September 12, 2011 Landmark London Hotel, London, UK How will the A&D industry’s top companies capitalize on commercial growth opportunities and offset declining defense spending in mature markets? Find out as CEOs position their companies in front of major investors, securities analysts and industry suppliers. -- Profile your company amongst the world’s leading organizations andsecure maximum exposure -- Examine alternative options for aircraft finance
China may be looking to use its navy to broaden — and not just protect — the country’s power base, according to the U.S. Navy officer slated to be the next chief of naval operations (CNO). Adm. Jonathan Greenert, the current U.S. Navy vice CNO, also raised caution flags this week against using a redesigned Virginia-class attack submarine as a template for the next U.S. ballistic missile submarine rather than following the current plan for a new SSBN(X) boomer fleet.
ROLLS RESULTS: Rolls-Royce has released first-half results, with underlying profit up 28% to £595 million ($972 million) on 4% revenue growth year-on-year, buoyed by civil aerospace activity. By contrast, the defense order book contracted 5% year-on-year. Rolls-Royce’s defense business gained a £60 million one-off payment to cover cancellation costs from program cuts imposed by the U.K. defense ministry following last year’s Strategic Defense & Security Review. Without that money, full-year profit for the defense sector would be flat.
The Republican-led House Armed Services Committee (HASC) has finally met a defense spending cut it can tolerate. The deficit-reduction plan proposed by House Speaker John Boehner (R-Ohio) up for consideration by the full House July 28 may just be the lesser of two evils, according to HASC spokesman Claude Chafin.
LONDON — With defense budgets in its core European and U.S. markets under pressure, BAE Systems is looking at potential further cost-cutting and streamlining activities, even as it seeks growth opportunities in export campaigns. “The environment is challenging,” says BAE Systems CEO Ian King in presenting the company’s half-year results, which show a £1.3 billion ($2.1 billion) drop in sales and a £757 million operating profit, or £92 million less than last year’s midyear results.
The chairman and ranking Republican of the Senate Commerce, Science and Transportation Committee have made good on their threat to subpoena documents related to NASA’s selection of a design for the heavy-lift Space Launch System (SLS), setting up a showdown over the agency’s pace in meeting a congressional order.
The development of a joint vertical-lift aircraft needs to be a priority now for U.S. forces, the head of U.S. Army aviation says. “It’s critical to have a strategy now,” said Col. Bill Morris, Army aviation director, during a Pentagon briefing with reporters July 27. The Army, other services and the Pentagon are working together to come up with a strategic plan aimed at developing the first multirole variant for attack and assault missions by 2030, Morris says.
SINGAPORE — Airbus Military and partner Indonesian Aerospace (IAe) are working to convince Indonesia’s air force that it needs a total of nine Airbus Military C-295s, while at the same time IAe is trying to convince the European airframer to eventually transfer some C-295 production to Indonesia.
L-3 Communications is spinning off 55% of its government services businesses that specialize in systems engineering, technical assistance, training and operational support, but the company is hanging onto government services units that specialize in cybersecurity and intelligence. The new entity, to be called Engility, will be led by Tony Smeraglinolo, who is now executive vice president of L-3 Services Group. Engility is expected to have annual revenues of about $2 billion and will have about 10,000 employees.
Climate researchers have a new tool for measuring polar ice loss and its impact on worldwide sea levels, following work on the collapse of Antarctic ice shelves based on satellite data. Scientists at the University of Maryland, Baltimore County (UMBC), France’s University of Toulouse, and the University of Colorado calculate a pair of collapses in the Larsen ice shelf in 1995 and 2002 contributed to an annual loss of 11.2 gigatons to the sea from 2001-06, and 10.2 gigatons from 2006-10.
A key Pentagon review of the multinational Joint Strike Fighter (JSF) that had been slated for spring has slipped to this fall, but program officials still expect to send an amended F-35 cost report to Congress following the review, according to U.S. Air Force Maj. Gen. C.D. Moore, deputy director of the program.
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Any possibility of rapidly streamlining U.S. cyberoperations, establishing clear command and control of the discipline, or securing the freedom to use offensive cyberweapons is small. The underlying problems include a Byzantine network of defense and civilian organizations with conflicting cyber-responsibilities, a shortage of trained specialists and—most crippling of all—no identifiable funding streams. (See charts pp. 7-9.)
GENOA, Italy — Finmeccanica plans a host of new cost-cutting measures to increase its competitiveness, as the Italian aerospace and defense company looks forward to a tough second half of 2011. “Finmeccanica grew a lot in recent years, now it is time for a strong consolidation,” says CEO Giuseppe Orsi. The new measures will be in addition to ones already being carried out, which have not brought the expected results.
EXPORT CONTROL: A White House official asserts the Obama administration has enough constitutional authority to enact about 80% of its export licensing reform agenda, but the administration is preparing a bill of its own as competing legislation already has emerged in the House. “We have draft legislation that is nearly ready to go,” says Michael Froman, deputy assistant to the president and deputy national security adviser for international economic affairs.
SAN FRANCISCO — Boeing Military Aircraft’s second-quarter revenue was $3.6 billion on an operating margin of 10.6%, which the company said reflects “strong performance.” The second-quarter report, released July 27, also brought some refinement to the range of operating margins the company expects from its two main production units, Boeing Commercial Airplanes (BCA) and Boeing Defense, Space & Security (BDS). BCA’s margins have been revised to 8-8.5% — they were previously 7.5-8.5% — while BDS’s margins are now 9%, instead of 8.5-9%.
LONDON — After a difficult period during which program development problems were hampering Thales’s financial results, the aerospace and defense company is reporting progress across a range of activities. One key milestone in this regard is an agreement between Airbus Military and Thales on how to handle contractual disagreements associated with the A400M flight management system, says Thales CEO Luc Vigneron. The terms of the deal – completed this month – are confidential, Thales says, but it notes that the outcome “is positive.”
Boeing’s chief financial officer says the recently won U.S. Air Force KC-46A aerial refueling tanker program is expected to be “profitable over time” despite the company’s bid strategy of knowingly risking profitability in the development phase. “We had always bid this contract thinking that on the [engineering and manufacturing development] phase it would be very low profitability or even break-even,” said CFO James Bell during a second-quarter earnings telecon July 27. “Nothing has changed from that philosophy.”
The Australian defense minister and top military officer are in Washington for talks with U.S. officials, but it is not aircraft or Afghanistan that seems foremost on their minds; it’s submarines. Their message to Washington: Australia is a proven, “value-added” ally, and our new conventional submarines should complement your nuclear-powered undersea fleet. Also, we would like your help building them.
AIRSHIP ANOMALY: Lockheed Martin’s unmanned, solar-powered, high-altitude/long-endurance airship demonstrator (HALE-D) made an emergency landing less than 3 hr. into its first flight from Akron, Ohio, on July 27. “The aircraft ascended as planned up to 32,000 ft. along the prepared flight profile. However, an anomaly prevented our ability to ascend to the target 60,000 ft.,” the company says. “A decision was made to end the flight and make a controlled descent into a nonpopulated area in southwestern Pennsylvania.” Designed to stay aloft for two weeks, the U.S.
The major takeaway from the first phase of the analysis of alternatives (AOA) being done for the U.S. Army’s scout helicopter replacement program is that the service needs a “man in the loop” for reconnaissance, targeting and related missions, says Col. Bill Morris, Army aviation director. “A mix of manned and unmanned systems is optimum, particularly in places like Afghanistan,” Morris said July 27 during a Pentagon briefing with reporters.
