3-D Printing and Blockchain May Revolutionize Aircraft Part Production
Moog Inc., an aircraft-component maker, plans to reduce the time it takes to replace defective aircraft parts to a couple of hours by using a combination of 3-D printing and blockchain. Moog aims to reduce supply chain inefficiencies by reducing paperwork, expediting the purchase process, and offering print-on-demand services. In a test, Moog Inc. validated and installed an aircraft part in a few hours, a process that would typically take weeks using traditional methods.1
Extended Service for Warthog Aircrafts
Lawmakers in Washington extended the service of the A-10 “Warthog” aircraft into the 2030s. A-10s, used to send weapons to high-conflict target areas, are now capable of carrying four Small Diameter Bombs (SDBs) instead of the traditional one on each station due to upgrades last summer. Plus, the host of other enhancements to targeting pod capability, data speed, and storage capacity make the A-10 an ideal supporter of the fifth-generation front line.2
Low Cost Jet Trainer Appeals to Budget-Constrained US Air Force
In budget-constrained times, the new low-cost Boeing/Saab T-X trainer could be the key to meeting U.S. Air Force’s (USAF) national defense strategy. The T-X model is far more cost-effective than operating fourth- and fifth-generation fighters in low-level missions. The “Air Force We Need” initiative suggests increasing fighter squadrons from 55 to 62. The budget for T-X aims to purchase $19 billion of new aircrafts and training systems, of which The Boeing Company won $9.2 billion.3
Cost Effective Solution to Launching Missiles
On December 12th, the U.S. tested its first land-based, intermediate-range ballistic missile at the Vandenberg Air Force Base in California. The technology would be a more cost-effective solution than launching missiles from the air- and sea-based variants. This is the first U.S. flight of a land-based ballistic missile since its banning in a 1987 treaty – a past arms control accord between the U.S. and Russia to stop nuclear proliferation. The U.S. withdrew from the treaty in February after alleging a Russian cruise missile breached its terms.4 5
US Company Charged With Selling Illegal Chinese Surveillance
Aventura Technologies Inc. plus seven current and former employees were charged with unlawful importation, money-laundering and other crimes due to their involvement with selling illegal Chinese surveillance and security gear. The alleged offense was noticed by a USAF service member who found Chinese characters on his body camera screen. Brooklyn U.S. attorney’s office said that Aventura opened serious cybersecurity risks to the U.S. government and private consumers.6
UTC-Raytheon Merger Approved by Shareholders
United Technologies Corp. and Raytheon Co. shareholders approved the $135 billion merger between the two companies on October 11, pending regulatory approval. The new company will challenge established industry players in commercial jetliners and defense, including Boeing Co. and Lockheed Martin. United Technologies shareholders will own about 57% of the new entity.7
Hypersonic Weapons to Expand With Merger Announcement
Leidos Holdings Inc. announced the pending acquisiting of Dynetics, Inc. for $1.65 billion in cash. The deal aims to meet the Pentagon’s mission of accelerating the development of hypersonic weapons to the battlefield. Dynetics expects to add $1 billion in revenue, $110 million in EBITDA, and $40 million in one-time related transaction fees upon closing in 2020. The new company will allow Leidos to join in the growing hypersonic, space, and weapons markets and broaden its footprint with customers in related U.S. government agencies.8
Space Force Added to US Air Force Department
President Trump signed the fiscal 2020 defense authorization bill on December 20, adding the Space Force as the sixth military service under the Department of the Air Force. The bill allocates $40 million to establish the new division in the fiscal year 2020. 16,000 active duty and civilian personnel from the Air Force Space Command will be assigned to the Space Force but continue to be airmen for the U.S. Air Force for the time being. The Space Force is part of the President’s plan for the U.S. to be the leader in space and protect its national interests.9
US Aerospace and Defense Financing
The U.S. Export-Import Bank (Ex-Im) is re-authorized for an additional seven years to prioritize aerospace and defense financing and U.S. exports as per the year-end spending package signed into law on December 21, 2019. The bill intends to counter China’s global influence by issuing U.S. export credit, to compete against that of China’s. Ex-Im plays a critical role in financing the satellite industry.10
Small Contractors Struggle With the Pentagon’s Network Security Standards
Small companies and contractors struggle to meet new network security rules by the Pentagon, according to the department’s study. Hackers prefer to target a small contractor because of its weaker cyber defenses, and it often carries large amounts of valuable data given by larger companies. Small companies that fail to comply with the Pentagon’s network and security standards run the risk of losing business from it.11
Widespread Industry Impact of Boeing’s Paused Production
Almost 600 suppliers and hundreds of subcontractors are experiencing financial pressures after Boeing Co.’s decision to pause production of its 737 MAX aircraft at the beginning of January 2020. Boeing remains unclear about its plans to purchase from suppliers, rattling the company’s supply chain. Large manufacturers of the MAX’s components, including General Electric, Safran, Spirit AeroSystems and Woodward, all saw their stock price decline. Further delay in the MAX production will cause considerable pain to Boeing’s already struggling supply chain.12
Largest Transactions Closed
- Ontic Engineering and Manufacturing, Inc.
- CVC Capital Partners Limited
- AIM Aerospace, Inc.
- Sekisui America Corporation
- Arotech Corporation
- Greenbriar Equity Group, L.P.
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.
EBIT - Earnings Before Interest and Taxes