Boeing [BA] is the first to sign on to a new policy encouraging overseas-based companies to make a firm, long-term commitment to continue business activities in the United Kingdom, the U.K. Ministry of Defense (MoD) recently said.
Boeing has always been committed to establishing and focusing on relationships and partnerships as it continues to grow internationally, a company spokesman said. The company’s goal is to continue building long-term relationships that are mutually beneficial to the company and the countries involved that goes beyond the sale of a platform. Boeing continues to evaluate opportunities with global partners to ensure mutually beneficial opportunities and relationships advance.
Following the publication of a U.K. Ministry of Defense White Paper, “National Security Through Technology,” overseas-based suppliers have been encouraged to invest in Britain’s defense and security sector through the launch of a new Defense and Security Industrial Engagement Policy (DSIEP)–launched by Minister for Defense Equipment, Support and Technology Peter Luff.
“The Ministry of Defense is delighted that Boeing will continue to invest in the U.K.’s defense and security sectors and provide supply chain opportunities for U.K. companies, particularly SMEs,” Luff said. “Boeing’s commitment demonstrates the competitiveness of U.K. industry and we look forward to continuing and extending our relationship with this world class company.”
Boeing, a major MoD supplier, for example, provides the C-17 strategic transport aircraft and the Apache and Chinook helicopters.
The Managing Director of Boeing Defense UK, Mike Kurth, said: “The previous Industrial Participation opportunity associated with the supply of these platforms was a significant factor in our commitment to increase our U.K. defense footprint that now employs more than 800 people. This brings significant defense capability onshore for helicopter maintenance and modification, logistics transformation, training and advanced modeling and simulation to mention just four.”
That’s only part of the story, he said. “…our focus on the U.K. supply chain means Boeing also spends around $1 billion each year with 250 suppliers that have become an invaluable part of the Boeing supply chain.”
Boeing works within each country’s laws and requirements to craft an industrial participation plan benefiting all parties, by tailoring programs to address the customer’s goals and objectives, the spokesman said. Boeing adapts and tailors its programs as the global economy shifts, customers change and needs and expectations evolve. The company also can work with industrial partners to help them improve and expand into areas they have identified.
To date, Boeing has 69 active industrial programs worth more than $27 billion in 23 countries, representing more than 15 Boeing products, the spokesman said.
L-3 Completes Deal For Thales Civil Aircraft Simulation Business
L-3 Communications [LLL] recently said it has completed its purchase of the civil aircraft training and simulation business from France’s Thales for about $130 million in cash.
The new L-3 business unit, which is now L-3 Link Simulation & Training U.K. Limited, produces a full flight simulator capability called the RealitySeven Full Flight Simulator that supports civil aircraft aircrew training worldwide.
The new business is part of L-3’s Electronic Systems Group.
When the deal was first announced in April, L-3 said it would strengthen its military simulation and training business by adding a full flight simulator capability and enable it to expand into the civil simulation market. L-3 said then that the United Kingdom-based unit is expected to have $150 million in sales this year.
Saab Agrees To Acquire Air, Vessel Traffic Management Firm HITT
Sweden’s Saab AB recently said it has agreed to acquire the Dutch firm HITT N.V. for $38.4 million in line with the company’s strategy to be a global leader in traffic management.
The acquisition is expected to close in October pending the tender of HITT’s shares. More than 70 percent of HITT’s shareholders have agreed to the deal.
HITT provides air and marine traffic management services globally, as well as hydrographic and navigation systems.
Saab said the combination will give it a “strengthened market presence and a strong portfolio of world leading products, combining innovative software systems with state of the art sensor systems.” Saab said it has limited overlap with HITT.
French Air Force General To Become New Commander of NATO ACT
French Air Force Gen. Jean-Paul Paloméros has been approved by the North Atlantic Council as the next as Supreme Allied Commander Transformation.
Paloméros, nominated by French President Francois Hollande, is currently Chief of Staff of the French Air Force. He will take up his new duties at the end of September at Headquarters Supreme Allied Commander Transformation (ACT) in Norfolk, Va.
General Paloméros will take over from French Air Force Gen. Stéphane Abrial.
Taking command in 2009, Abrial leads one of two NATO strategic commands, and is the first non-American to do so. He took over from U.S. Marine Gen. James Mattis, then dual hat commander of Joint Forces Command and NATO ACT. Mattis now leads U.S. Central Command.
