to separate critical- and therefore covered by tighter certification rules-and non-critical functions in a component, with the user potentially able to tweak the latter accordingly. </p>
<p>"If you think about the evolution from the flip-phone to the smart phone, that's it. And we want to drive that same sort of evolution with everything we make. </p>
<p><u><strong>$3bn Profit for Honeywell Aerospace in 2021- up to 5% on the previous year</strong></u></p>
<p>"But we still anticipate being a maker of things, a designer of things; we are a leader there today and we are going to be a leader there tomorrow".</p>
<p>Of course, management can express these sweeping-sometimes grandiose- visions, but the effect is nil if those on the shop floor do not buy into it. Has Madsen seen any pushback from staff? Far from it, he says; the workforce is "excited" by the potential that the additional computing power brings.</p>
<p>"People that have been part of the industry for a long time understandably have questions- they want to know how it will work- but you show folks that this is what we can do an APU control through software to make it smarter in the way it consumes fuel, smarter in the way it operates so that it uses less fuel, produces less noise, has a lower carbon footprint. There's still an APU there, but now it's a smart APU and the operator loves that- it makes it more reliable. </p>
<p>"Once the folks from that world understand that, they love it".</p>
<p>Mind you, Madsen considers himself among the converts: "I grew up as an aerospace engineer, a mechanical engineer. Software was something that sat inside my computer, but I have realised the power that software and, in particular, user-defined software brings to the capability that these systems have; frankly it's so much faster and more reliable than trying to implement a solution many times in hardware". </p>
<p><u><strong>Diverse benefits: </strong></u></p>
<p>There is also a wider benefit to Honeywell from its embrace of new technology, suggests Madsen: "One of the neat things about it is that the diversity of our workforce continues to expand", he says. Beyond this, the meeting of two worlds-traditional aerospace engineers on one side and software engineers on the other- creates something greater than the sum of its parts. Those software engineers may be just out of school or coming from a consumer products background and “not only do they bring their software skills with them, but they bring a different way of thinking and innovation, a connectedness to customers, a sense of how important user interface is,” Madsen says.</p>
<p>“And, you might think, ‘Why would a turbine blade designer care about that?’ Well, they do because they want to make their engine, the mechanical part of their engine more maintainable. They want to make it last longer. They want to make it perform better.”</p>
<p>Topping everyone’s to-do list this year – and probably for the foreseeable future – is the issue of sustainability. Honeywell’s current range has numerous products that touch on the topic, whether that is a state-of-the-art weather radar that enables fuel saving through better aircraft routing, or high-temperature barrier coatings that improve engine efficiency.</p>
<p><u><strong>Revolution approaches</strong></u></p>
<p>While clearly important, these offer only incremental gains for the here and now; the big leaps forward – the “revolutionary things”, as Madsen puts it – are likely to be in the next generation of products. For instance, Honeywell has been quietly building up its competence in fuel-cell systems, aided by the 2020 acquisition of expertise and intellectual property in the field from Ballard Unmanned Systems.</p>
<p>Test flights using the technology – which include hydrogen compounds that are stored in a cartridge rather than as a compressed liquid or gas – in systems of 1-2kW have already taken place using small drones “and these show the ability for those types of vehicles to operate six to eight times longer than they could with a battery”.</p>
<p>Madsen describes a potential hybrid-electric system as a “fairly near-term revolutionary advancement”, which Honeywell sees as having potential to power a next-generation APU.</p>
<p>“It really is a very, very well-suited solution for APUs, [which] tend to operate in a wide range – they go from not operating at all, right into maximum power in a given flight. And so your peak power requirement is real, but only for a very short period of time,” he says.</p>
<p>In the short term, a turbogenerator would be combined with a battery system, but this would eventually change to a turbogenerator married with a fuel cell.</p>
<p>The shift to an alternative fuel source would usher in a “real step change in noise levels, carbon emissions and fuel consumption”, Madsen says, and compared with a new powertrain for a narrowbody aircraft is “not a large leap in technology” and is “well within the scope of our technology roadmap”.</p>
<p>He foresees double-digit fuelburn savings as achievable, particularly for long-haul operators, a jump in performance that is “more than you could achieve with technology improvements in the APU alone”.</p>
