Jean Chrétien and U.S. President Bill Clinton were on hand last week to witness the signing ceremony in Ottawa which opens the commercial aviation skies between the two countries.

Air Canada said yesterday it would begin taking advantage of the new agreement next Monday by introducing a direct service between Toronto and Atlanta, Georgia. The airline will offer more than 20 new routes between Canada and the U.S. over the next 10 months including daily service between Washington and Ottawa, Toronto, and Montreal.

The new agreement will spur more than $15 billion in new economic activity and create tens of thousands of jobs on both sides of the border, says the U.S. Department of Transport.

Not only airlines but airport administrations are also moving their marketing efforts into high gear. Vancouver's tourism department has jumped on the bandwagon and announced yesterday that following the signing of the agreement, the U.S. transportation department approved new direct flights between the following U.S. cities and Vancouver: America West from Phoenix, American Airlines from Dallas, Continental from New York and Houston, Northwest from Minneapolis, Reno Air from Reno, and United from San Francisco.

"Vancouver has always been a popular destination, however, we've known for some time that it can be a challenge to get individuals and groups here quickly," explained Vancouver International Airport Authority President David Emerson. "For many air travellers, it meant indirect flights and changing planes in Toronto, Chicago or Seattle. Now, it will be a direct flight, saving both time and money."

The open skies agreement also comes in time for the opening of Vancouver's new International Terminal Building in June, 1996. Vancouver's new international terminal is the first in North America that is being built for streamlined and efficient transit for connecting passengers.

Canadian carriers have announced flights between Los Angeles, Denver, Phoenix and San Francisco. Additional flights are also being planned for New York and Chicago. Currently, U.S. and Canadian carriers fly to Vancouver from only a few American cities, including Los Angeles, Chicago, Seattle, Minneapolis and San Francisco.

Canada's Aerospace & Defence Weekly

Volume 9, Number 8 March 1, 1995

Comment:

February `95's last week was a dandy. Clinton and Chrétien did well together! They actually looked and sounded good. And then came Paul Martin's budget. Yes. Things are looking up. Albeit, defence took a severe hit for the umpteenth consecutive time, but, one has to admit that a few steps in the right direction might well be the result if NDHQ is sharpened-up over the next three years and if the three regional commands can be effectively integrated into a central administration. Yes, it's going to hurt. And yes, many people are very upset. But the fiscal tightrope has worn so thin it isn't a joke any more.

And say, what's this about the City-class destroyers? (Sorry DND. We still say anything over 4,000 tons is a destroyer, not a frigate.) A single news magazine TV show tried again to take apart the CPF project. It's startling to learn that after 15 years spent by the best experts alive to figure out and build the most sophisticated destroyers on earth, a few half-baked TV reporters could do it in a day or two and pan the whole project. These W5 folks must have dropped too much acid in their hippy days.

Canada/U.S. `Open Skies'

The airline industry is hopping with activity following the signing of the Canada/U.S. open skies accord. What does it all mean? More flights, more competition, and lower air fares.

Publisher and Editor In Chief: Micheal John O'Brien

Editorial Staff Writer:

Frederick J. Harris

Contributing Editors:

Jim Henderson (Toronto)

Mike Martin (Ottawa)

Patrick McManus (Halifax)

William Kane (Washington DC)

John Reed (London, England)

Moshe Karem (Jerusalem, Israel)

The Wednesday Report is published weekly by

MPRM Group Limited, 15221 Yonge Street,

Suite 201, Aurora, Ontario, Canada L4G 1L8. Telephone: (905) 841-1277 Facsimile/Data: (905) 841-4389.

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in any manner whatsoever, is strictly forbidden without attribution.

Delta Airlines has been awarded two new routes already and other U.S. carriers are planning to introduce as many as 17 new non-stop services from 12 U.S. cities to Canada in the weeks ahead.

CAE-LINK SOLD

GM Hughes Electronics Corp. (GMHE) announced Monday it has completed its purchase of training systems and services provider CAE-Link Corporation from CAE Inc. of Toronto.

