Bloomberg l Boeing Lobbies for $2 Billion in Jets as Lockheed Delayed

March 30, 2012 § 3 Comments

Boeing Co. is pressing U.S. lawmakers to back production of as many as 37 additional Super Hornet fighter jets valued at about $2.5 billion, as the Pentagon delays Lockheed Martin Corp.’s new F-35.

Boeing is lobbying for a $60 million increase in the Navy’s fiscal 2013 budget for advance purchases of materials to keep building F/A-18 E/F Super Hornets beyond 2015. The money would avert a shutdown of the fighter’s assembly line and might help reduce a shortage in jets the Navy needs, according to a document the company distributed on Capitol Hill.

Current Navy plans call for completing funding for the Super Hornet program in 2014, with deliveries of planes continuing through 2015. Boeing’s supporters in Congress are seizing on budgetary and production delays for Lockheed (LMT) Martin’s new F-35, the Joint Strike Fighter, as a rationale for buying more Super Hornets.

Adding Super Hornets would be “a bargain to the Navy,” said Democratic Senator Claire McCaskill of Missouri, where Boeing builds the Super Hornet in its St. Louis plant.

“We need the jets on the carriers,” McCaskill, who serves on the Senate Armed Services Committee, said in an interview. “Obviously it is much less expensive than the JSF, and the JSF is way behind.”

Super Hornet Jobs

The Super Hornet program supports 100,000 direct and indirect jobs and has 1,900 suppliers across the U.S., according to Boeing’s document circulating on Capitol Hill. Among suppliers are Northrop Grumman Corp. (NOC), which makes the aft and center fuselage; General Electric Co. (GE), which makes the engines; and Raytheon Co. (RTN), which makes the radar.

Chicago-based Boeing, the world’s largest aerospace company, has fought to remain a producer of U.S. military tactical aircraft alongside Lockheed Martin. Bethesda, Maryland- based Lockheed, the world’s largest defense contractor, is building versions of the F-35, the Pentagon’s costliest program, for the Air Force, Navy and Marine Corps.

In February, Defense Secretary Leon Panetta proposed delaying the purchase of 179 F-35s beyond 2017 to save $15.1 billion as the Pentagon seeks to cut $487 billion from its budget over the next decade. The first 63 F-35 fighters are exceeding their combined target cost by $1 billion, and aircraft deliveries are on average more than a year late, according to the Government Accountability Office. Full-rate production has been delayed five years, according to GAO testimony to Congress on March 20.

F-35 Development

Michael Rein, a Lockheed spokesman, cited in an e-mail yesterday a statement by Panetta that the Defense Department is “100 percent committed to the development of the F-35.”

The Navy’s program for the Super Hornet, the most modern version of the aircraft carrier-based F/A-18, calls for 565 aircraft. Boeing says it will shut down its St. Louis production line unless there are additional planes, leading to a loss to the U.S. industrial base, according to the company document distributed to Congress.

Boeing currently has a multiyear contract ending in fiscal 2013 and valued at $5.3 billion for 124 aircraft, including an electronics-jamming version of the aircraft called the Growler. The final delivery for aircraft that the Navy will buy in 2013 will come in 2015, according to Defense Department budget documents.

Multiyear Contract

Navy leaders would like to extend the multiyear contract and buy 13 more of the latest F/A 18 models in 2014, according to March 20 congressional testimony submitted by Navy officials including Vice Admiral Mark Skinner, the principal military deputy to the assistant secretary of the Navy for research, development and acquisition.

For fiscal year 2013, the Navy requested about $30.2 million in advance procurement of materials for the aircraft, according to Defense Department documents.

Boeing wants the additional $60 million for advance procurement of 24 more aircraft in the budget that Congress will write in coming months, according to the document circulated in Congress.

Continuing with a multiyear contract “is going to save us a lot of money,” McCaskill said.

