_Aerospace Daily

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Aerospace/Defense Stock Box As of closing March 12, 1998 Closing Change UNITED STATES DowJones 8602.52 -57.04 NASDAQ 1771.66 +7.60 S&P500 1068.59 -1.33 AARCorp 29.438 -.062 AlldSig 40.625 -1.000 AllTech 64.250 +.188

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House Appropriations national security subcommittee chairman Rep. C.W. (Bill) Young (R-Fla.) has adopted the practice this year of starting off hearings on the military services' budget requests by reminding the service brass that "this year is a little different. We don't have that cushion of a little money over the budget." House National Security Chairman Rep. Floyd Spence (R-S.C.) concluded a hearing on the services' unfunded fiscal 1999 requirements last week by imploring the service chiefs to help make the case for more money for defense.

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British Aerospace and Rolls-Royce praised an announcement late Thursday by U.K. Science, Energy and Industry Minister John Battle that the British government will raise the foreign shareholding limits for the two companies to 49.5%. "The changes are designed to promote the competitiveness of these companies by increasing their freedom to operate commercially in world markets," Battle said in a written answer to a Parliamentary question.

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The U.S. Navy's plan to develop and buy the Tactical Tomahawk variant of the Tomahawk Land Attack Missile was prompted by Navy needs, not a desire to bail out Hughes from losses on the TLAM program, the Pentagon's Inspector General has concluded.

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The U.S. Air Force expects delivery of the first Lockheed Martin C- 130J to be delayed further after an icing problem with the new transporter forced Lockheed Martin to slip delivery to its launch customer, the British Royal Air Force.

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ACTD DEVELOPMENT: Every Advanced Concept Technology Demonstration should be followed by at least a short engineering and manufacturing development phase, Hawley says. That's at least one of lessons the Air Force has learned after it took over the Predator unmanned aerial vehicle. The length of the development program would depend on each system, he says, but it would allow the service to bring on training programs and equipment and work technical details. The AF is now putting Predator through a block upgrade program to get its desired capability.

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The Pentagon next fiscal year plans to spending about $14.2 billion on research and development and procurement of classified programs, the Center for Strategic and Budgetary Assessment said Friday. The spending level represents about 17% of what DOD is spending overall on weapons acquisition. That level is on the order of what DOD has allotted to "black" programs over the past 10 years.

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The service chiefs of the U.S. Army, Navy, Marine Corps and Air Force have told Congress they need assurances that by April 1 a non-offset supplemental to the fiscal 1998 defense budget will be forthcoming, or else readiness or modernization could suffer. Air Force Chief of Staff Gen. Michael E. Ryan told Congress in a late February letter that without a guarantee by April 1 day-to-day operations might suffer. The funds themselves have to be made available by July "to avoid severe program impacts and mission degradation."

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Sabena has signed a contact for 34 A320s and two more A330-200s, while Swissair has ordered nine ultra-long-range A340-600s, Airbus reported last week. Both announcements affirm earlier commitments. The Sabena decision caps a battle between Airbus and Boeing to replace the carrier's 737 fleet. The carrier revealed late last year it had selected Airbus. Sabena selected CFM International engines for its new A320s. Swissair selected Airbus last December.

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ALL IN THE FAMILY: The Ballistic Missile Defense Organization is trying to identify what new investments it has to make in its FY '00 Program Objective Memorandum to ensure all its family of theater missile defense (TMD) systems are interoperable as they come on line over the upcoming years, says Brig. Gen. Richard Davis, BMDO deputy for theater air and missile defense.

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Sabena Belgian airlines signed its contract yesterday for 34 new Airbus Industrie A320 narrowobodies powered by CFM International CFM56-5B/P turbofans, a deal estimated to be worth about US$420 million. Even though Sabena's expertise and background is with Pratt&Whitney, a partner in the International Aero Engines consortium which had offered the V2500 in the A320 engine competition, Sabena partner and major shareholder Swissair - a major CFM operator - had been pressuring the Belgian carrier to go with CFM (DAILY, Feb. 26).

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The National Transportation Safety Board is urging beefed-up inspections, the creation of new inspection techniques, thorough checks of alloy suppliers' records and a full-scale critical design review on GE CF6 turbofans following an uncontained HP compressor failure on a Canadian Airlines International flight out of Beijing last fall.

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Unionized pilots are vowing to fight airline industry attempts to stretch Extended Twin Operations (ETOPS) out to four hours from today's three-hour limit, citing safety concerns. Following a quarterly meeting in Arlington, Texas, last week, the Coalition of Airline Pilots Associations also chided FAA for its "slow pace" in issuing a final rule on hours of service for pilots, and called for required traffic alert and collision avoidance systems (TCAS) on cargo aircraft.

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The chiefs of the four services yesterday outlined for the House National Security Committee more than $4 billion in unfunded requirements for fiscal 1999, but HNSC Chairman Rep. Floyd Spence (R-S.C.) said the chances of Congress providing the additional funding were remote. "Defense is not on the radar screen in the eyes of the American people as a priority," Spence told the service chiefs at the conclusion of more than three hours of testimony.