The $155 million acquisition will result in CAE-Link being integrated into GMHE's training subsidiary, Hughes Training Inc. CAE-Link operations will be known as Hughes Training — Link Division.

For the first fiscal year ended March 31, 1994, CAE-Link reported consolidated revenues of approximately $345 million. CAE-Link is an established supplier of simulation, training and technical services, primarily to the U.S. military and NASA.

Hughes Training designs, develops and implements training systems and equipment for military and industrial organizations worldwide. Hughes Training has nearly 1,400 employees at its Arlington, Texas and Herndon, Virginia facilities. The Link Division, with approximately 3,100 employees, has major operations in Binghamton, New York; Falls Church, Virginia; Little Rock, Arkansas; as well as Dallas and Houston. Hughes Training will form a combined company integration staff that will identify key issues and market activities for the new organization. Joint task teams will then be responsible for developing recommendations for implementation of the overall integration effort.

"The complementary businesses of the combined company make it a world leader in the training and simulation market, and provide critical technology and product synergy that will be a positive benefit to our customers," said Stuart I. Moore, president of Hughes Training, which has headquarters in Arlington.

The earnings of GM Hughes Electronics Corp., a subsidiary of General Motors Corp. are used to calculate the earnings per share of General Motors Class H Common Stock. (NYSE:GMH).

GLOBAL EXPRESS BUSINESS JET: PRODUCTION BEGINS

Production of the first Bombardier Global Express long-range, high-speed business jet aircraft is under way. Mitsubishi Heavy Industries began producing machined wing skins for the all-aluminum, 93-foot 6-inch (28.5-m) wing earlier this week at its Oye plant in Nagoya, Japan.

Mitsubishi employees used a two-spindle five-axis gantry profiler to cut the aircraft's first metal — a wing skin destined for the lower centre section. In addition, all major tooling at the Oye facility has been completed and Mitsubishi will soon also begin machining other components.

Mitsubishi joined the Bombardier Global Express programme in September 1993 and is responsible for the detail design, manufacturing and assembly of the transonic wing and the centre fuselage. Other major structural and system subassemblies are currently being developed by leading aerospace companies in North America, Europe and Asia.

"All our programme participants are making significant progress and everything indicates that we are on target to achieve our objectives," remarked Robert Brown, president, Bombardier Aerospace Group — North America.

Operators will also benefit from a cabin offering a wide range of interior configurations to enhance in-flight productivity and comfort. The cabin is higher and wider than any other business jet, and its length from cockpit divider to the end of the pressurized compartment is 48 feet (14.6m).

Cabin volume totals 2,077 cubic feet (58.8 cu. m), thanks to a height of six feet three inches (1.9 m) and Canadair's trademark eight-foot, two-inch wide body comfort (2.5 m).

POSSIBLE JAPANESE/GE ENGINE FOR RJ

Japan's Ishikawajima-Harima Heavy Industries Co. Ltd. (IHI) and General Electric Co. (GE) of the United States are negotiating to develop and produce jointly a small jet engine. The major heavy machinery-maker is reportedly considering joining GE's plan to develop a jet engine with a thrust rating of some 14,000 pounds, based on a 9,000-pound engine that GE currently supplies for the 50-seat Canadair RJ. A report in the Japanese newspaper, Nihon Keizai, said last Friday that IHI would put up 25 percent of the total investment of 40 billion yen (400 million U.S. dollars). The new engine will be developed initially for an 80-seat extended body version of the Canadair RJ which is could make its first flight in 1998.

MESA TO BUY UP TO 50 DASH 8 SERIES 200s

Mesa Air Group of Farmington, New Mexico will purchase 25 de Havilland Dash 8 Series 200 aircraft plus 25 options from Bombardier Regional Aircraft Division. A definitive agreement confirming the purchase is expected to be concluded during March. Deliveries would begin in February 1996 at a delivery

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rate averaging two aircraft per month.