<p>The AAM space is clearly an area of interest for Honeywell, where it occupies the dual role of flightdeck supplier to and investor in Lilium and Vertical Aerospace. Beyond the obvious financial incentive of seeing the pair succeed, Madsen sees the manufacturer’s presence in the fledgling segment as important, viewing it as the latest of aviation’s “super cycles”. Given that those previous cycles encompass the advent of powered flight, the invention of the jet engine, and the subsequent transition to high-bypass engines, the AAM industry has some big shoes to fill.</p>
<p>“I think we are on the next wave with these systems. Like all the inventions that have come before, everyone says, ‘They can’t do that, that won’t work’ until they do it and it’s working.</p>
<p><br />
“We don’t want to be a bystander or even a casual participant; we want to be part of what shapes that industry,” he says.</p>
<p>At $11 billion turnover, Honeywell is a big player in aerospace, but is dwarfed by some of its peers, notably Raytheon Technologies, which last year saw sales of $64 billion.</p>
<p>The sheer size – and pricing power – of a company like Raytheon and its Collins Aerospace and Pratt & Whitney units, has prompted speculation that a business like Honeywell Aerospace might need to merge with another partner in the sector to better compete.</p>
<p><br />
<u><strong>Integrated advantage</strong></u><br />
But Madsen is having none of it. He cites the business’s “unparalleled” range of products and the way in which all its previous acquisitions have been integrated. Additional bolt-on opportunities will be considered, he adds.</p>
<p>“What I would say, though, is that we have, I think, an advantage in the fact that we have been a large, integrated multi-technology aerospace company for quite a while; we have developed a very high degree of competency in managing our technology, managing our workforce, managing our global footprint.</p>
<p>“Having one culture, one operating system, one design philosophy, common themes across all our products – that's easy to say, but it’s very difficult to do. I would just say that work is, to a large extent, behind us, while it still lies in front of many of our peers.</p>
<p>“So being big is nice, but big can be complicated; managing that is important if you want to continue pleasing your customers.” </p>
<p> </p>
<p> </p>
<p>Phoenix, Arizona-headquartered Honeywell Aerospace is arguably best known for its major components or systems – for example, the T-55 engines that power the Boeing CH-47 Chinook helicopter. But running as it does from the flightdeck at one end of the aircraft to the auxiliary power unit at other, the firm’s product range is literally nose to tail. Not all of those parts are glamorous, but all are vital.</p>
<p>The past two years, of course, have been highly challenging for anyone in the sector. Honeywell Aerospace saw revenues in 2021 fall by 4%, to $11 billion, from $11.5 billion in 2020 – itself an 18% decline on 2019’s figure of $14 billion– as the aerospace industry lurched through the Covid-19 pandemic.</p>
<p>Navigating the business through the crisis is Michael Madsen, a Honey well veteran of more than 30 years, who became chief executive of the aerospace unit in 2019.</p>
<p>Madsen, an aerospace engineer by training, says the past two years have seen “the most acute set of circumstances I think any of us have ever faced in the industry”.</p>
<p>Although previous global crises– the financial crash of 2008, for<br />
example – threw up immense challenges, none weighed so heavily on<br />
one particular sector.</p>
<p>“I have been doing this a long time and I can’t think of a time when it has been more acute and more focused on the transportation industry. I mean, there is nothing to impact transportation like a global pandemic,” Madsen says.</p>
<p>But, he adds, there are “greenshoots” with the division’s return to profit growth: in 2021 profits rose by 5%, to $3 billion, improving on the $2.9 billion generated in 2020, and heading back towards 2019’s figure of $3.6 billion. </p>
<p>Honeywell’s broad and, crucially, multisector portfolio has helped: business aviation began recovering first, in 2020, followed by US domestic air transport last year; defence spending in the USA, although navigating a “transition year” in 2021, continued at a relatively steady state. However, longhaul international travel has yet to return to 2019 levels, and may not hit those heights again for several years. That will be an important milestone, Madsen thinks, as the widebody segment is “an important driver for the aftermarket” – the more aircraft fl y, the greater the need for spare parts – and will also drive the full return of shorthaul operations.</p>
<p>But while different sectors experienced varied levels of recovery across 2020 and 2021, Madsen feels 2022 will be more of a turning point. “This year I am really excited because we are going to grow in all segments of our business,” he says, noting that “people definitely want to get out there and travel”.</p>