Cost Projections

The Pentagon projects the current multiyear contract for the Super Hornets will save $852.4 million compared with procuring aircraft through annual contracts. The “flyaway” cost of a Super Hornet averages $67 million this year, according to Pentagon budget documents. The flyaway cost doesn’t include research and development, support and training equipment, technical data or spare parts.

Boeing also wants Congress to put language in its annual defense authorization measure encouraging the Navy to keep the production line open to meet future needs.

The Super Hornet “offers unmatched capability, availability and affordability for naval aviation,” Boeing spokesman Sean McCormack said in an e-mailed statement. The fighter offers “date-certain deliveries, cost-certain production and proven combat capability,” McCormack said. McCormack declined to comment on the company document circulated on Capitol Hill.

Combat Missions

Super Hornets and older Hornets have conducted more than 148,000 combat missions since the terrorist attacks of Sept. 11 and continue to provide support to deployed U.S. troops, according to the Navy. Two Super Hornet versions — the single- seat E model and the two-seat F model — have been in service with the Navy since November 1999.

The Super Hornet “provides great leverage for those that are building the Joint Strike Fighter,” Admiral Jonathan Greenert, the chief of naval operations, told members of the U.S. House Appropriations committee this month. “I think that we need to keep an eye on it.”

The Navy and the Marine Corps, which is part of the Department of the Navy, each operate hundreds of strike fighters, aircraft that can conduct both air-to-ground and air- to-air operations. F/A-18s are the principal strike fighters operated by the Navy and Marines, according to the Congressional Research Service.

Retiring Older Planes

The Navy plans to retire older versions of the F/A-18 and shift to a combination of Super Hornets and carrier-based F-35s. The Marines are seeking a strike-fighter fleet made up solely of the F-35 version designed for short takeoffs and vertical landings and carrier-based jets once it can no longer extend the life of its Hornets and Harrier aircraft. The Marine Corps is looking at ways to keep its AV-8 B Harriers flying for as much as 20 more years, according to Skinner.

The Navy estimated last year that it sees a fighter shortage for its 11 aircraft carriers starting in 2015. Pentagon officials, including Panetta, said last year that the Pentagon needed to buy more Super Hornets as a hedge against delays in F- 35 production.

The Navy projects its shortage of strike aircraft to “remain below a manageable 65 aircraft through 2028, with some risks,” said Captain Cate Mueller, a Navy spokeswoman. The shortage is affected by use of the aircraft fleet and deliveries of fighter jets as well as the Navy and Marine Corps force structure, according to Mueller.

“The Department of the Navy continues to meticulously manage the fatigue life and flight hours of our tactical aircraft,” Mueller said in an e-mailed statement. The Navy “continues to evaluate all options to manage the strike fighter inventory,” she said.

By Roxana Tiron

March 29, 2012

Bloomberg l Boeing Lobbies for $2 Billion in Jets as Lockheed Delayed

Aviation Weekly l Boeing Looks At Room For Growth In Charleston

March 29, 2012 § Leave a comment

Boeing is looking to buy rights to additional land for further expansion of its manufacturing operations in North Charleston, S.C., as it ramps up activity across North America to cope with the ongoing surge in civil airliner work.

“There’s a lot of expansion because we have a lot to build,” says Boeing Commercial Airplanes President James Albaugh. ”We’re going to grow here in Puget Sound. We’re going to grow in Charleston. We’re going to grow in Salt Lake, in Winnipeg,” says Albaugh. “Production is 40% up over the next several years, so we need to expand.”

Albaugh, who was commenting as Japan Airlines took delivery of its first two 787s, denies reports that Boeing is planning an additional production line in North Charleston. The 240-acre site, which is due to see the official roll-out of the first completed aircraft for Air India at the end of April, is not currently set for additional growth, explains Albaugh.

“We have no plan to do that,” he says. “But you know, you need to anticipate anything that might come along,” adds Albaugh, “I don’t think you need to read too much into that, other than that we have rights to some land out there.” The site is in the process of ramping up to produce three 787s per month as part of Boeing’s overall goal of 10 per month by late 2013.