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The National Reconnaissance Office has devised an integrated signals intelligence (SIGINT) architecture to improve SIGINT performance and cut costs, NRO Director Keith R. Hall told the Senate Armed Services strategic forces subcommittee. The SIGINT architecture "will improve SIGINT performance and avoid costs by consolidating systems, utilizing medium-lift launch vehicles wherever possible and use new satellite and data processing technologies," Hall said in prepared testimony presented at a hearing Wednesday.

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NASA's X-38 prototype of an International Space Station Crew Return Vehicle (CRV) passed its first flight test yesterday when it was dropped from NASA's B-52 research plane and used a parafoil for a guided landing at Dryden Flight Research Center, Calif. The lifting body vehicle, an atmospheric test version of the spacecraft that Station crews would use as an emergency "lifeboat" to return to Earth, took eight minutes to descend from its release altitude of 23,000 feet, NASA reported. The parafoil deployed as planned and steered the craft to Earth.

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Damage to an F-22 engine isn't expected to delay the fighter's flight test program, Lt. Gen. George K. Muellner, the U.S. Air Force's top acquisition officer, said yesterday. The AF has suspended all engineering and manufacturing testing on the Pratt&Whitney F119 engines after a knife-edged seal in the engine broke (DAILY, March 11). Program officials "certainly don't expect any impact" on the flight test program, Muellner told reporters before testifying before the Senate Armed Services acquisition and technology subcommittee.

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The U.S. government told Lockheed Martin and Northrop Grumman last Friday that one of three paths it was considering taking on the companies' proposed merger was an outright rejection of the $11.6 billion deal, senior government officials said yesterday.

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Lucas Aerospace won a spot on Brazilian airframer Embraer's new EMB- 314 ALX program supplying the electric power system. The ALX is the latest version of the popular Embraer Tucano single-engine piston trainer, and while so far there's no firm contract, Brazil's air force says it plans to buy 99 ALXs, and exports are likely. Lucas' system, designed at the company's Aurora, Ohio, facilities, consists of a 400 amp starter-generator and generator control unit, which can be used to start the engine and supply primary DC electric power.

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Kuwait Airways purchased three Gulfstream V aircraft for the government of Kuwait, Gulfstream Aerospace announced Tuesday. The order is valued at about $115 million, with deliveries scheduled by the end of 1999. The aircraft will provide worldwide airlift capabilities for senior government officials and also ultra-long range medical evacuation capabilities.

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Aerospace/Defense Stock Box As of closing March 12, 1998 Closing Change UNITED STATES DowJones 8659.56 -16.19 NASDAQ 1764.06 +7.21 S&P500 1069.93 +1.46 AARCorp 29.500 +.625 AlldSig 41.625 -.500 AllTech 64.062 +1.250

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The Senate Commerce Committee yesterday adopted an amendment to the fiscal year 1998 NASA authorization bill imposing a $21.9 billion cost cap on the International Space Station. The amendment, proposed by Commerce Committee Chairman John McCain (R- Ariz.) and Sen. Kay Bailey Hutchison (R-Tex.), imposes the $21.9 billion cap on Space Station spending "through completion of assembly" and a $17.7 billion cap on "Space Shuttle launch costs in connection with assembly of the International Space Station," according to the printed committee amendment.

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Pratt&Whitney Canada's Service Center network took over H+S Aviation Ltd.'s PW100 and PT6T turboprop engine overhaul business under a new deal whose terms weren't disclosed. Based in Portsmouth, England, a new unit - Pratt&Whitney Canada (UK) Limited - is doing repair and overhaul work on both PW100s and PT6T Twin-Pacs, using H+S's existing facilities. P&WC says that P&WC-UK, along with the P&WC/MTU Customer Support Center, will "provide total customer service for all operators in Europe, the Middle East and Africa."

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ORDERS Ryanair ordered CFM International CFM56-7B turbofans valued at $300 million to power 25 737-800s on firm order from Boeing. Deliveries will begin next year....CFM International says China Eastern placed an order valued at $140 million for CFM56-5B/P engines to power 10 new leased Airbus A320 aircraft. The first aircraft was already delivered last month; the rest will be delivered by 2000....Aeromexico leased a Pratt&Whitney- powered 767-300ER from International Lease Finance Corp. for delivery in November on a 77-month lease.

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Wood Dale, Ill.-based AAR Corp. turned in 57% better third-quarter profits on sales that were 35% ahead of last year's pace, the company reports. AAR earned $9.3 million on $208.5 million in sales - both record figures - in its fiscal 1998. Operating profits were up nearly 51% against year-ago levels to $17 million. So far this year, profits stand 57.1% higher at $25 million, compared with $15.9 million during the like period in 1997. Sales are up 31.4% to a record $559.6 million.