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August 13, 2019 | International, Aerospace

Could Textron Become Purer A&D Company, Or Be Sold?

By Michael Bruno

As a multi-industrial manufacturer, Textron sells many transportation vehicles, from military helicopters to UAVs and even snowmobiles and recreational four-wheelers.

But a new corporate review may indicate the conglomerate could be looking to become an aerospace and defense (A&D)-focused company similar to other large rivals, according to analysts.

Earlier this month, Textron announced it is reviewing strategic alternatives such as a sale or spin-off of its German Kautex business unit, which produces fuel systems and other functional components. Kautex operates more than 30 plants in 14 countries and generated more than $2.3 billion in revenue in 2018.

“Kautex strategic review suggests Textron wants to become an A&D ‘pure-play,'” Cowen analysts Cai von Rumohr and his team said Aug. 9. “The thesis is that ‘new Textron' could command a higher [valuation] multiple closer to A&D pure-plays; and it would have optionality for merger and acquisition (M&A) or stock repurchasing to leverage its new product-driven growth.”

The Cowen analysts said they think that if Kautex is disposed of, so could golf cart maker Textron Specialized Vehicles or other units in Textron's Industrial division. In turn, the company could use proceeds and money saved to bolt on smaller A&D businesses, or it could continue active share repurchases to lever benefits of expected growth from new products such as Longitude, Sky Courier, Denali and V-280.

“A third possibility is that free of Industrial, Textron could be of interest to larger primes, who would bring more lobbying clout to V-280,” the analysts said. Buying candidates could be Boeing or General Dynamics, they added.

Separately, a well-known adviser to the A&D industry recently told Aerospace DAILY that Textron would make a good acquisition target for other A&D players. “Over the years I've had my clients take a hard look at that one,” the consultant said. This person listed Boeing and Lockheed for possible top-level consolidation, although getting Pentagon and Trump administration approval could be more of a challenge than for other recent M&A deals.

To be sure, Textron is already an aerospace-focused multi-industrial. According to Cowen, it is the leader in Class 1-5 business jets (which make up 24% of annual total revenue), with positions in helicopters via Bell (26%), defense systems (12%), and then industrial products (25%). Defense as an end-market accounts for 29%.

But conglomerates are increasingly breaking up and those with A&D elements continue to focus on those businesses. United Technologies is working to spin off its elevators and air conditioning businesses while adding Raytheon. General Electric is divesting major units but favoring aviation. Honeywell International in recent years has spun off units to focus more on A&D and related businesses. One reason for the portfolio shaping is because of pressure from major investors who want companies to be more focused, in part so they can balance their own investment portfolios rather than relying on a company to try to play in various industries.

Goldman Sachs is advising Textron on its review. Textron reiterated that no decision has been made and there are no assurances that the process will result in any transaction being announced or completed.

The company has not set a definitive timetable for completion of its review of strategic alternatives and does not intend to make any further announcements related to its review unless and until its board of directors has approved a specific transaction or Textron otherwise determines that further disclosure is appropriate.

https://aviationweek.com/business-aviation/could-textron-become-purer-ad-company-or-be-sold

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  • UK seeks new technologies for future Royal Navy fleet

    June 14, 2019 | International, Naval

    UK seeks new technologies for future Royal Navy fleet

    By Hemanth Kumar and Talal Husseini The UK Defence and Security Accelerator (DASA) is set to launch a new competition to seek intelligent systems and technology solutions to develop a comprehensive future Royal Navy fleet. Known as ‘Intelligent Ship – The Next Generation', the competition will be officially launched in London on 19 June. Through the competition, the UK Ministry of Defence (MOD) is looking for proposals for novel and innovative projects to facilitate the wider use of intelligent systems within future warships. The MOD said in the competition document: “This aim is based on a future vision where elements of automation, autonomy, machine learning and artificial intelligence (AI) are closely integrated and teamed with human decision makers. “It is expected that this will ensure timely, more informed and trusted decision-making and planning, within complex, cluttered, contested and congested operating and data environments.” DASA will offer £1m in funding for innovative proposals under the first phase of the future Royal Navy fleet competition. An additional £3m will be made available to fund subsequent phases. The adoption of advanced technologies is seen as a pivotal move in the efforts to reduce decision times in order to meet future threat capabilities. Interested companies will have to showcase through their proposals how they would improve automation, autonomous functions, and AI-enabled decision aides. The scope also includes demonstrating how the proposals could improve speed and/or quality of decision-making and mission planning in a future naval operating environment. The MOD clarified that it does not want proposals that do not “offer significant benefit to defence and security capability”, or “offer no real long-term prospect of integration into defence and security capabilities”, or “offer no real prospect of out-competing existing technological solutions”. The MOD went on to say: “It is important that over the lifetime of DASA competitions, ideas are matured and accelerated towards appropriate end-users to enhance current or future capability. “How long this takes will be dependent on the nature and starting point of the innovation. Early identification and appropriate engagement with end-users during the competition and subsequent phases are essential.” Parties will have time until 23 July 2019 to pitch their ideas for the competition. https://www.naval-technology.com/news/uk-future-royal-navy-fleet/

  • The Air Force tested its Advanced Battle Management System. Here’s what worked, and what didn’t.

