December 9, 2022 | International, Naval
US Navy creates innovation center, advisory board to focus investments
A new Navy Innovation Center will work with industry and academia to ensure the service remains ahead of tech trends over the long term.
April 28, 2020 | International, Aerospace
Collapse of Boeing-Embraer deal could have major impact on C-390 Millennium’s future
By: Valerie Insinna
WASHINGTON — Boeing's termination of a $4.2 billion deal for a majority stake in Embraer's commercial aviation business could have widespread implications on the Brazilian firm's flagship military aircraft.
Boeing on Saturday announced that it would walk away from a joint venture that would give it an 80 percent stake in Embraer's commercial business, as well as a 49 percent stake in the company's C-390 Millennium cargo plane.
Although Boeing said that the company would maintain previous teaming agreements to support Embraer with marketing the C-390 internationally, analysts told Defense News that the vitriol between the two companies could portend a wider collapse of their collaboration in the military sphere.
“The future of the KC-390 without Boeing — or without a U.S. defense prime helping — isn't all that great,” said Richard Aboulafia, an aerospace analyst with the Teal Group. “It just seems like cooler heads should probably prevail.”
At Dubai Air Show last November, the companies announced the formation of a new entity known as Boeing-Embraer Defense set up specifically to proactively market the C-390 around the world — a step up from previous agreements that had Boeing in more of a hands-off role. The agreement gave Boeing a new plane that could compete head-to-head against Lockheed Martin's C-130, and gave Embraer the resources to match.
The big question now is whether Embraer seeks out partnerships elsewhere for either the KC-390 or its commercial business, said Byron Callan, an analyst with Capital Alpha Partners.
“I just wonder, is there something else or someone else that emerges in 2021 or 2022 that ties up with Embraer. Could that be Chinese? Indian? Another country, company or entity outside of the United States?” he said. “That would be a more interesting broader change for aerospace, that has military implications as well, too.”
It's even possible that Airbus could try to usurp Boeing's role as Embraer's partner on the C-390, said Callan, who noted that Airbus — like Boeing — does not offer a medium cargo transport aircraft that directly competes against the C-130.
A good relationship gone bad
On Monday morning, Embraer announced that it had filed arbitration proceedings against Boeing, capping off an angry back-and-forth between both companies that spanned the weekend.
When Boeing announced it was walking away from the deal on Saturday, the company claimed it had “worked diligently over more than two years” to finalize the transaction, but that Embraer left some conditions of the master transaction agreement, or MTA, unresolved.
"It is deeply disappointing,” said Marc Allen, Boeing's president of Embraer Partnership & Group Operations. “But we have reached a point where continued negotiation within the framework of the MTA is not going to resolve the outstanding issues."
Embraer, however, issued a scathing statement of its own, asserting that it had fulfilled all contractual obligations and blaming the failure of the deal on Boeing's continued financial problems and the fallout from two fatal 737 MAX crashes.
“Embraer believes strongly that Boeing has wrongfully terminated the MTA, that it has manufactured false claims as a pretext to seek to avoid its commitments to close the transaction and pay Embraer the US$4.2 billion purchase price,” the company said.
“We believe Boeing has engaged in a systematic pattern of delay and repeated violations of the MTA, because of its unwillingness to complete the transaction in light of its own financial condition and 737 MAX and other business and reputational problems.”
Boeing's decision to break its agreement with Embraer makes sense from a financial standpoint, Cai Von Rumohr, a defense analyst with Cowen, wrote in an email to investors. Because of COVID-19's impact on the aerospace industry, $4.2 billion seems an inflated price for Boeing to pay to acquire a controlling stake in Embraer's commercial business, and terminating the deal may help to free up cash that Boeing needs in the near-term.
But while Von Rumohr said he believes Boeing and Embraer will continue to collaborate on the C-390, it will depend on whether the relationship can be salvaged.
“This issue is, how pissed off is Embraer now, and is this something they're likely to get over to continue with what was a teaming agreement that made a whole lot of sense for both parties?” Von Rumohr told Defense News.
