The commercial aerospace industry today remains the largest market for Hexcel products. Hexcel is uniquely positioned to serve this market through its global operations. Although production of commercial aircraft (100 seats or more) peaked at around 900 in 1999, production is forecast to be at the robust level of about 800 aircraft in 2000. With the impact of the Asian economic crisis and increased competition, the entire industry has actively sought ways to reduce the costs of building and maintaining commercial aircraft. Hexcel has accepted this challenge and has continued to improve efficiencies and reduce total costs throughout its business in order to provide customers better value while remaining competitive and profitable.

In a very competitive marketplace, Hexcel has secured strong positions on virtually all western commercial aircraft from both OEMs and subcontractors. We work in close collaboration with our customers to both reduce the cost of their aircraft and improve their performance capabilities through such initiatives as “just-in-time delivery” and the creation of new products.

Cost competitive products are helping to encourage the further penetration of composites on the airframe for both large commercial aircraft and regional jets. Indeed, over the past 20 years, composite utilization has almost tripled from earlier generations of aircraft to the latest designs. This trend is poised to continue as Airbus considers the A3XX, which, if built, would dramatically increase composite usage as compared to current aircraft.

Hexcel is also committed to the growing market for regional aircraft. The company’s global manufacturing base is well suited to serve the many regional aircraft manufacturers located around the globe and we have secured long-term supply agreements with several of them.

Looking ahead, the industry is growing more confident that commercial aircraft production will now stabilize at the levels anticipated for 2000. As the Asian economy and airlines recover, there is the potential for growing orders, particularly for wide-body aircraft. Hexcel’s strong position in commercial aerospace applications and commitment to cost-effective manufacturing places the company in excellent position to benefit from increased demand and new aircraft programs that we anticipate will utilize an ever growing volume of composites.