Mesa plans to operate its Dash 8 Series 200 fleet through its Mountain West Airlines division in United Express livery out of Denver to destinations throughout the U.S. Rocky Mountain region.

"Mesa has selected the Dash 8 Series 200 for a variety of reasons," said Larry Risley, chairman, Mesa Air Group in making the announcement. "The aircraft's performance at high elevation, hot temperature airfields, its ability to tanker fuel, generous baggage volume, passenger comfort, mechanical reliability, superior operating economics and growth potential were all part of the equation in making the Series 200 purchase decision," he added.

The latest model of the Dash 8, the Series 200 is powered by two Pratt & Whitney Canada PW123D engines flat-rated to 2,150 shp up to 45 degrees C at sea level. That power gives the Dash 8 Series 200 the ability to take off from high elevation airports under hot climatic conditions without payload reductions. Dash 8 Series 200 aircraft have also been ordered for their unique "hot and high" capabilities for corporate, maritime surveillance and airline usage by customers in Columbia, Australia and India.

Market demand prompted de Havilland Inc. to announce an increase in its Dash 8 production from two to three aircraft per month in September last year.

IRELAND OPEN FOR BUSINESS, WELCOMES CANADIANS

Last December in Belfast, British Prime Minister John Major spoke to an audience of investors and government officials convened by Britain to lay the foundations for a prolonged period of sustained economic growth in Northern Ireland to underpin the peace.

There were delegates from 16 nations at the International Investment Forum, representing Canada, the United States, Australia, New Zealand, the Far East and Europe.

Canadians attending were Laurent Beaudoin, Chairman and Chief Executive Officer of Bombardier Inc., and Raymond Royer, the company's President and Chief Operating Officer. Michael Harnett, President of Tillyard and Partners of Mississauga, Ontario, also participated.

Bombardier became Northern Ireland's largest private employer in 1989 when it took over from the government the ailing firm of Short Brothers, one of the most famous names in aviation history. Shorts' record includes manufacturing of the Stirling heavy bomber in World War II and the massive Belfast Strategic Transport, as well as a range of renowned flying boats.

Following the takeover, Bombardier invested 200 million pounds in the company, since when sales and exports have doubled and a loss of 48 million pounds has been turned into a profit of 33 million pounds. Productivity has increased by 50 percent.

Under Bombardier's direction, Short Brothers has developed into a highly diversified manufacturing and aviation service company, making components for the Boeing 747 jumbo jets, the Dutch Phonier 100, the Canadair Regional Jet, and the Learjet 45 as well as helping train mechanics and pilots and maintaining air bases in numerous countries.

The second great Canadian company prominent in the Northern Ireland economy is Northern Telecom (Nortel), a manufacturer of telecommunications equipment which is 51 percent owned by Bell Canada Enterprises. Like Bombardier, Nortel pledged cash, high technology and jobs to Northern Ireland at a time when the Province's economic future was overshadowed by seemingly relentless sectarian strife. Nortel employs about 1,000 at its Belfast transmission equipment manufacturing facility and 540 people at Glawya in the south. Nortel's faith in Northern Ireland is exemplified by its investment of £30 million over the past three years and its plan to plough back f10 million this year.

Companies like Bombardier, Nortel, and its subsidiary Bell North Research, bring to Ireland state-of-the-art technology, on top of their financial investment. Baroness Denton, the British government minister in charge of Northern Ireland economic development, notes that with a population of only 1.5 million, the region has a small domestic market and needs to export to thrive. Tie-ups with established foreign firms can provide the access to advanced technology and to world markets that can set local firms on the road to success, she argues.

Positive reasons for foreign investors to invest are a work-force which is among the best educated in Britain; lower wages than in Britain generally; cheaper property and very good communications. Government grants underwrite up to 50 percent of foreign companies' capital investment; these, with other tax and investment concessions, are as generous as any offered in Britain.