Another major question is how the COVID-19 crisis effects worldwide defense spending, with implications for nations' domestic industries as well the international defense industrial base.
Callan noted that some countries who have ordered the aircraft such as Brazil or Portugal “are probably looking at different defense budget projections.
Aboulafia added that the dissolution of the partnership increases the likelihood that Embraer will need stimulus funds from the government of the Brazil to help fortify its commercial sector during the COVID-19 pandemic.
“That money could easily come out of defense spending, which would impact Embraer defense programs, particularly Gripen or C-390,” he said.
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May 6, 2019 | International, Aerospace, C4ISR
Thales Alenia Space and Maxar Consortium Achieve Significant Milestone for Telesat’s LEO Satellite Constellation
CANNES, France & WESTMINSTER, Colo.--(BUSINESS WIRE)--Thales Alenia Space, a Joint Venture between Thales (67%) and Leonardo (33%) and Maxar Technologies (NYSE: MAXR) (TSX: MAXR), have completed an important milestone for the Telesat LEO constellation. Our solution leverages both Maxar and Thales Alenia Space's experience in building LEO constellations and also integrates advanced technologies from Maxar's MDA business. The consortium has now significantly advanced their detailed, low-risk designs for the complete LEO system, including system optimization, requirements development, engineering trade-offs and technology prototyping to establish mature and compelling designs for Telesat LEO's space, ground and user terminal segments. As previously announced, Telesat selected the consortium of Thales Alenia Space and Maxar, as one of two contractors for its LEO system design phase to design an end-to-end communications system, including satellites, landing stations, user terminals, operations centers, and ground network. In January, the consortium, led by Thales Alenia Space, announced the success of the System Requirements Review. The Thales Alenia Space / Maxar design for Telesat LEO is based on the combined companies' proven experience, industrial capability and a strong supplier base for fully integrated communications satellite systems, including payload antenna design, on-board processing, optical inter-satellite links and LEO satellite production. This milestone is the result of fruitful and efficient teamwork between the two commercial companies. “Together with Maxar, we bring a strong expertise in integrated systems, high throughput payloads, advanced antennas and processors, as well as production heritage for constellations of high technology satellites. Leveraging the flight proven success of sophisticated constellations deployed by Thales Alenia Space, we are confident to enable Telesat LEO to deliver low-risk, breakthrough performance and affordability dedicated to broadband services around the world,” declared Martin Van Schaik, Senior VP Sales and Marketing Thales Alenia Space. “Achieving this milestone demonstrates the success of Maxar's close collaboration with Thales Alenia Space and highlights the progress we've made in our innovative and low-risk design for Telesat's LEO constellation. Our solution leverages both Maxar and Thales Alenia Space's experience in building LEO constellations and also integrates advanced technologies from Maxar's MDA business,” said Megan Fitzgerald, Maxar's Senior Vice President and General Manager of Space Solutions. “For over 60 years, Maxar has helped to address many of the world's most challenging communications requirements, delivering some of the most complex, powerful and highest capacity satellite systems, and building a better, more connected world.” The operations of DigitalGlobe, SSL and Radiant Solutions were unified under the Maxar brand in February; MDA continues to operate as an independent business unit within the Maxar organization. https://www.businesswire.com/news/home/20190506005173/en
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September 20, 2018 | International, Naval
NAVSEA: New Pentagon Strategy Putting Pressure on Private, Public Maintenance Yards to Deliver Ships on Time
By: Sam LaGrone VIRGINIA BEACH, Va. — The Pentagon's new focus on high-end warfare with sophisticated adversaries will put increased emphasis and pressure on Navy readiness, and the service's maintenance infrastructure needs to better in fixing ships on time, the head of Naval Sea Systems Command said on Tuesday. Taking cues from Secretary of Defense James Mattis' new National Defense Strategy, all the services are focused on dialing up readiness to meet a higher-level threat, Vice Adm. Tom Moore said during a keynote speech at the American Society of Naval Engineers (ASNE) Fleet Maintenance and Modernization Symposium. “The last year has had the biggest focus on readiness that I have seen in the 37 years I've been in the Navy, and that's on all