Rockwell Collins’s President and CEO Kelly Ortberg spoke recently with Aviation Week editors in their Washington offices.

 

How do you find Defense Secretary Ashton Carter’s innovation initiative? Are you going to plug into that, or do you foresee competition coming from Silicon Valley?

 

We’re already kind of the interface between consumer and commercial technology from Silicon Valley and the Defense Department. If you look at the avionics that we’re putting on next-generation defense equipment, they’re not full of a bunch of custom technologies and devices. We’re pulling from the same chips, the same IT [information technology] network designs and customizing them for the military. I think that [Carter] is going to have a tough time getting the tech world to want to do business the [Pentagon’s] way, and that’s where we play. We can be that bridge, those folks can come through us. We can move the technologies forward, whether it’s in the cabin or the cockpit. We don’t invent all the technology -- we figure out how to bring it into the aircraft marketplace.

 

So you don’t feel threatened by Silicon Valley?


They’re all about speed and large volumes of consumer technologies. When we’re talking about a seven-year development program and you can’t change a part number for 20 years, I don’t think [Carter] is going to find a receptive audience out of Silicon Valley.

 

How concerned should people be about hackers getting into the cockpit, or hacking into an inflight entertainment system?

 

It’s going to provide business opportunities for us, because we’re taking capabilities that we’ve learned in the defense world and bringing those in to provide cyber security defenses for onboard systems. As soon as things are connected, they’re vulnerable. We have been working very closely, particularly with Boeing and Airbus, on their new architectures. It requires us to have strong security architecture on the airplane. The new generation of aircraft has secure firewalls and separation of communications. The level of security risk is different for an inflight entertainment system than it is for basic flight-control systems, and those systems will continue to be separated and partitioned in a way that you can’t access the avionics through the inflight entertainment.

 

How big of a business opportunity is it?

 

Probably one-third of our content on the Airbus A350 is information management systems – onboard file servers, the secure interface, the routers that send information to the appropriate location, for both the cabin and the private network in the aircraft. Most of our systems are designed in a network application. Some of those applications could move from the airplane to the ground. You would run those applications on the ground, and then just provide the information. For example, you don’t have the GPS mapping software loaded onto your [mobile] device. You connect to the mapping software that’s on a server somewhere.

 

Looking to cockpits of the future and talk about going to a single pilot, some believe the bigger leap would be just going right to no pilots.

 

The social [issues] are the bigger challenge. We can get through the technical challenges. We don’t need windows in that airplane. In fact, the window is a very expensive component of an airplane. We could put cameras there and see digitally. But do people want to get on airplanes with no windows? So I think moving from a two-man cabin to a one-man cabin is probably a first step, and we’re working the technologies to allow that to happen.

 

Do things like the GermanWings pilot-induced crash inhibit that?

 

All the systems on an airplane are designed to give ultimate control to the pilot. There are a lot of implications associated with taking control away from the pilot. So I think the GermanWings example creates a real complex problem. A solution is always having multiple people in the cockpit. We provide triple- or double-redundant technical solutions. You’re probably going to see that in terms of people.

 

But there are technical solutions that could be applied to this GermanWings problem.

 

Lots of them. We have auto-fly, remote control and anti-collision detection capabilities. All of those technologies can be applied. But again, the fundamental theory is that the pilot is in the best position to determine what needs to be done to save an aircraft, not in a nefarious situation but in a bad situation. Do you want to take that capability away from the pilot? That’s a much broader issue for the regulating authorities to decide on.

 

Airbus and Boeing are planning on building a lot of airplanes in the next few years. Do their plans for robust rate increases pass muster with you?

 

They do. We can react up and down to demand very quickly, because we don’t have big capital expenditures associated with taking production rates up three-four aircraft a month. We might need to add one test set in our factory line. If they jump rates up, that’s good for us. What we’re seeing is that orders for the [Boeing] 737MAX and [Airbus] A320NEO have been very good for the past 18 months.

 

It’s a market that hasn’t seen a downturn since after the 9-11 attacks in 2001.

 

Backlogs have not come down. They’re so big they’re almost unhealthy. I don’t see anybody changing their fleet renewal strategy because of [lower fuel prices]. Fleet planning is a 20-year strategy, and this fuel environment is likely to change. I think everybody is sticking with their fleet renewal or expansion strategies.

 

There have been a few years of challenges in getting the F-35 helmet set up. It seems like things are turning around. Can you give us an update of where you are, and what was the lesson from all of this?

 

This is the first time we’d ever put an integrated heads-up display in the helmet. The dynamics of that, and how the mind reacted to vibrations, surprised us and created some unplanned jittering of the display. We ended up putting a micro-[inertial measurement unit] on the pilot’s head. We measure the vibration and we filter it out with software so the mind doesn’t see the different shaking of the display. We’ve worked through that. We also marked improvement in the brightness and the green-glow effects. So I feel pretty good about the latest generation, and we’re making good progress on the cost reduction.

 

Do you see new competitors emerging in the UAV market, or is Rockwell Collins moving into new segments of that market?

 

I think it’s going to be the same players, and it’s going to evolve similar to business aviation. The certification levels and requirements are going to be scaled, depending on the altitude and weight of the platform.

 

Everything is going well for Rockwell Collins. Wall Street loves you: Your outreach into international sales, the reliance on commercial to drive growth and the defense outlook is improving. Where do you see the risks?

 

We’ve gone through a very long period of a lot of aircraft developments, and they’re now coming into the market. So we’re seeing a double [benefit] of increased [sales] and less cash being applied to program developments, which is creating the returns we expected. I feel really good about our five-year outlook. But we live to the timing of the OEMs. The [Boeing] KC-46 [tanker aircraft], for example, has timing challenges. Is the [Bombardier] Lear 85 going to come back, and what’s the timing? Those are things that create dynamics for our business. But if you look at positions won [on platforms] we’re very firm: 737MAX, 777X, rate increases on the 787. Those are things that are going to happen.

 

Where do you see growth internationally?

 

Commercially China continues to be a very big growth market for us. The Middle East is growing. Brazil is a very strong, growing market for us, both commercially and in defense. And then India, where we’re more focused on defense. Our growth in India is one area where we’ve grown slower than I wanted to. Cracking the nut and doing business in India is proving to be hard.

 

How important is growing your services business?

 

I want to see our services business grow, so we’re not selling just a product but a service that’s a long-term annuity. I like that because it doesn’t [rely on] OEM production rates. There will be a day when OEM rates won’t be as good as they are today. I would like to see us build out a service portfolio that lives on the installed base, not just on the OEM rates. That will help diversify the company.