Operating income was SEK 28 M (4) and the operating margin was 1.4% (0.2).

The low income was mainly due to the downturn with lower sales and low profitability within the aftermarket business. The operating income was also affected by falling demand for new spare parts within the component business, as well as by negative currency effects.

Passenger traffic continues to decrease
According to IATA (International Air Transport Association), there was a 7.7% drop in international passenger traffic in the first five months of the year, compared to the same period 2008. Cargo traffic was 21.3 % lower than a year ago, but showed first signs of recovery in May. IATA has revised its airline financial forecast for 2009 to a global net loss of USD 9 billion, almost double its March estimate, due to the deteriorating operating environment.
   In the first six months of 2009, Airbus and Boeing announced 175 gross orders and 106 cancellations, which means 69 new orders, compared with 962 new orders the same period last year. The backlog for large commercial aircraft decreased from 7,429 at the start of the year to 6,998 at the end of June. So far this year, the aircraft manufacturers have delivered 500 aircraft, compared to 486 in the same period last year.
   In late June, Boeing postponed the maiden flight of the 787 once again, which will impact deliveries to the new aircraft. A new date for the first flight has not yet been announced.

Important decision on space propulsion
In June, the Swedish government decided to continue to participate in the European launch-vehicle program. The decision was important meaning that Volvo Aero's space operations in Trollhättan could continue to participate in all ongoing Ariane and technology programs. Thereby Volvo Aero can maintain its leading position in nozzles and turbines for space rocket engines.
 
As a result of this, a few weeks later the French aerospace company Snecma and Volvo Aero agreed on the basic principles of a five-year partnership between the two companies in the field of space propulsion. The agreement between Snecma and Volvo Aero involves the series production of 37 nozzles and the same number of turbines for the Vulcain 2 engine of the Ariane 5 rockets, which will be manufactured by Volvo Aero from 2009 until 2014. For Volvo Aero, sales of several hundreds of millions of Swedish kronor will be secured through the agreement

In June, Volvo Aero also unveiled the brand new sandwich nozzle for the future Ariane rocket’s Vulcain 2 engine. By applying a new welding technology, the new sandwich nozzle will be significantly less expensive to manufacture, while simultaneously being more robust and delivering higher performance, allowing Ariane 5’s payload to increase by 100 kg.

Volvo Aero and Snecma have also signed an agreement stating that Volvo Aero Norway will supply components for the new, enhanced engine for the Boeing 737 aircraft, the CFM56-7BE. As Snecma is Volvo Aero Norway’s single largest customer, this agreement is of great importance to Volvo Aero Norway

Volvo Aero has signed an agreement with the regional airline VLM Airlines, Belgium. The five-year agreement pertains to the maintenance of VLM Airline’s fleet of 18 Fokker 50 aircraft with PW100 engines and is considered a key order. The order is expected to have a total value of approximately USD 20 M for Volvo Aero.