<p>Despite Honeywell’s reputation as a ‘nuts and bolts’ business, it seems to have shifted subtly in recent years, becoming one more focused on software. Take, for example, Honeywell’s launch in 2021 of its Anthem flightdeck. Designed initially for the new breed of advanced air mobility (AAM) vehicles in development, Anthem feels like a departure from Honeywell’s current Primus Epic avionics suite.</p>
<p><u><strong>Processing capability</strong></u></p>
<p>Describing Anthem, Madsen uses words such as “connectivity”, “processing capability” and “user-defined content”, which sound more like the phrases you would use to sell a laptop than something at the business end of a business jet.</p>
<p>In fact, he likens its operation to that of a smartphone with a “user interface” and “click-through menus”. However, those features are key when considering who will actually be flying these aircraft five or 10 years from now.</p>
<p>“That all sounds sort of simplistic, but it’s actually quite important because when you think about the next generation of pilots, they are going to be used to systems like that. They are going to be used to operating an interface like a tablet, like a laptop, like a smartphone. And it’s important to make pilot<br />
training simple, easy, and quick.”</p>
<p>Anthem has so far been selected by Lilium and Vertical Aerospace for their respective Lilium Jet and VX4 vehicles, and for an undisclosed business aircraft, says Madsen, who is hopeful of securing additional positions on business and air transport programmes over the next 24 months. </p>
<p>Madsen says the shift in focus is intentional, allowing its customers to take advantage of "software applications that can help them solve problems". It may be a cliche to reference the internet of things and the potential benefits that connected components and predictive maintenance can bring, but it does not make them any less true. </p>
<p>He also argues that Honeywell Aerospace is perfectly placed to take advantage of the broader group's expertise in connected buildings or industrial process controls: "We think at Honeywell that we are better positioned to play in that space than anyone because of what we do on the ground", he says. "It's absolutely part of the future, it's very intentional".</p>
<p>But Madsen does not see it as Honeywell abandoning its engineering expertise for a shiny new toy, so much as marrying the two together for the benefit of the customer. </p>
<p>"Frankly, you are not going to fly an aeroplane just with software; you still need auxiliary power units (APUs), you still need controls. Those things will still be there. The way we see that evolving, though, is that as the software becomes embedded and part of those systems, it enables us to quickly adapt them, tailor them and, in many cases, it allows the user to adapt and tailor them".</p>
<p>He sees the potential to separate critical- and therefore covered by tighter certification rules-and non-critical functions in a component, with the user potentially able to tweak the latter accordingly. </p>
<p>"If you think about the evolution from the flip-phone to the smart phone, that's it. And we want to drive that same sort of evolution with everything we make. </p>
<p><u><strong>$3bn Profit for Honeywell Aerospace in 2021- up to 5% on the previous year</strong></u></p>
<p>"But we still anticipate being a maker of things, a designer of things; we are a leader there today and we are going to be a leader there tomorrow".</p>
<p>Of course, management can express these sweeping-sometimes grandiose- visions, but the effect is nil if those on the shop floor do not buy into it. Has Madsen seen any pushback from staff? Far from it, he says; the workforce is "excited" by the potential that the additional computing power brings.</p>
<p>"People that have been part of the industry for a long time understandably have questions- they want to know how it will work- but you show folks that this is what we can do an APU control through software to make it smarter in the way it consumes fuel, smarter in the way it operates so that it uses less fuel, produces less noise, has a lower carbon footprint. There's still an APU there, but now it's a smart APU and the operator loves that- it makes it more reliable. </p>
<p>"Once the folks from that world understand that, they love it".</p>
<p>Mind you, Madsen considers himself among the converts: "I grew up as an aerospace engineer, a mechanical engineer. Software was something that sat inside my computer, but I have realised the power that software and, in particular, user-defined software brings to the capability that these systems have; frankly it's so much faster and more reliable than trying to implement a solution many times in hardware". </p>
<p><u><strong>Diverse benefits: </strong></u></p>
<p>There is also a wider benefit to Honeywell from its embrace of new technology, suggests Madsen: "One of the neat things about it is that the diversity of our workforce continues to expand", he says. Beyond this, the meeting of two worlds-traditional aerospace engineers on one side and software engineers on the other- creates something greater than the sum of its parts. Those software engineers may be just out of school or coming from a consumer products background and “not only do they bring their software skills with them, but they bring a different way of thinking and innovation, a connectedness to customers, a sense of how important user interface is,” Madsen says.</p>