    January 23, 2020 | International, Aerospace, C4ISR

    The Air Force tested its Advanced Battle Management System. Here’s what worked, and what didn’t.

    By: Valerie Insinna WASHINGTON — The first field test of the U.S. Air Force's experimental Advanced Battle Management System in December was a success, with about 26 out of 28 capabilities showing some semblance of functionality during a recent exercise, the service's acquisition chief said Tuesday. But the service will seek to be more ambitious during a second demonstration in April, which will focus on space and bring in elements from U.S. Space Command and U.S. Strategic Command, said Will Roper, the Air Force's assistant secretary for acquisition, technology and logistics. "I am thrilled to say that 26 out of 28 things work. That is too high of a success rate at this point in time, but I'll take it. We should be taking more risk than that,” he told reporters during a roundtable. The three-day test took place at Eglin Air Force Base, Florida, and involved a potential cruise missile attack on the United States simulated by QF-16 drones. Through the exercise, Air Force F-22 jets, Air Force and Navy F-35 fighters, the Navy destroyer Thomas Hudner, an Army unit equipped with the High Mobility Artillery Rocket System, as well as special operators shared data in real time in ways the services cannot currently do in an operational environment. What will ABMS eventually look like? That's still a mystery, even to the Air Force, which wants to test different solutions for connecting platforms, crunching data and sending it to other assets with the goal of eventually fielding what works and abandoning what doesn't. “We gave the team the goals of: Pull what you can together in three and a half months to see how far we can stretch, how quickly we could achieve something,” said Air Force chief architect Preston Dunlap, who manages the ABMS effort. “We were quite happy actually, even with 10 percent solutions.” Here's a rundown of some notable successes so far, as well as major failures: The F-35 and F-22 were able to stealthily exchange data. Despite the two jets having advanced “sensor fusion” capabilities, the Air Force's two most advanced fighters can't really talk to each other. The F-35 uses the Multifunction Advanced Data Link, or MADL, to securely share sensitive information with other F-35s, while the F-22 has its own data link, the Intra-Flight Data Link, or IFDL. Even using a non-stealthy connection to share information has its limitations: While the F-35 can both transmit and receive data via the Link 16, which meets NATO standards, the F-22 currently can only receive data. However, the first ABMS test showed hopeful signs for fifth-generation fighter communication. The demonstration involved radio systems — built by F-35 prime contractor Lockheed Martin as well as Northrop Grumman, which manufactures key structures and mission systems for the aircraft, including MADL, Dunlap said. The demo also included Honeywell-made antennas built to speak across both MADL and IFDL, he added. Those systems were integrated onto a ground based rig that “look[ed] like a big piece of hardware with radios on it,” according to Roper. Then, the F-35 and F-22 flew over the system, exchanging data by bouncing it back-and-forth from the ground-based radios, Dunlap said. He noted that the test verified that existing technology can be used to overcome three obstacles: translating the F-35's MADL to the F-22's IFDL; moving data across the different frequencies; and securing the communication. "It was really herculean,” Dunlap said. "[The contractors] were excited by the speed of the acquisition team to get the ball going." During the next ABMS demo in April, the Air Force plans to stretch the capability by putting the translation system inside the unmanned Kratos XQ-58 Valkyrie for flight-based testing. “I also challenged the team to expand the amount of information translated between the different platforms so they can take advantage of new information on the displays,” Dunlap said. An AC-130 gunship connected with SpaceX's Starlink constellation. Although Dunlap did not provide much detail on this element of the exercise, he confirmed that the AC-130 was able to pass data through the constellation of small, high-bandwidth commercial internet satellites. The Air Force has shown interest in connecting its platforms to commercial broadband satellites through its Global Lightning experiment. A demonstration with Starlink and the KC-135 tanker aircraft is in the works, and the service also plans to evaluate equipment from Iridium, OneWeb and L3Harris. The Air Force created a cloud-based application for command and control. Typically, the service performs command and control from air operations centers — physical buildings where analysts sit in front of computers with specialized software that provides data from multiple assets, Dunlap said. Changes to software don't necessarily happen automatically, and they may require assistance from information technology experts. In the ABMS exercise, the Air Force demonstrated a cloud-based battle management and situational awareness application for the first time. It used a “CloudOne” system to host data up to the secret level, which will be a formative system underlying ABMS, Dunlap said. Both Amazon and Microsoft are involved in standing up the CloudOne technology, but Roper said the Air Force could use the Joint Enterprise Defense Infrastructure contract vehicle for CloudOne if JEDI winner Microsoft provides better rates. The robot dogs were a swing and a miss. U.S. Special Operations Command brought the robots that are capable of augmenting surveillance operations to the ABMS field test, but operators couldn't figure out how to connect them with the other platforms involved in the exercise. “We had some robot dogs — apparently those exist — that can go and do patrol. We were never able to patch their feeds in,” Roper said. There's hope for cybernetic canines becoming part of ABMS in the future though. Roper added that the ABMS team would be welcome to try to integrate the robots in future exercises. https://www.c4isrnet.com/air/2020/01/22/the-us-air-force-tested-its-advanced-battle-management-system-heres-what-worked-and-what-didnt/

