Back To Resources
    Subscribe to PCE Communications
    Choose Your Subscription

    Aerospace, Defense & Government Contracting Q2 2020

    Q2 2020 Aerospace Defense Government

    Industry Trends

    Aerospace Manufacturers Drastically Cut Jobs During Pandemic

    Aviation giants, Airbus SE, and Boeing Co. have notified shareholders that both companies intend to shed around 15,000 employees due to the COVID-19 pandemic’s effect on global air travel. Airbus stated the job cuts, which account for approximately 11% of the total workforce, will occur at the company’s manufacturing sites in France and Germany. Boeing has indicated a similar policy as the company plans to lay off roughly 10% of its 160,000 global employees. According to Airbus, air-traffic is not anticipated to return to pre-pandemic levels until at least 2023.1

    Delta Retires Boeing 777 as Global Travel Declines

    Delta Air Lines Inc. has said that it will retire Boeing Co.’s 777 aircraft from its fleet by the end of 2020. The Boeing 777 is one of Delta’s largest planes and traditionally operates long-haul international routes. The 777’s retirement comes as no surprise as global air travel has significantly declined due to the coronavirus pandemic. According to Delta CEO Ed Bastian, the company is currently burning roughly $50 million a day, a figure in which the Atlanta-based airline intends to reduce to zero by year-end.2

    SpaceX Becomes First Private Company to Send Astronauts into Space

    Elon Musk’s SpaceX became the first private company to send astronauts into space in late May. The successful launch is a historic achievement as it reduces the dependence of U.S. astronauts on Russian spacecrafts. SpaceX was founded by Musk in 2002 and has been a co-recipient of more than $7 billion in taxpayer funding.3

    Raytheon Aims to Cut $2 Billion in Costs

    Raytheon Technologies Corp. announced an initiative to cut $2 billion in costs, suspend share buybacks, and furlough employees within its commercial aviation business. The U.S. defense contracting giant, who only recently finalized its merger with United Technologies Corp., plans to implement these changes immediately and sees further reductions down the road. Raytheon CEO Gregory Hayes stated the newly combined company still intends to return upwards of $20 billion to shareholders but has extended the time frame to four years from a previous estimate of three years.4

    Lockheed Remains Unphased by the Pandemic

    American defense contracting powerhouse, Lockheed Martin Corp., has shown no sign of instability during the COVID-19 pandemic. Since the start of the crisis in mid-March, Lockheed Martin has hired 8,300 employees and intends to hire an additional 3,200 by year-end. The defense contractor has also sent around $1.1 billion in accelerated payment to support its vast network of suppliers during the pandemic.5

    Defense Contractors Rebound as Pandemic Restrictions Scale Back

    Defense contractors are getting back to work as the U.S. begins to scale back restrictions induced by the COVID-19 pandemic. According to the Pentagon’s top acquisition official, Ellen Lord, the industry has seen an enormous recovery with only 33 companies in the industrial base that remain closed for business.6

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Dynetics, Inc.
    • United Technologies Corporate
    • $93,157.47
    • Meggitt Training Systems, Inc.
    • Pine Island Capital Partners
    • $146.00
    • Chemring Ordnance, Inc.
    • Nammo AS
    • $17.00

     

    Source S&P Capital IQ as of 7/6/2020 and PCE Proprietary Data

    Subscribe to PCE's Quarterly Industry Reports

    Contacts
    David Jasmund

    David Jasmund

    Orlando Office

    407-621-2111

    Contact Me Now
    Michael Poole

    Michael Poole

    Orlando Office

    407-621-2112

    Contact Me Now

    Data Assumptions

    This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

    Glossary

    EBIT - Earnings Before Interest and Taxes
    EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
    LTM - Last Twelve Months
    TEV - Total Enterprise Value

    Sources:

    1. Alderman, L., “Airbus, Expecting Long Slump in Air Travel, Will Slash 15,000 Jobs,” The New York Times, June 30, 2020.
    2. Sider, A., Sebastian, D., “Delta to Retire Boeing 777 Fleet to Cut Costs Amid Coronavirus,” The Wall Street Journal, May 14,  2020.
    3. Pasztor, A., “Elon Musk’s SpaceX Readies First Astronaut Launch by Private Firm,” The Wall Street Journal, May 23, 2020.
    4. Cameron, D., Grya, T., “Raytheon Technologies to Cut $2 Billion in Costs, Furlough Staff,” The Wall Street Journal, May 7, 2020.
    5. Gould, J., “Lockheed paid suppliers $1.1 billion, added 8,300 jobs since pandemic,” Defense News, June 27, 2020.
    6. Mehta, A., “Nearly all defense companies have reopened from COVID-19,” Defense News, June 22, 2020.

    Please Share This

    PCE logo

    PCE Investment Bankers, Inc. - member FINRA & SIPC
    PCE Valuations, LLC    |    PCE Advisory, LLC

    SITE MAP

    OFFICES

    [PCE was] completely responsive to our needs and [was] always two steps ahead, leading us expertly through a very complicated process. - Dennis Buhring, Physician Associates

    Copyright © 2023 PCE Companies | Business Continuity | Privacy Policy | FINRA BrokerCheck | Whitelist PCE