The reports emerged last week during an event at Charleston International Airport at which plans were presented for a new cargo terminal. At the meeting, Chip Limehouse, chairman of the Charleston County Aviation Authority, reportedly commented that Boeing had requested rights to purchase a large tract of undeveloped land close to its existing site.

Despite the slower-than-expected rate of 787 deliveries so far in late 2011 and early this year, Albaugh remains confident that overall deliveries will pick up. “I’ve seen nothing to lead me to believe we won’t deliver what we said we would.” The 787 production rate officially hit the 3.5-per-month rate on March 1. “With each rate break every time we do it I feel better,” he adds. Boeing delivered three 787s in 2011, and two aircraft were handed over to JAL in March. Albaugh’s comments come despite acknowledgments from launch customer All Nippon Airways (ANA) that its planned 787 deliveries continue to lag behind schedule.

Photo: Guy Norris

Mar 29, 2012

By Guy Norris

Aviation Weekly l Boeing Looks At Room For Growth In Charleston

DoD Buzz l H-I pitches ‘Patrol Frigate’ as cheaper alternative to LCS

March 29, 2012 § Leave a comment

Many others have argued this case, but now shipbuilder Huntington-Ingalls Industries is making the pitch all on its own: A new “Patrol Frigate” version of its National Security Cutter would be as good as – or better than – the Navy’s littoral combat ships, it says.

In a commentary posted Wednesday on DoDBuzz, H-I’s customer relations director Patrick Stadt described how the company had commissioned computer modeling that put a naval version of its ship up against a notional LCS in a series of small-warship, “LCS-type” missions.

The twist: The simulation accounted for LCSes both with and without their interchangeable mission equipment – the offboard aircraft, boats and submersibles that the ships need to locate mines, hunt submarines, and take almost all the missions for which LCS was built. The results, given their origins here, will not surprise you, but here they are just the same:

The analysis determined that out of the 19 missions traditionally performed by small surface combatants, seven indicated the Patrol Frigate was the preferred ship. When compared against a non-missionized LCS, (just the seaframe, no mission systems), the Patrol Frigate was the preferred ship in 15 missions.

To compare operational costs (fuel and personnel), six modeled scenarios were run based on proposed scenarios in the [Center for Strategic and Budgetary Assessments] paper, ranging from securing loose nuclear weapons to maritime interdiction. For those two scenarios, the Patrol Frigate reflected an operational savings of approximately 29 percent and 33 percent, respectively, when compared to an LCS-type ship. In all six scenarios (the two above and convoy protection, maritime stability operations, counter piracy/counter crime, and humanitarian assistance/disaster response), the Patrol Frigate reflected an operational savings of approximately 26 percent.

The modeling and simulation performed supports the premise that the Patrol Frigate would make an affordable and strong contribution to the low-end of a traditional threat spectrum. By constructing a mixed fleet of high-conflict and low-conflict capable ships, navies around the globe can glean significant budgetary savings while better aligning ship capability with anticipated mission scenarios.

Yes, the deck is stacked when you pit a fully capable ship against one that’s not operating as intended, but it’s also possible that the ongoing technical problems with the LCS mission modules could mean the Navy has no choice but to field ships without some of the equipment it’s been counting on. For its first trip to Singapore next year, the littoral combat ship USS Freedom is set to carry a “demonstration” module, as opposed to a real one.

The problem for H-I is that no matter how many times or how many ways it makes the pitch for its “Patrol Frigate,” it can’t seem to get any traction. The Navy’s mind is made up – Navy Secretary Ray Mabus confirmed again to Congress this month that the service is locked into its program for 55 LCSes. Even though LCS has its critics on the Hill, no one, as yet, has begun to seriously champion the frigate.

Why the silence? Maybe the Navy pleased everyone in 2010 when it selected LCS designs by both competitors, Lockheed Martin and Austal USA. Happy vendors mean happy lawmakers, and twice the potential opposition to another small ship muscling in on the territory of two satisfied camps.