  • Army Halts Apache Helicopter Deliveries

    October 19, 2020 | International, Aerospace, Naval

    Army Halts Apache Helicopter Deliveries

    For the second time in two years, the Army had to stop accepting Boeing's attack helicopter. The exact reason remains unknown. Marcus Weisgerber The U.S. Army has stopped accepting Apache helicopters from Boeing after the company found that an employee kept “improper” records concerning parts installed on the aircraft. It's the latest quality-control issue to bedevil America's largest planemaker, which is trying to shift its company's culture and repair its public image after two deadly airliner crashes and a production line that left tools and trash inside new tanker aircraft. “At this time the Army is still conducting a comprehensive review of a number of Boeing processes, production, and manufacturing plans for critical safety items applicable to all AH-64E aircraft production,” Lt. Col. Brandon Kelley, an Army spokesman, said in an emailed statement. When it learned of “improper record keeping” at its AH-64 Apache factor in Mesa, Arizona, Boeing “immediately notified the Army,” Steve Parker, vice president and general manager of Boeing Vertical Lift, said in a statement provided by a company spokesman. “Boeing and the government are jointly reviewing our Mesa quality management processes and procedures,” Parker said. “Flight operations and deliveries will resume when Boeing and the Army are satisfied this issue has been resolved and appropriate corrective action plans have been implemented.” Boeing no longer employs the worker who kept the improper records, according to a person with knowledge of the issue. Boeing's Mesa operation builds new Apaches and overhauls old ones with more modern equipment — a process known as remanufacturing. The company continues to build aircraft amid the delivery stoppage, an industry source said. “The Army will begin acceptance of aircraft once conditions have been satisfied to ensure production processes meet standards for safety and quality and the potential for future quality escapes has been fully mitigated,” Kelley said. “The Army will continue to work with Boeing in reviewing their quality processes and manufacturing of critical safety items and recommend changes as necessary to prevent future delivery of non-conforming product.” Kelley said that soldiers' lives were not put at risk by the issues. It's not the first time the Army has suspended Apache deliveries. From March to August 2018, the service halted acceptances after finding a flaw in a part that holds the helicopter's rotors to the aircraft. Boeing quality-control practices have been called into question by both the commercial industry and the military. The Federal Aviation Administration is investigating potential manufacturing issues on 787 Dreamliner aircraft. The U.S. Air Force had to halt deliveries of KC-46 tankers on numerous occasions after military inspectors found trash, parts, and tools left inside the aircraft. In March 2019, Will Roper, the head of Air Force acquisition, blamed the company's assembly line culture for the issues. The coronavirus pandemic has only made things worse for Boeing and its suppliers as air travel evaporates and airlines cancel plane orders. Earlier this year, executives said the company's $34 billion defense business would outperform its typically lucrative commercial business for the first time in more than a decade. Coronavirus-related factory shutdowns and production slowdowns started taking a toll on Boeing's defense business in the spring. Boeing delivered 54 fewer military aircraft and satellites so far this year when to the first three quarters of 2019, a 31 percent decline, according to company data. This year, Boeing has delivered 10 KC-46 tankers, less than half of the 21 delivered through the third quarter of 2019. https://www.defenseone.com/business/2020/10/army-halts-apache-deliveries-after-boeing-finds-improper-record-keeping-helicopter-factory/169332/

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