28 avril 2020 | International, Aérospatial

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.

https://www.defensenews.com/air/2020/04/27/collapse-of-boeing-embraer-deal-could-have-major-impact-on-c-390-millenniums-future

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  • Congress has questions about the Air Force’s and Navy’s next-generation fighter programs

    25 juin 2020 | International, Aérospatial

    Congress has questions about the Air Force’s and Navy’s next-generation fighter programs

    By: Valerie Insinna WASHINGTON — The House Armed Services Committee wants to limit the amount of money the Air Force and Navy get for their respective sixth-generation fighter programs until it gets some answers. The Navy and Air Force are leading separate efforts to develop a follow-on fighter jet to the F-35, with both services calling their programs “Next Generation Air Dominance.” Both projects are in the early stages of development, with the services hoping to ramp up activities this year. But HASC intends to fence off 85 percent of the fiscal 2021 funding requested for the NGAD until the committee receives an independent review performed by the Pentagon's director of cost assessment and program evaluation, according to the Tactical Air and Land Forces Subcommittee's markup of the FY21 defense policy bill. A committee aide told reporters on Monday that the stipulations are “nothing out of the ordinary” and are meant to allow lawmakers to gain further insight into the programs, not to permanently strip funding from the efforts. “When they field their capabilities, we just want to make sure that they've thought them through, that the department has determined that they are affordable and that anything else that is already in the budget into the future that's high priority as well is not going to get pushed out unintentionally if they have unexpected cost growth or run into problematic issues when they field the capabilities,” the aide said. How's the Air Force effort going? Earlier this month, Air Force acquisition executive Will Roper said the service is on track to finalize a business case for its NGAD program this summer. The Air Force envisions NGAD as a family of systems that could include aircraft, drones and other advanced technologies. But when it comes to developing new advanced aircraft, Roper wants to pursue a new strategy he calls the “Digital Century Series” that would have multiple companies continuously developing new jets and competing against each other for small-batch contracts. The business case, which is being put together by the program executive office for advanced aircraft, will explore whether the Digital Century Series idea is technically feasible, how the development and procurement process should be structured, and whether it would be cheaper than traditional contracting methods. “That is going to really help us, I hope, because we'll show that data and argue that it is not just better from a ‘competing with China and lethality' standpoint. It's just better from a business standpoint,” Roper said. “If it breaks even or is less [than traditional methods], I will be exceptionally happy. If it's more expensive — and I hope not exceptionally more — then we're going to have to argue” on behalf of the program. The Air Force has asked for $1 billion for its NGAD program for FY21. It received $905 million for the program in FY20. How's the Navy's effort faring? The Navy's NGAD program, also known as F/A-XX, is more mysterious. In its FY21 budget rollout this year, the service announced it would curtail its Super Hornet buy, purchasing a final 24 F/A-18E/Fs and then using the savings from a planned 36 jet buy from FY22 to FY24 to invest in its own future fighter. Little is known about the Navy's requirements. The service completed an analysis of alternatives in June 2019, as well as broad requirements and guidance for a concept of operations. The effort is now in the concept development phase, during which defense companies explore ideas “that balance advanced air dominance capabilities and long-term affordability/sustainment,” Navy spokesman Capt. Danny Hernandez told Defense News earlier this month. Congress has signaled that it may not be willing to allow the Navy to stop buying Super Hornets in future years. HASC inserted language into the FY21 defense policy bill urging the Navy to continue buying new Super Hornets, warning the service that next-generation fighter procurement does not always proceed according to plans. “The committee recalls the Navy curtailed F/A-18 procurement approximately 10 years ago with aspirational goals to maintain strike-fighter inventory levels with planned procurement of F-35C,” the committee said. “That plan was not realized due to F-35 program execution and subsequently required the Navy to procure additional F/A-18E/F aircraft to reduce operational risk. The committee expects a similar outcome may occur with the Navy's current plan for FA-XX due to affordability and technological challenges.” The bill also directs the chairman of the Joint Chiefs of Staff and the Defense Department's inspector general to provide more information on the operational risk incurred by not buying additional Super Hornets, as well as F/A-18 squadron adherence to maintenance practices. https://www.defensenews.com/air/2020/06/23/congress-has-questions-about-the-air-force-and-navys-next-generation-fighter-programs/

