MILITARY DEMAND FOR MODEL 36 APU IS SIGNIFICANT, BUT CENTER OF GRAVITY REMAINS COMMERCIAL APPLICATIO
NEWTOWN, Conn. -- The Model 36 auxiliary power unit remains a popular choice for business jets and military programs, but production of the APU family is likely to begin declining in the medium term if Honeywell fails to secure new applications.
By then, we expect to see production end for the Dassault Falcon 900LX and Challenger 650. (Another business jet application, the Gulfstream 450, exited the market in 2017, and another, the Cessna Citation X+, will wrap up production in 2019.)
Other business jet models that use the Model 36, including the Bombardier Challenger 350, Dassault Falcon 2000, and the Gulfstream G280, are expected to account for the lion's share of the APU's long-term demand.
Over the long term, new business jets coming onto the market will opt for the Model 36's sibling, the RE200, and its derivatives, or for competing models from Pratt & Whitney. That will eventually lead to a decline in demand for the Model 36.
Military demand for the Model 36 is waning. Boeing's F/A-18 and EA-18G both carry the Model 36 APU, and even as the U.S. Navy expects to transition to the F-35 Lightning II, it is adding to its requirements for both aircraft as a hedge against F-35 costs and program delays. The Pentagon is expected to extend production of the F/A-18 into the late 2020s, but the outlook is bleak after that. The Eurofighter Typhoon faces a similar fate. Both aircraft are victims of the shrinking demand for legacy fighters and competition from the F-35.
The Model 36 still has a couple of applications in the rotorcraft market, and the S-92 and the Boeing AH-64 Apache are projected to remain in production throughout the forecast period. Demand for these models will be modest compared to demand for business jets.
The Pentagon's VH-92 presidential helicopter program will boost deliveries of the S-92 during 2019-2023, but as it involves only 23 aircraft, the program will have only minimal impact on demand for the Model 36. Demand for the S-92 is heavily influenced by the health of the offshore energy segment, and demand for heavy helicopters from that sector has yet to recover from a deep slowdown suffered by operators in 2014-2016.
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