H-I has also pinned its hopes on the potential for international sales of the “Patrol Frigate,” forecasting a global demand for as many as 215 frigate-sized ships over the next 20 years. So far, that evidently has not translated into real orders. Don’t look for the sales pitch to go away, though: The company is trying to scare up work as soon as it can because the end of production on the National Security Cutter is in sight, and when it winds up, the “Patrol Frigate” concept probably will, too.

By Philip Ewing

March 28th, 2012

DoD Buzz l H-I pitches ‘Patrol Frigate’ as cheaper alternative to LCS

Aviation Week l US Army To Launch JMR Mission-System Studies

March 28, 2012 § Leave a comment

Bids are due April 1 for trade studies to define the mission-system capabilities and technologies for the U.S. Army’s planned Joint Multi Role (JMR) rotorcraft.

The Aviation Applied Technology Directorate (AATD) is planning a two-phase JMR technology demonstration, beginning in fiscal 2013 with air-vehicle development and flight testing.

Mission-system development and testing are planned to begin two years later, in fiscal 2015, in recognition that electronics advance faster than airframes, rotors, engines and drive systems.

Phase 2 will kick off with the award of multiple contracts for mission-system effectiveness trades and analyses — equivalent to the air-vehicle configuration studies already under way at AVX Aircraft, Boeing, Bell-Boeing and Sikorsky.

As with the air-vehicle studies, mission-system bidders are being asked to identify those “game-changing” technologies that need maturing through flight demonstration to be ready for JMR full-scale development beginning early in the next decade. There are several supporting technology-development efforts under way this year. “We are having to do some things in parallel, which is not ideal,” says Keith Arnold, team lead for teaming and intelligence within AATD’s systems integration division.

The foundation for the JMR mission system is the open-system Joint Common Architecture (JCA), based on the Future Airborne Capability Environment reusable-software standard developed by government and industry.

“JCA is going to be key to any future aircraft,” Arnold says. “It has got to work if we are to change the way Defense Department aircraft are built and bought, and it’s a big part of what JMR is about.”

A JCA demonstration is planned for fiscal 2014-15. This will feed into the JMR Phase 2 demonstration, “which will develop specific pieces of the mission system and take others that exist and make them work together in a new architecture and airframe,” Arnold says.

“We’d like to put the mission system on one of the air-vehicle demonstrators, but that injects risk,” he says. “So only the stuff that has to be will be tested in flight on the Phase 1 air vehicles. What we can, we will test in surrogate vehicles or on the bench.”

Also feeding into Phase 2 are AATD research programs developing advanced cockpit concepts and crew decision-aiding tools. “We are trying to take an integrated look at the battlespace. This aircraft will not be operating alone, but in a team as part of a larger battle,” Arnold says.

Decision-aiding work is aimed at “answering basic questions about the role of the human in future intelligent cockpits,” he says. “We have aircraft that can fly themselves, so what is the optimum allocation of tasks between the human and the machine?”

March 28, 2012

By Graham Warwick

Aviation Week l US Army To Launch JMR Mission-System Studies

WRWR l New fighter production could be casualty of defense drawdowns

March 27, 2012 § Leave a comment

Fighter Generations - By David Cenciotti

Fighter Generations - By David Cenciotti

The nation’s ability to develop a “generation six” fighter jet could be the first casualty of defense budget cuts.

Fred Downey, Aerospace Industries Association vice president for national security, told an Air Force Association audience earlier this month that the most threatened specialty in the defense industrial base is manned fighter aircraft design.

“Maintaining such design talent is expensive and there are no new manned fighters in planning, let alone on the drawing board,” Downey said.

The U.S. has the edge in generation five fighters, but that edge could be lost over time. The Pentagon has ended the abbreviated production of the F-22 fighter while F-35 development continues to suffer criticism due to cost overruns.

Pentagon officials have mentioned the potential of a “generation six” fighter, but no serious commitment has been discussed publicly.