DE HAVILLAND WINS AIR TRANSPORT WORLD ACHIEVEMENT AWARD

de Havilland has become the first regional aircraft producer worldwide to receive the prestigious

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Technology Achievement Award from Washington-based Air Transport World magazine.

The award, presented in a gala ceremony last week in Washington, D.C., was accepted by de Havilland president Gaston Hebert, and retirees Mike Davy, former de Havilland vice president of engineering, Bob Fowler, chief engineering test pilot for the company for many years and Dick Batch, retired director of product design for de Havilland.

In presenting the award, Air Transport World executives cited de Havilland's unique products and commitment to the regional airline industry. "As the industry matured, so did the offerings of the Canadian manufacturer, starting with the simple, rugged Twin Otter 30 years ago, graduating to the pressurized comfort of the Dash 7, and then to the speed and efficiency of the Dash 8. Testimony to the industry's opinion of de Havilland aircraft are the 1,368 of these aircraft the company has sold," said the magazine.

de Havilland's selection for the Technology Achievement Award is a result of the company's ongoing commitment to development and support of regional aircraft. A shortage of suitable aircraft was one of the chief barriers to expansion for the commuter/regional airline industry in the 1960s. Several companies offered products that achieved some degree of success but only one company backed up its winning entry-level aircraft with evolutionary developments in both size and sophistication that continue to serve the industry. For that effort, de Havilland was chosen for this year's award.

This is the 21st year for the Air Transport World annual achievement awards. They were created in 1974 to help bring recognition of excellence in the airline industry. Previous winners for the Air Transport World annual achievement awards in the technology achievement category have included Boeing, Airbus, GE Engines and Pratt & Whitney Canada.

Established in 1928 just outside of Toronto, de Havilland has manufactured about 7,400 aircraft. Today's product line, the Dash 8 family of turboprop airliners, operate with more than 60 customers in 24 countries around the world.

de Havilland Dash 8 aircraft are marketed and supported by Bombardier Regional Aircraft Division based in Toronto. In addition, Bombardier Regional Aircraft markets and supports the Canadair Regional Jet aircraft produced in Montreal. de Havilland is a unit of Bombardier Aerospace Group — North America along with Canadair and Learjet. Bombardier Inc., a Canadian corporation with 36,500 employees worldwide, is involved in the fields of aerospace, transportation equipment and motorized consumer products.

U.S.A.F. F-22 PASSES DESIGN REVIEW MILESTONE

The U.S. F-22 air superiority fighter programme successfully conducted the formal portion of the Air Vehicle Critical Design Review last week. This thorough review of the entire F-22 air vehicle design marked the culmination of 211 lower level reviews and 24 sub-tier CDRs held over the past year.

"This was an absolutely outstanding effort and a gratifying success for the F-22 team," said Major-General Robert Raggio, F-22 programme director at Aeronautical Systems Centre (ASC) at Wright-Patterson A.F.B. "We all should be proud of this accomplishment and for all of the programme reviews we've completed prior to this event. The current state of the F-22's design is in excellent shape — a superb team accomplishment!"

During the past year, the reviews of the various subsystems and software of the F-22 were accomplished, clearing the way for the week-long, top-to-bottom review of the F-22 design. This review ensured the overall design tasks, critical to conducting CDR, would be completed — well over 6,000 items in all.

The success of CDR can be attributed in large part to the Integrated Product Team (IPT) approach being used in the F-22's development. Under the IPT concept, each team is completely responsible for its "product" (avionics, cockpit, airframe, utilities and subsystems, etc.), from engineering a part or system, controlling its cost and schedule, and ensuring that it can be manufactured and supported once in use.

"The implementation of integrated product development and teamwork between the government and contractor allowed the design issues to be worked far in advance of the actual CDR," said Jon Ogg, the F-22's chief engineer here. "The meeting was merely a formalization of these efforts."

The purpose of the CDR was to ensure that all performance and functional requirements have been incorporated into the design of the F-22; to verify that required development tasks involving detail design had been completed; and to confirm the programme meets all necessary criteria to proceed into the next phase, fabrication and assembly.