  • Intevac Receives Record $40 M Digital Night Vision Contract Award

    22 juillet 2019 | International, Aérospatial, Terrestre, C4ISR

    Intevac Receives Record $40 M Digital Night Vision Contract Award

    Intevac, Inc. (Nasdaq: IVAC) announced today it has received a $40 million contract award for the multi-year production of digital night vision cameras in support of the U.S. Government. “With this new order and increased backlog, we now have multi-year visibility for our manufacturing operations, and continued validation of our digital night vision technology.” “This award represents the largest single booking to date for Intevac Photonics, and increases our Photonics backlog to the historic level of just over $83 million,” commented Timothy Justyn, executive vice president and general manager of Intevac Photonics. “This award closely follows awards for both the U.S. Army's IVAS ground soldier program, and the Apache Helicopter's Pilot Night Vision Sensor (PNVS) foreign military sales announced last December, demonstrating Intevac's commitment to delivering the latest digital night vision technology to our Warfighters.” “We are very proud to have received this substantial order for our digital night vision technology,” added Wendell Blonigan, president and chief executive officer of Intevac. “With this new order and increased backlog, we now have multi-year visibility for our manufacturing operations, and continued validation of our digital night vision technology.” Intevac's digital night-vision sensors, based on its patented Electron Bombarded Active Pixel Sensor (EBAPS®) technology, provide state-of-the-art capability to the most advanced avionic fighting platforms in the U.S. Department of Defense inventory. Intevac was founded in 1991 and has two businesses: Thin-film Equipment and Photonics. In our Thin-film Equipment business, we are a leader in the design and development of high-productivity, thin-film processing systems. Our production-proven platforms are designed for high-volume manufacturing of substrates with precise thin film properties, such as the hard drive media, display cover panel, and solar photovoltaic markets we serve currently. In our Photonics business, we are a recognized leading developer of advanced high-sensitivity digital sensors, cameras and systems that primarily serve the defense industry. We are the provider of integrated digital imaging systems for most U.S. military night vision programs. For more information call 408-986-9888, or visit the Company's website at www.intevac.com . This press release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Intevac claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “expects,” or “anticipates,” and do not reflect historical facts. Specific forward-looking statements contained in this press release include, but are not limited to; the multi-year visibility of camera deliveries. The forward-looking statements contained herein involve risks and uncertainties that could cause actual results to differ materially from the company's expectations. These risks include, but are not limited to: changes in planned shipment dates, which could have a material impact on our business, our financial results, and the company's stock price. These risks and other factors are detailed in the Company's periodic filings with the U.S. Securities and Exchange Commission. Source: Intevac, Inc.http://www.asdnews.com/news/defense/2019/07/18/intevac-receives-record-40-m-digital-night-vision-contract-award

  • Contract Awards by US Department of Defense - July 15, 2019

    16 juillet 2019 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité, Autre défense