The Council said throughout Abrial’s command he contributed actively to the adaptation of the Atlantic Alliance’s structures, concepts, resources, training assets and defense planning process. Also, the Council expressed deep appreciation on behalf of NATO governments.
BAE Systems Tops Lockheed Martin For South Korea’s F-16 Avionics Upgrade Effort
BAE Systems beat out Lockheed Martin [LMT] on South Korea’s program to upgrade the avionics and electronic systems on its F-16 fleet.
BAE Systems said recently South Korea will deliver a Letter of Request (LOR) for the company to be the sole source systems integrator for upgrading more than 130 F-16s, which will be contracted through the Pentagon’s Foreign Military Sales program. The company said in a statement its upgrade solution includes the Commercial Fire Control computer, which it says has the highest throughput and most supportable mission computer in any F-16.
Lockheed Martin spokeswoman Laura Siebert confirmed recently the company bid for the South Korean F-16 avionics upgrade.
BAE Integrated Aviation Solutions Vice President Floyd McConnell said recently during a conference call the company expects the Letter of Acceptance (LOA) to be signed within three to six months, and once the two parties are under contract, initial upgrade deliveries will begin within three years. McConnell said South Korea has not set a date for initial operational capability (IOC) yet.
McConnell also said once the two parties start the program, BAE will deliver prototypes in “about two to three years.”
BAE estimates the F-16 market comprises 3,000 jets globally with an estimated value of more than $3 billion in potential avionics upgrades.
“We’re ready and we’re qualified to compete in this opportunity-rich market space,” BAE Support Solutions President Dave Herr said recently.
McConnell said F-16 avionics work is not new to BAE, saying the company provides approximately 40 percent of the mission equipment in F-16s worldwide. He added BAE’s’ F-16 experience dates back to the 1970s aircraft and has included flight control systems and ground support.
The South Korea avionics upgrade is just one program involving F-16 electronics. Both Raytheon [RTN] and Northrop Grumman [NOC] said they will bid on the Air Force’s program to upgrade its F-16 fleet with at least 300 Active Electronically-Scanned Array (AESA) radars. Raytheon is offering its Raytheon Advanced Combat Radar (RACR) while Northrop Grumman is bidding its Scalable Agile Beam Radar (SABR).
Lockheed Martin develops F-16s.
MBDA Delivers Missile Threat Simulation To Germany Technology Office
MBDA Germany recently said it has supplied a missile threat simulation tool to the German Federal Office of Defense Technology and Procurement (BWB).
This system allows simulation of all types of missiles, particularly ballistic missiles and cruise missiles, physically correct and in great detail–from launch to impact. Using this technology, technical propositions regarding threats can be organized, narrowed down and formulated with greater precision.
Threats to nations or to troops on deployment from proliferating theater ballistic, short-range and medium-range missiles (TBMs) can be analyzed. Additionally, the data makes possible the analysis of air defense systems performance capability. The knowledge gained can be used in the development of modern air defense systems. Finally, the threat simulation helps to continually expand and update the air defense target catalog.
“The threat simulation we have developed is unmatched in Germany,” said Walter Stammler, head of operations at MBDA Germany. “It is a part of our unique range of skills in the fields of air and missile defense which also includes our new simulation and integration center, our test and training center in Freinhausen and our laser weapon facilities.”
MBDA Germany is the leading missile systems company in Germany and part of the European MBDA Group.
MBDA owned by BAE Systems with 37.5 percent, European Aeronautic Defense And Space (EADS) with 37.5 percent and Finmeccanica with 25 percent.
Work In Afghanistan, Air Traffic Management Boosts Exelis’ Income
Strong program execution on work it is doing under a U.S. government contract in Afghanistan and on air traffic management programs drove strong earnings at Exelis Inc. [XLS] in the second quarter despite weaker sales.
Net income increased 9 percent to $86 million, 46 cents earnings per share (EPS), from $79 million (42 cents EPS) a year ago, topping analysts’ estimates by two cents. Operating margins, excluding costs related to Exelis’ spinoff from ITT Corp. [ITT] last year, were 7.9 percent, up nearly 4 percent.
Company officials didn’t single out the particular contract it has with the U.S. government in Afghanistan other than to say that a large part of the work is fixed-price and it has been able to drive productivity improvements to gain leverage.