Downey said companies cannot retain “military-unique” design and production capabilities without the prospect of demands from the Defense Department.

“Our boards won’t let us and our investors won’t let us if there is no market or no profit,” he is quoted in an AFA account of his remarks. “Industry is most concerned about the evaporation of its skilled workforce which is not easy to reconstitute.”

He stressed that reconstituting that capability in the wake of a bad Pentagon decision is “problematic at best.”

By Gene Rector

March 27, 2012

WRWR l New fighter production could be casualty of defense drawdowns

Market Watch l Aerospace & Defense Industry Poised for a Mergers & Acquisitions Boom: Deloitte

March 26, 2012 § Leave a comment

Strategic pre-deal planning, execution are key to a successful transaction

Following years of uncertainty, the aerospace and defense (A&D) industry is on the brink of a mergers and acquisitions (M&A) boom, according to a new Deloitte report. Specifically, the study shows many companies are well-positioned to take strategic advantage of consolidation opportunities, particularly at the supplier level, due to pent-up demand, available capital and favorable valuations.

And, with the A&D industry facing another year of expected flat performance, many executives are making it a high priority to strategically approach M&A in order to avoid decline. However, as recent research on M&A activity across multiple industries shows, with as many as 70 percent of transactions failing to create long-term value, A&D leaders cannot afford to be wrong in their M&A pursuits.

Deloitte’s report, “Three Keys to M&A Effectiveness for A&D Executives: Capturing the Full Value of Strategic Acquisitions,” underscores the importance of careful planning prior to execution, and how it can prevent failure and ensure activity results in substantial growth for a company.

“Over the past ten years we’ve seen the A&D industry stockpile cash as a result of success in continued operations, exhaustion of other cash deployment activities and economic uncertainty,” said Marty Hartigan, principle, Deloitte Consulting LLP and report co-author. “M&A activity looks more appealing now as a cash deployment strategy after years of stock repurchases, dividend increases and discretionary contributions to pension obligations.”

Drawing on industry trends, the Deloitte report suggests A&D executives consider the following three key guidelines to ensure M&A effectiveness and maintain performance throughout the transaction:

-Manage the demand of integration by limiting the total number of acquisitions

-Make M&A central to a company’s growth strategy by implementing meaningful acquisitions

-Target companies with business models that enhance the acquiring company’s market position

According to the Deloitte report, following these guidelines will enable companies to take full strategic advantage of new M&A opportunities and ensure they are prepared for the opportunities of the future that focus on operational and specific-supplier segments. This is in stark contrast with the defense contractor mega-mergers of the past. Modern segment opportunities include “new reality” technologies such as cyber, unmanned, Intelligence Surveillance and Reconnaissance (ISR), precision attack, mission assurance, and logistical and energy-related services. Capitalizing on these opportunities may result in greater industry effectiveness and better competitive positioning of the company, the study notes.

“Recent U.S. Department of Defense budget cuts have brought renewed focus to competitive positioning,” said Tom Captain, vice chairman, Deloitte LLP and U.S. aerospace and defense leader. “Defense contractors need a strategy for growth to fill the pending revenue gap. Carefully planned and executed acquisitions can provide a transformational opportunity to gain new customers and to get into new products and services in this post-Iraq war era.”

The Deloitte report also provides insight on how to tackle integration challenges specific to the A&D industry, including concerns that overhead harmonization hurts competitiveness, integration can reduce overall company specialization, and the belief that the target’s intrinsic value is sensitive to integration activities.

About Deloitte’s Aerospace & Defense Group Deloitte’s A&D sector focuses on the top issues facing the industry. Deloitte A&D practitioners have deep industry experience and are actively involved in various segments of the industry, including: M&A, advanced technology programs, airplane program launches, and acquisition reform and economic assistance packages. For more information about Deloitte’s Aerospace & Defense group, please visit: http://www.deloitte.com/us/a&d .