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"The completion of approximately 6,200 specifically defined activities contained in the F-22 Integrated Master Plan/Integrated Master Schedule (the step-by-step blueprint for F-22 development) were evaluated during the week-long CDR," said Ajmel Dulai, F-22 air vehicle chief here. "The team can be very proud of this feat — their attention to the technical details should be commended."

The critical design review covered such items as aircraft configuration, structures, materials, manufacturing processes, propulsion, and flight performance. Additionally, data obtained from recent wind tunnel, material, and structural tests was also evaluated. Other areas, such as supportability, survivability, and vulnerability characteristics of the F-22, were assessed as well.

Compared to previous new-design fighter development programmes, the F-22 design is extremely mature and has unprecedented design fidelity at this stage of development.

More than 16,500 hours of wind tunnel testing out of a planned total of 17,500 hours have been completed. More than 150 hours of actual flight testing with the YF-22 prototypes (during late 1990 and from October 1991-April 1992) provided valuable data for the F-22 in areas such as structural design, flying qualities, propulsion, and weapons systems.

Additionally, structural component testing, analytical model testing, and evaluation of approximately 13,000 materials coupons (test specimens) have been completed and have contributed to the high confidence the contractor team has in the design of the F-22 at this point.

Parts fabrication for the first of nine aircraft to be built during the EMD phase of development (seven single-seat F-22A and two tandem-seat F-22Bs) began in December 1993. Assembly of the first aircraft is slated to begin this summer. The next major programme milestone will be rollout, with the first flight of an F-22A following in May 1997.

The CDR was held at the facilities of the weapon system's prime contractor, Lockheed Aeronautical Systems Company, February 20-24, in Marietta, Georgia.

"Our success in reaching this major milestone is a result of the tremendous efforts of the dedicated people working on the F-22 programme," said Gary Riley, Lockheed F-22 programme vice president and general manager. "We have had more than 30,000 people, including over 30 major subcontractors and 2,500 suppliers, providing exceptional support to this programme. Their teamwork and commitment to excellence has produced the outstanding achievements seen here."

The major challenges to the F-22 team leading up to CDR were the weight, projected per-unit production cost of the air vehicle, and radar cross section reduction. No open items from CDR are scheduled to be closed by June 1995. The results from the CDR will help ensure that the performance of the fighter, when delivered, meets the needs of the user, Air Combat Command.

The F-22 is the next generation replacement for the F-15 Eagle air superiority fighter, which is planned to become operational early in the next century. It combines stealth design with the supersonic, highly manoeuvrability, dual-engine, long-range requirements of an air-to-air fighter, and includes an inherent air-to-ground capability. The EMD phase of the programme began in August 1991 with the selection of the Lockheed/Boeing/General Dynamics (now Lockheed Fort Worth Co.) team and its F-22 design and Pratt & Whitney with its F119 engine to power it. The F-22 programme was structured using extensive prototyping prior to the EMD phase and incorporating Integrated Product Development processes following the 1986 Packard Commission recommendations to improve Department of Defence acquisition processes.

"The (U.S.) government and contractor F-22 air vehicle and F119 engine teams will continue to work in partnership and with our utmost energy to deliver the successes which Air Combat Command, our customer, expects of us," said General Raggio. "That includes work to the rollout, first flight and beyond."

LITTON BOARD DECLARES DIVIDEND

A Series B $2 cumulative preferred-stock cash dividend of 50 cents per share has been declared by the board of directors of Litton Industries Inc., headquartered at Woodland Hills in California. This regular quarterly dividend is payable April 1, 1995, to shareholders of record March 17, 1995.