levels. Navy leadership is talking about readiness every single day, from the [chief of naval operations] on down,” Moore said. “Right now we're not delivering on everything we need delivered, and going forth we really need to deliver, and the pace of change is only going to get faster.” According to Moore, the Navy's public yards are delivering ships on-time about 45 to 50 percent of the time, while private shipyards are getting ships out on time about 35 percent of the time. “It's important to keep in mind that I have 55 ships coming into maintenance availabilities in the private sector in 2019, and in 2018 only 35 percent ships I have in availabilities are expected to move on time,” he said. “Thirty-five percent is just not going to be good enough moving forward to meet the demands that fleet has today.” He indicated that the four public shipyards are improving. “We're starting to see some results. Last year we delivered all four carriers all on time. We stubbed our toe a little bit on Ike,” Moore said referring to the maintenance availability of carrier USS Dwight D. Eisenhower(CVN-69) that has almost doubled in length. Work on nuclear submarines has also lagged in public yards, he said. “All I have to do is look at Ike, Rhode Island and Ohio and Seawolf and some of the ships that are in the yard today to know that's still a challenge for us.” NAVSEA has a plan on the books to retool and refresh its four public yards over the next 20 years and has now turned its attention to the private yards: it needs to contract in a way that promotes more efficient work, and it needs more capacity through more drydocks. “There are people who argue with me that whether we have a capacity challenge or not, but all I do is look that only 35 percent of the ships are delivered on time, and the conclusion I draw is there are not enough people working on ships,” he said. “If we're going to be successful, we have to be able to provide a stable and predictable workload for industry, and we're going to have to be competitive.” NAVSEA is taking yet another look at how it contracts with private shipyards for maintenance, with a plan to modify the Multiple Award Contract/Multi-Order (MAC-MO) contract strategy that was meant to optimize cost for the Navy. “The consensus was, after two years of running with MAC-MO, I think we agree that strategy isn't delivering the results that we need,” Moore said. To improve the process, NAVSEA is working a pilot program that would bundle availabilities on each coast that would allow companies a more predictable set of work. “We'll get bids from industry and we'll be able to lay [our] chips on the table. We'll be able to look at the bids. We'll be able to look at who has capacity and who doesn't. We'll be able to look at, hey, it's important to keep an industrial base, and we'll be able to make decisions that are not solely based on price that will allow us to deliver our ships on time and give you a little more stable and predictive work,” Moore said. “My goal is eventually that we will eventually – on each coast – bundle availabilities six months at a time... so you can know at least what work you can have in the next six months and beyond.” The Navy is set to test the scheme with a three-ship pilot program for repairs of guided-missile destroyers USS Arleigh Burke (DDG-51) and USS Bulkeley (DDG 84) and amphibious warship USS Gunston Hall(LSD-44). With the increase in predictability for bundled MAC-MO contracts, the Navy hopes private industry will invest in infrastructure to handle the planned 355-ship Navy. “The acquisition strategy we have today doesn't incentivize industry to hire and make investments that I think they need to make,” Moore said. “I think that acquisition strategy is the root cause of what I would say was a lack of capacity in the private sector today.” In another bid to expand capacity, the NAVSEA is looking to certify drydocks to Navy standards. Moore said NAVSEA has been in touch with 12 shipyards who mostly don't do work on warships that are interested in having their drydocks certified for use for repair work. Moore said he's also looking to increase private industries ability to work on nuclear submarines. Currently, there are four submarines in repairs at public yards. Overall, Moore stressed the need to improve maintenance is growing as the Pentagon strives to be more dynamic and the service grows. “We're putting strain on the ships, we're putting strain on the men and women out there wearing the uniform that are out there at the tip of the spear, and it's up to us to figure out how to generate the readiness for the force that we have: 287,” he said. “As we go up to 355, if we can't generate the readiness with 287 in terms of delivering ships on time – as you know there's a lot of skepticism that we can do that as we head to 355.” https://news.usni.org/2018/09/19/navsea-new-pentagon-strategy-putting-pressure-private-public-maintenance-yards-deliver-ships-time