Sales in the quarter decreased 7 percent to $1.4 from $1.5 billion, in line with the company’s expectations, as both operating segments saw declines.
In the C4ISR Electronics and Systems segment, sales were off as expected on radios, jammers and domestic nigh vision equipment while operating income fell on lower volume and a sales mix weighted toward new product lines.
At the Information and Technical Services segment, the sales decline was driven by less work on a large Middle East services contract, which is moderating to more sustainable levels. Income was way up on the Afghanistan-related work and the air traffic management programs.
For the year, Exelis still estimates sales between $5.4 billion and $5.5 billion with expectations near the high end of the range. Earnings are expected to be between $1.80 and $1.86 EPS.
Orders in the quarter were $1.2 billion a 7 percent gain from a year ago but still representing less than one on a book-to-bill ratio. Backlog at the end of June stood at $10.5 billion, $800 million less than at the end of the first quarter. Funded backlog dropped $100 million between the first and second quarters to $2.8 billion.
Free cash for the quarter was a $141 million outflow, although the company is maintaining guidance for the year above $200 million, including dividend payments.
Japan Awaits Conclusion On V-22 Mishaps
Japanese Defense Minister Satoshi Morimoto said recently his country is awaiting the outcome of investigations into recent crashes of two V-22 Ospreys before it will sign off on allowing U.S. Marines to operate the aircraft on Okinawa.
Morimoto said Japan will work closely with the United States in reaching any decision about operations for the dozen V-22s that arrived in July. The Marines were allowed to deploy the V-22s but under the condition that they not engage in operations until inquiries into the accidents were completed and Tokyo is satisfied they are safe to fly.
“The United States will give us the report of the investigations with regard to what happened in Florida and Morocco as soon as possible, and until we confirm the safety of it the United States will refrain from flying the Osprey,“ Morimoto said through a translator at a Pentagon press conference with his U.S. counterpart, Leon Panetta.
Panetta said he expects the study on the accident to be complete within a month and presented to the Japanese government and in the meantime the Marines will refrain from flying the V-22 based on Okinawa in the “short term.”
Panetta said the V-22s are crucial for extending the reach and response time of Marines in the Asia-Pacific region, from anything from military contingencies to disaster relief. Panetta said the tilt-rotor aircraft has proven to be safe.
“The Osprey is a critical aircraft,” Panetta said.
Okinawa residents, historically weary of the Marine presence on the island, are worried the Ospreys pose a safety hazard, and that concern grew after an April crash of a Marine Corps version, the MV-22, in Morocco that killed two Marines. That was followed by an accident in Florida involving an Air Force version known as the CV-22. Four people were injured.
The Pentagon has staunchly defended the safety record of the aircraft that have been deployed to Iraq and Afghanistan, and other countries. Ospreys can occasionally be seen in the skies above Washington.
The aircraft are built by a partnership between Boeing [BA] and Bell Helicopter, a unit of Textron [TXT].
The image of the aircraft has continued to be plagued by problems dating to its development in the 1990s that involved several fatal accidents and caused the program to be put on hold. The Pentagon has since maintained that the problems were worked out and the Ospreys are now among the safest in the U.S. fleet.
Morimoto was to fly in a V-22 following the press conference.
Maersk Acquires Ship Operator With MSC Contract
Maersk Line, Limited (MLL), which serves the U.S. government through the operation of flagged shipping vessels, recently said it has acquired 3PSC, which builds and operates special mission ships for the Military Sealift Command.
Terms of the deal were not disclosed.
3PSC, which is based in Florida, operates six vessels and has a seventh under construction that is expected to be delivered later this year or early in 2013. Virginia-based MLL has 24 U.S. flag container ships, manages 36 water craft for the Army, has a partnership for the operation of four roll-on and roll-off vessels, and also operates several government-owned special mission ships and maritime prepositioning ships.
“Through the acquisition of 3PSC, MLL will continue its tradition of providing outstanding ship operation and maintenance services to the Military Sealift Command,” John Reinhart, MLL’s president and CEO, said in a statement.
MLL plans to integrate 3PCS operations into its Norfolk, Va., headquarters later this year. 3PSC has about 20 employees and its founder and CEO Gary King will leave the company as part of the deal.