SOURCE Deloitte

March 26, 2012

Market Watch l Aerospace & Defense Industry Poised for a Mergers & Acquisitions Boom: Deloitte

Aviation Week l Geospatial Intelligence Goes From Land to Sea

March 21, 2012 § Leave a comment

Maps are clearly a vital tool for any military commander, but the days when a two-dimensional, printed representation of an area will suffice have long since passed. Dynamic mapping of the battlespace is not new, but 21st century technologies are revolutionizing the collection, dissemination and analysis of tactical intelligence.

At Defense Geospatial Intelligence here in January, the annual conference for the defense and security geoint community, participants mulled technologies and techniques from simple refinements to enable easier comprehension of an area of operations, to radical concepts intended to predict events based on analysis of patterns in fused geolocated data sets.

Col. Mark Burrows, commander of the U.K.’s Joint Aeronautical and Geospatial Organization, explained that recent experience has highlighted crucial areas in which geoint operators have to upgrade their skill sets. “We didn’t really do geospatial business very well in urban areas in the past,” Burrows says. Pointing to a photograph of high-rise tower blocks next to villages, he says it is “the sort of thing we’re going to have to put on a map” but in a way that can be understood. “It’s probably going to be in 3-D, I suspect, especially if you were a helicopter pilot and needed to know how to fly through it. We have the scope to do rapid 3-D modeling, but we need to find a way to get that in the field quickly. Another one is littoral [operations]. We will have to do it again, we may have to do it at very short notice, and we are going to have to work onboard ships a bit more.”

Libya quickly is turning into a classic case. “Timelines were very dynamic in Libya,” recalls Cpl. Ross Colwell, a geo support sapper who was deployed to support Apache crews and Royal Navy personnel on board HMS Ocean. “The main product I created was the rebel frontline; it could change by the hour, so I had to get products out pretty much as soon as I could get them, generally within half an hour. On board HMS Ocean the distribution of products was quite simple—mainly it was hard copy. But we require improved dissemination techniques [to send products off-ship].”

Indeed, while historically geoint has been land-based, the maritime domain is becoming an increasingly important geoint domain, driven by the resurgence of piracy, which brings greater urgency to the need for accurate intelligence about shipping movements. Also, year-round access to formerly ice-bound shipping routes demands real-time updates and high-grain detail to enable safe passage through constantly changing sea lanes.

The Italian company e-Geos, owned jointly by Finmeccanica and Thales, can collect two complete sets of images of the Northwest Passage within 17 hr. from its Cosmo-SkyMed satellite constellation. Analysis of images taken minutes apart can help calculate the speed of the movement of ice and thus aid route prediction.

ExactEarth of Cambridge, Ontario, has built a lower-orbiting constellation specifically to map shipping movements over oceans. At 30 km (18.6 mi.) the satellites can receive signals from shipboard Automatic Identification Systems (AIS), enabling real-time intelligence on any vessel deviating from its planned route, and flagging the location of ships that have their AIS turned off.

The benefits of geoint are also apparent to homeland security and police forces. GeoEye of McLean, Va., a supplier of satellite imagery, acquired the predictive analysis company Spadac in 2010 and now supplies more than 40 customers with predictive geospatial intelligence. The software analyzes geo-tagged data to discover relationships between events and features in the physical and human environment; a proprietary algorithm then predicts future occurrences. The company has demonstrated prediction of phenomena as varied as burglaries and the arrival of invasive species.

Geoint is also an area that seems particularly open to innovations from outside the traditional defense establishment. Santa Clara, Calif. -based Nvidia, known for high-speed graphics processing cards used mainly to improve the game-playing power of consumer PCs, says its cards are a good fit for the intensive data processing frequently found in geoint tasks. Not only could the processing power assist in enhancement of imagery received at a base station, but exponential increases in processing capability on board a satellite or UAV could speed up intelligence dissemination by ensuring only the most relevant imagery is sent down to the ground.

By Angus Batey

March 21, 2012

Aviation Week l Geospatial Intelligence Goes From Land to Sea

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