EME OFFICER AWARDED MB

Captain Andrew James Collingwood, a member of the Land Electrical and Mechanical Engineering Branch has been awarded the Medal of Bravery for his action while serving as a United Nations Military Observer in Croatia in the spring of 1994. On April 19, 1994 he worked his way through an uncleared mine field south of Plastavo to try to rescue a comrade who had been severely wounded during a mine clearing operation. Carefully making his way through the mine field he arrived on the scene only to find the soldier lying, dead, in a pool of blood. Captain Collingwood made his way back to safety and then guided a medical team in

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recovering the body.

CANLOGBAT ROTATION

Over the past week most members of 2 Service Battalion have returned to their home base, CFB Petawawa. For the past six months they have been manning CANLOGBAT at Primosten, Croatia under the command of Lieutenant Colonel Al Stephen . They are now being replaced primarily by members of 5 Service Battalion, CFB Valcartier under the command of Lieutenant Colonel Marc Pouliot.

The Canadian Logistics battalion is some 268 strong and provides support for the Canadian infantry battalion in Croatia and the armoured regiment in Bosnia.

CANADIAN EVALUATION TEAM IN UKRAINE

Last week a Canadian Forces evaluation team of three individuals travelled to Ukraine to visit the 4th Independent Naval Infantry Brigade at Feodosiya, 100 miles north east of Sebastapol. The visit was made under the provisions of the Operation for Security and Cooperation in Europe (OSCE) and the team is the first foreign one to visit this newly formed unit. It departed Ottawa on 20 February, staged through Amsterdam and returned to Canada on 24 February.

CALENDAR

February 27 — The next CDPA Luncheon Meeting will be held at the RCAF Officers' Mess located at 158 Gloucester Street, Ottawa, commencing at 12:00 noon. Members will be briefed by Lieutenant-Colonel Moe Krause about the "Military Automated Air Traffic System (MAATS)". The $15 fee is payable at the door, or in advance at the CDPA office, 500 - 100 Gloucester Street, Ottawa, Ontario, K2P 0A4. Contact Anne Healey at (613) 235-5337 to make reservations in advance.

April 9-11 — The Aerospace Industries Association of Canada's (AIAC) Thirty-Third Semi-Annual General Meeting will be held at the Westin Hotel in Ottawa. The theme of the event is "Canadian Aerospace: Reality in a New World". Speakers will include Diane Francis, Editor, Financial Post; Finance Minister Paul Martin; Wolfgang Demisch of BT Securities Corporation, New York; and Karel Ledeboer of the International Air Transport Association. For additional information contact the AIAC in Ottawa at (613) 232-4297.

May 30-31 — The COPWIN '95 seminar will be held at the National Arts Centre in Ottawa sponsored by the Canadian Defence Preparedness Association (CDPA). The objective of COPWIN '95 is to promote earlier industrial involvement in the capital acquisition process. The Department of National Defence's long-term equipment acquisition and R&D plans will be discussed, including all new projects over $500,000. The focus on the requirements will be through the 15 year planning cycle, reflecting the impact of the '94 defence white paper and the February '95 Budget. In support of DND's `Cooperation with Industry', CDPA is pleased to welcome members and non-members alike to participate in COPWIN '95. Contact the Canadian Defence Preparedness Association, 500 - 100 Gloucester Street, Ottawa ON K2P 0A4, or telephone (613) 235-5337; fax, (613) 235-0784.

August 9-13 — Airshow Canada's 1995 international aviation & aerospace tradeshow will be held at Abbotsford in British Columbia. The event incorporates the 1995 CBAA (Canadian Business Aircraft Association) trade show and aircraft display. For further information contact Airshow Canada at P.O. Box 6, Abbotsford, BC, Canada, V2S 4N9. Telephone: 604-852-4600. Telefax: 604-852-3704.

April 17-18, 1996 — AFCEA has announced Technet Canada '96, presented by AFCEA Canada (Armed Forces Communication and Electronics Association), to be held at the Ottawa Congress Centre. The event will provide opportunities for exhibitors from within the information community to showcase their products and services in the fields of communications, electronics and intelligence. To book show space, call AFCEA's `show office' at 613-594-8788 or fax 613-236-4351.

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