    Contract Awards by US Department of Defense - July 15, 2019

    ARMY Lockheed Martin Corp., Grand Prairie, Texas, was awarded a $492,108,514 fixed-price-incentive contract for High Mobility Artillery Rocket Systems M142 launchers and support requirements to include Product Data Definition Package Maintenance, training, support equipment, qualification testing, initial spares/repair parts and software. One bid was solicited with one bid received. Work will be performed in Camden, Arizona; Boca Raton, Florida; Budd Lake, New Jersey; Whippany, New Jersey; Dallas, Texas; Palm Bay, Florida; Archbald, Pennsylvania; York, Pennsylvania; Clearwater, Florida; Jackson, Mississippi; and Brownboro, Alabama, with an estimated completion date of May 30, 2023. Fiscal 2019 operations and maintenance, Army funds in the amount of $66,404,293 were obligated at the time of the award. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W31P4Q-19-C-0101). General Atomics Aeronautical Systems Inc., Poway, California, was awarded a $275,000,000 hybrid (cost-plus-fixed-fee and firm-fixed-price) contract for aircraft, satellite communications air data terminals, universal ground data terminals, program management, and equipment maintenance and repair. Bids were solicited via the internet with one received. Work will be performed in Poway, California, with an estimated completion date of July 30, 2021. Fiscal 2017, 2018 and 2019 aircraft procurement, Army funds in the amount of $275,000,000 were obligated at the time of the award. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity (W58RGZ-19-C-0022). TetraTech, Arlington, Virginia, was awarded a $9,626,655 firm-fixed-price contract for biological and environmental services. Bids were solicited via the internet with four received. Work locations and funding will be determined with each order, with an estimated completion date of Jan. 2, 2031. U.S. Army Corps of Engineers, Philadelphia, Pennsylvania, is the contracting activity (W912BU-19-D-0010). NAVY Manson/Connolly Seal Beach JV, Seattle, Washington, is being awarded an $88,147,000 firm-fixed-price contract for P-224 Causeway Boat Channel and Turning Basin and P-226 Ammunition Pier at Naval Weapons Station Seal Beach. The contract also contains five unexercised options and one planned modification, which if exercised would increase the cumulative contract value to $154,771,611. The work to be performed provides a public boat channel, naval ship channel and naval ship turning basin; ship mooring dolphins, excavation of above water moles, salvage and reuse of armor/riprap, paving, striping, signage, fencing, hauling and disposing of excess dredge material, placing fill for vehicle causeway and habitat enhancement; and constructing rock breakwater, rock armor shore protection, security structure and wharf improvements to support large deck amphibious ship ordnance operations. This project also includes relocating naval barge mooring buoys, installing marine navigation aids, utility infrastructure upgrades and communication infrastructure and security improvements. Work will be performed in Seal Beach, California, and is expected to be completed by June 2024. Fiscal 2019 military construction (Navy) funds for P-224 in the amount of $117,780,000 are obligated at the time of award, and the funds will not expire at the end of the current fiscal year. When fiscal 2020 military construction (Navy) funds are available they will be obligated using one of the unexercised options for P-226. This contract was competitively procured via the Navy Electronic Commerce Online website with two proposals received. Naval Facilities Engineering Command Southwest, San Diego, California, is the contracting activity (N62473-19-C-2450). Huntington Ingalls Inc., Newport News, Virginia, is being awarded a $40,000,000 cost-plus-incentive-fee modification to previously awarded contract N00024-17-C-2105 for additional supplemental work for the refueling complex overhaul of USS George Washington (CVN 73). Work includes accomplishment of the overhaul, modernization, repair, maintenance and refueling. This modification provides additional funds required to support mandatory and essential work performed by Huntington Ingalls Industries Newport News. All work is approved by the government and will ensure that the ship is returned to the fleet fully mission capable at redelivery. The supplemental refueling work for CVN 73 will be accomplished by Huntington Ingalls Inc., located in Newport News, Virginia, under the authority of 10 U.S. Code 2304(c)(1). Huntington Ingalls Inc. is the original building yard contractor for all ships of the CVN 68 class, the reactor planning yard, the lead design refueling yard and the only private shipyard capable of refueling and overhauling nuclear powered aircraft carriers. Therefore, it is the only source with the knowledge, experience and facilities required to accomplish this effort in support of the refueling of CVN 73 without an unacceptable disruption of Navy-wide overhaul and repair schedule. This additional effort will ensure that the ship is returned to the fleet fully mission capable at redelivery. Work will be performed in Newport News, Virginia, and is expected to complete by August 2021. Fiscal 2018 shipbuilding and construction (Navy) funding in the amount of $40,000,000 will be obligated at time of award and will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity. Bethel-Webcor Pacific JV,* Anchorage, Alaska, is being awarded firm-fixed-price task order N6247319F4865 at $39,300,000 under a multiple award construction contract for a maritime skills training center at Naval Base San Diego. The task order also contains three unexercised options and one planned modification, which if exercised would increase cumulative task order value to $41,868,747. The work to be performed provides for converting a portion of Building 3304 to house computer simulator trainers to support the Surface Warfare Officers School's mission to train sea-bound warriors to serve on surface combatants as officers. The planned modification, if issued, provides for furniture, fixtures and equipment. The options, if exercised, provide for an electrical switch, fiber optic cable and new duct bank installation and removal of existing cages in a portion of the building. Work will be performed in San Diego, California, and is expected to be completed by December 2020. Fiscal 2019 operations and maintenance, (Navy) contract funds in the amount of $39,300,000 are obligated on this award and will expire at the end of the current fiscal year. Four proposals were received for this task order. Naval Facilities Engineering Command Southwest, San Diego, California, is the contracting activity (N62473-18-D-5856). Keysight Technologies Inc., Englewood, Colorado, is being awarded a $9,850,400 indefinite-delivery, indefinite-quantity contract for up to 350 radio frequency vector signal generators in support of the Naval Air Systems Command's Metrology and Calibration Division. Work will be performed in Singapore, and is expected to be completed in January 2026. Fiscal 2019 aircraft procurement (Navy) funds in the amount of $84,432 will be obligated at time of award, none of which will expire at the end of the current fiscal year. This contract was competitively procured via an electronic request for proposals; two offers were received. The Naval Air Warfare Center Aircraft Division, Lakehurst, New Jersey, is the contracting activity (N6833519D0137). Bluewater Management Group LLC, Norfolk, Virginia (N3220519D2002), is being awarded a $7,926,050 indefinite-delivery, requirements contract for Customer Support Unit-West for civil service mariners' lodging and transportation. The contract includes a one-year base period with four, one-year option periods, which, if exercised, would bring the cumulative value of this contract to $42,691,305. Work will be performed in San Diego, California, and is expected to be completed if all options are exercised by Sept. 30, 2024. Navy operation and maintenance funds in the amount of $7,926,050 are obligated for fiscal 2020 and will expire Oct. 1, 2020. This contract was competitively procured with proposals solicited via the Federal Business Opportunities website and five offers received. The U.S. Navy's Military Sealift Command, headquartered in Norfolk, Virginia, is the contracting activity (N3220519D2002). Harris Corp., Rochester, New York, is being awarded a $7,392,098 firm-fixed-price, indefinite-delivery/indefinite-quantity contract with a base ordering period of one year for the refurbishment of Marine Corps Radio components associated with controlled cryptographic communications. This contract includes two one-year option ordering periods which, if exercised, could bring the cumulative value of this contract to $22,850,412. Work will be performed in Rochester, New York. Work is expected to be completed October 2020. If all options are exercised, work will continue through January 2023. Fiscal 2019 working capital (Navy) funds in the amount of $1,012,868 will be obligated on the first delivery order at the time of award and will not expire at the end of the current fiscal year. This contract was not competitively procured in accordance with 10 U.S. Code 2304(c)(1) - only one source and no other supplies or services will satisfy agency requirements. The Marine Corps Logistics Command, Albany, Georgia, is the contracting activity for (M67004-19-D-0002). *Small Business https://dod.defense.gov/News/Contracts/Contract-View/Article/1905262/source/GovDelivery/

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