Textron’s Earnings Reflect The Market

October 28, 2009 by Matthew Potter · Comment
Filed under: Bell, Business Line, Companies, Earnings, Events, Military Aviation, Textron, commercial aviation, logistics, production program 

Textron reported their third quarter earnings yesterday. They did beat expectations by not having a loss but had a profit of about 1 cent a share. This was a decline of ninety-eight percent from the year before. Despite all this the company is confident they will make a profit for a year and earnings would be as predicted.

Textron decline is caused by financial products and their civil air division. Sales of Cessna aircraft a luxury item right now were down a lot. The company has been reducing their participation in the financial sector due to the general downturn there. Despite Bell Helicopter’s struggles with the Armed Reconnaissance Helicopter (ARH) the military part of the company saw some growth.

There have been previous reports that Textron might sell Bell or other parts as it reorganizes to face the current economic downturn but so far that has not happened. As with everyone the company will have to wait and see how the economy recovers and what growth occurs.

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Air National Guard To Have Role With KC-X

October 19, 2009 by Matthew Potter · Comment
Filed under: Syndicated Industry News 

Since 9/11 the U.S. military has moved to integrate even more their National Guard and Reserve Forces. They have been called up at high rates and have received more and upgraded equipment. Currently the Air National Guard of various states like Alabama fly KC-135 tankers. If the full fleet of KC-X aircraft are built then some of the states will receive these new tankers. Recently it was announced that the Air National Guard will provide participation on the KC-X source selection. This is most likely to help make sure that any specific requirements of the Air Guard are considered and is not common with programs of this size.

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European Customers Continue To Dither On A400M

June 23, 2009 by Matthew Potter · Comment
Filed under: Business Line, Companies, Contract Awards, Countries, EADS, England, Events, France, Military Aviation, Restructuring, Spain, development program, logistics, production program 

The various defense ministers and their staffs of the seven European countries buying the EADS developed A400M transport continued to punt on a decision. They now will wait another month before deciding whether to restructure, end or demand their money back on the troubled program. The orignial decision date was March. That was extended three months to the end of June and now it will be in July when the “terms of the negotiation” are to be defined. Then there will be some period of negotiation with EADS on what to do with the aircraft.

Some countries have been outspoken in support of the very late program while others have discussed ending their participation due to the cost and schedule problems. England who is in the worst position budgetary wise is reevaluating all of their defense spending and looking at areas to cut costs. They have been the most vocal about ending their participation and perhaps getting the upfront money back from EADS.

The company has been stockpiling cash in case there will be a need to give some of the money back already received for the aircraft. A decrease in the number to be purchased will also lead to higher prices for the remaining customers unless some other deal can be reached. It is obviously in the best interest of the company and perhaps the countries involved to complete the program but now these talks have been ongoing for six months or so. At some point some decision will have to be made.

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England Looking At Harder Line On Typhoon Buy

May 12, 2009 by Matthew Potter · Comment
Filed under: Business Line, Companies, Contract Additions, Countries, EADS, England, Events, Germany, Military Aviation, Restructuring, Saudi Arabia, Spain, production program 

Update — It was reported on Monday that the expected penalties and cancellation fees related to the UK’s buy in this round for the advanced aircraft will be over two billion pounds ($3 billion or so). This amount of money may make it more feasible to purchase the aircraft. While penalties are capped at the two billion figure there would still be termination fees. The economic effect of ending the program would also be substantial as there are several thousand jobs in the UK that rely on the program. The decision on this effort will not be easy for the Brown Government already facing a dire financial situation.

As we wrote about previously England’s budget struggles are causing it to rethink the upcoming contract buy of Typhoon fighters. If England does not participate fully in the third option then either the other countries will have to renegotiate the prices most likely to a higher number. England does have the option of ending their participation in the multi-national contract but would have to pay substantial termination fees that might end up higher then the cost of buying the aircraft.

The interesting thing is that it was England worried that some of the other participants may have left the contract that worked to have the high fees put in the contract. England is trying a third option where most of there scheduled buy will go to Saudi Arabia rather then to them allowing some savings. The Brown government like Obama in the U.S. is facing trying to pay for a large economic stimulus package as well as increased social spending. This has put pressure on a military budget already suffering from the combined campaigns in Iraq and Afghanistan. Like Obama is doing one way to save money is to end large procurement programs to save defense spending. They can either be stopped in development or less units can be bought, like the F-22. Unfortunately the less you buy the more they cost so total savings may be limited.

If England does renege on this contract there will be significant future issues with their partners and for the Eurofighter consortium.

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India Rejects Rafale For New Fighter

April 20, 2009 by Matthew Potter · Comment
Filed under: Boeing, Business Line, Companies, Contract Awards, Countries, D'Assault, EADS, Events, India, Lockheed Martin, MiG, Military Aviation, Proposal, SAAB, production program 

Update — Flight International is reporting that India says it has not ruled out any competitor in the program.

The Indian Air Force is looking to purchase an advanced fighter to add to their inventory. Six foreign companies had submitted bids for the 126 aircraft order. Now word comes that the French proposed Dassault Rafale was eliminated from the competition. The Indianexpress.com reports that publicly it was stated the aircraft did not meet certain “qualitative” requirements. It was also said that the proposal submitted showed the aircraft did not meet some of the technical requirements for the program. This means that the contest will continue with Boeing, Lockheed Martin, SAAB, MiG and Eurofighter participation for now.

The deal is one of several that India is proceeding with in an attempt to upgrade the technical capability of their armed forces. In the past the country had tended to buy from Russia or England. India has also spent the last several years developing an indigenous arms industry. Although lately they have turned to outside sources to include Israel and the U.S. for advanced weapons.

Currently there are several nations looking at buying advanced fighters. The Rafale has not been bid for many as most of the competition has been between the F/A-18G, SAAB Gripen, F-35 JSF and the Eurofighter Typhoon. The Indian contract is certainly one of the largest percolating.

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Indian Offset Policy Leads to Israeli Contract

December 1, 2008 by Matthew Potter · Comment
Filed under: Astra Microwave, Contract Awards, ELTA Systems, IT, India, Israel, Military Aviation, production program 

Israeli company ELTA Systems placed a contract with Astra Microwave worth about $11 M for components. This is due to the offset provisions in Indian law for foreign firms winning contracts. MarketWatch.com has the press release. Israeli companies won a major contract to provide airborne radar and surveillance aircraft from India recently and this award may be an offset for that contract. Read more

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English government procurement rules too inflexible for most businesses

October 18, 2008 by Matthew Potter · Comment
Filed under: Contract Awards, Editorial, England 

The English government has been trying to expand the participation of small businesses in its procurements. Now a survey of 500 small and medium businesses finds that most are not willing to make the effort to bid on government work due to the complexity and formality of the procurement process. This has also been a criticism in the US. The government RFP, proposal and evaluation process is too complicated most businesses to make the effort. One advantage that the US does have over the UK is that they do not charge companies for access to their listings of available contracts. Most of that is now done via the web for free.

See this article in printweek.com for more.

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