<p>“And, you might think, ‘Why would a turbine blade designer care about that?’ Well, they do because they want to make their engine, the mechanical part of their engine more maintainable. They want to make it last longer. They want to make it perform better.”</p>
<p>Topping everyone’s to-do list this year – and probably for the foreseeable future – is the issue of sustainability. Honeywell’s current range has numerous products that touch on the topic, whether that is a state-of-the-art weather radar that enables fuel saving through better aircraft routing, or high-temperature barrier coatings that improve engine efficiency.</p>
<p><u><strong>Revolution approaches</strong></u></p>
<p>While clearly important, these offer only incremental gains for the here and now; the big leaps forward – the “revolutionary things”, as Madsen puts it – are likely to be in the next generation of products. For instance, Honeywell has been quietly building up its competence in fuel-cell systems, aided by the 2020 acquisition of expertise and intellectual property in the field from Ballard Unmanned Systems.</p>
<p>Test flights using the technology – which include hydrogen compounds that are stored in a cartridge rather than as a compressed liquid or gas – in systems of 1-2kW have already taken place using small drones “and these show the ability for those types of vehicles to operate six to eight times longer than they could with a battery”.</p>
<p>Madsen describes a potential hybrid-electric system as a “fairly near-term revolutionary advancement”, which Honeywell sees as having potential to power a next-generation APU.</p>
<p>“It really is a very, very well-suited solution for APUs, [which] tend to operate in a wide range – they go from not operating at all, right into maximum power in a given flight. And so your peak power requirement is real, but only for a very short period of time,” he says.</p>
<p>In the short term, a turbogenerator would be combined with a battery system, but this would eventually change to a turbogenerator married with a fuel cell.</p>
<p>The shift to an alternative fuel source would usher in a “real step change in noise levels, carbon emissions and fuel consumption”, Madsen says, and compared with a new powertrain for a narrowbody aircraft is “not a large leap in technology” and is “well within the scope of our technology roadmap”.</p>
<p>He foresees double-digit fuelburn savings as achievable, particularly for long-haul operators, a jump in performance that is “more than you could achieve with technology improvements in the APU alone”.</p>
<p>The AAM space is clearly an area of interest for Honeywell, where it occupies the dual role of flightdeck supplier to and investor in Lilium and Vertical Aerospace. Beyond the obvious financial incentive of seeing the pair succeed, Madsen sees the manufacturer’s presence in the fledgling segment as important, viewing it as the latest of aviation’s “super cycles”. Given that those previous cycles encompass the advent of powered flight, the invention of the jet engine, and the subsequent transition to high-bypass engines, the AAM industry has some big shoes to fill.</p>
<p>“I think we are on the next wave with these systems. Like all the inventions that have come before, everyone says, ‘They can’t do that, that won’t work’ until they do it and it’s working.</p>
<p><br />
“We don’t want to be a bystander or even a casual participant; we want to be part of what shapes that industry,” he says.</p>
<p>At $11 billion turnover, Honeywell is a big player in aerospace, but is dwarfed by some of its peers, notably Raytheon Technologies, which last year saw sales of $64 billion.</p>
<p>The sheer size – and pricing power – of a company like Raytheon and its Collins Aerospace and Pratt & Whitney units, has prompted speculation that a business like Honeywell Aerospace might need to merge with another partner in the sector to better compete.</p>
<p><br />
<u><strong>Integrated advantage</strong></u><br />
But Madsen is having none of it. He cites the business’s “unparalleled” range of products and the way in which all its previous acquisitions have been integrated. Additional bolt-on opportunities will be considered, he adds.</p>
<p>“What I would say, though, is that we have, I think, an advantage in the fact that we have been a large, integrated multi-technology aerospace company for quite a while; we have developed a very high degree of competency in managing our technology, managing our workforce, managing our global footprint.</p>
<p>“Having one culture, one operating system, one design philosophy, common themes across all our products – that's easy to say, but it’s very difficult to do. I would just say that work is, to a large extent, behind us, while it still lies in front of many of our peers.</p>
<p>“So being big is nice, but big can be complicated; managing that is important if you want to continue pleasing your customers.” </p>