In a ceremony held today at the Embraer facility in Gavião Peixoto (São Paulo, Brazil), Embraer delivered the first modernized EMB 145 AEW&C (Airborne Early Warning and Control), designated E-99, to the Brazilian Air Force (FAB). Four additional E-99 aircraft will be modernized as part of the contract.
The mission systems and related subsystems, including electronic warfare, command and control, electronic countermeasures, and aerial surveillance radar were updated as part of the modernization process, expanding FAB’s capacity to carry out Flight Control and Alarm missions and Electronic Reconnaissance, among others.
The E-99M project is conducted by COPAC with support from Embraer and various international suppliers, such as SAAB, Aeroelectronica International (AELI), and Rohde & Schwarz. In addition to modernization, the project entails technology transfer agreements that will enable technological advancements for the Brazilian defense industry.
Atech, an Embraer Defense and Security company, participates in the development of the command and control system. Six mission planning and analysis stations were also acquired, which will be used for the training and improvement of crews.
Built on the successful ERJ 145 regional jet platform, with more than 1,200 units delivered and 30 million flight hours, the FAB E-99 aircraft can detect, track, and identify targets in their patrol area and transmit this information to allied forces. The aircraft can also perform airspace management, fighter positioning and interception control, signals intelligence, and surveillance missions.
On the heels of the U.S. government and Lockheed Martin’s (NYSE: LMT) formal submission of a F-35 proposal to the Swiss government in support of Switzerland’s New Fighter Aircraft (NFA) competition, Airbus and Germany have now followed suit.
You can view the details of the Airbus and Germany submission below!
The U.S. government and Lockheed Martin (NYSE: LMT) submitted an F-35 proposal to the Swiss government in support of Switzerland’s New Fighter Aircraft (NFA) competition.
The F-35 proposal is a total package offering that includes up to 40 F-35A aircraft, a sustainment solution tailored to Swiss autonomy requirements, and a comprehensive training program.
The offering includes an industrial package providing Swiss industry substantial F-35 work opportunities. Should the F-35 be selected as the new fighter for Switzerland, this industrial work would take place in all Swiss regions. Swiss industry has the opportunity to compete for direct production of components for use on all F-35s produced, sustainment projects focused on supporting the Swiss Air Force and enhancing Swiss autonomy, and cyber security projects directly related to the F-35.
The offer uses the F-35 Global Support Solution for sustainment to ensure Switzerland benefits from the European F-35 economies of scale to realize lower sustainment costs for the Swiss Air Force. It also includes a six-month spares package to ensure the Swiss Air Force has the ability to conduct autonomous operations, if needed. Lockheed Martin is also offering an option for the assembly of four aircraft in Switzerland to ensure the Swiss Air Force and Swiss industry gain an understanding of how to maintain the F-35 airframe and its advanced capabilities for the life of the program.
“We are confident that our F-35 offer is the best and most affordable solution for the Swiss NFA competition,” said Greg Ulmer, F-35 Program vice president and general manager. “We are offering the only 5th generation fighter at the cost of 4th generation aircraft while offering Switzerland an aircraft that will protect Swiss sovereignty for decades to come.”
To date, the F-35 has been selected by 13 nations and operates from 26 bases worldwide, with nine nations operating F-35s on their home soil. There are more than 585 F-35s in service today, with more than 1,190 pilots and 9,750 maintainers trained on the aircraft.
– Financial results continue to be significantly impacted by COVID-19 and the 737 MAX grounding
– Proactively managing liquidity and transforming for the future
– Revenue of $14.1 billion, GAAP loss per share of ($0.79) and core (non-GAAP)* loss per share of ($1.39)
– Operating cash flow of ($4.8) billion; cash and marketable securities of $27.1 billion
– Total backlog of $393 billion, including more than 4,300 commercial airplanes
Table 1. Summary Financial Results
Third Quarter
Nine Months
(Dollars in Millions, except per share data)
2020
2019
Change
2020
2019
Change
Revenues
$14,139
$19,980
(29)%
$42,854
$58,648
(27)%
GAAP
(Loss)/Earnings From Operations
($401)
$1,259
NM
($4,718)
$229
NM
Operating Margin
(2.8)%
6.3%
NM
(11.0)%
0.4%
NM
Net (Loss)/Earnings
($466)
$1,167
NM
($3,502)
$374
NM
(Loss)/Earnings Per Share
($0.79)
$2.05
NM
($6.10)
$0.66
NM
Operating Cash Flow
($4,819)
($2,424)
NM
($14,401)
($226)
NM
Non-GAAP*
Core Operating (Loss)/Earnings
($754)
$895
NM
($5,773)
($864)
NM
Core Operating Margin
(5.3)%
4.5%
NM
(13.5)%
(1.5)%
NM
Core (Loss)/Earnings Per Share
($1.39)
$1.45
NM
($7.88)
($1.13)
NM
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”
The Boeing Company [NYSE: BA] reported third-quarter revenue of $14.1 billion, GAAP loss per share of ($0.79) and core loss per share (non-GAAP)* of ($1.39), reflecting lower commercial deliveries and services volume primarily due to COVID-19 (Table 1). Boeing recorded operating cash flow of ($4.8) billion.
“The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality by closely managing our liquidity and transforming our enterprise to be sharper, more resilient and more sustainable for the long term,” said Boeing President and Chief Executive Officer Dave Calhoun. “Our diverse portfolio, including our government services, defense and space programs, continues to provide some stability for us as we adapt and rebuild for the other side of the pandemic. We remain focused on the health and safety of our employees and their communities. I’m proud of the dedication and commitment our teams have demonstrated as they continued to deliver for our customers in this challenging environment. Despite the near-term headwinds, we remain confident in our long term future and are focused on sustaining critical investments in our business and the meaningful actions we are taking to strengthen our safety culture, improve transparency and rebuild trust.”
Following the lead of global regulators, Boeing made steady progress toward the safe return to service of the 737 MAX, including rigorous certification and validation flights conducted by the U.S. Federal Aviation Administration, Transport Canada and the European Union Aviation Safety Agency. The Joint Operational Evaluation Board, featuring civil aviation authorities from the United States, Canada, Brazil, and the European Union, also conducted its evaluations of updated crew training. The 737 MAX has now completed around 1,400 test and check flights and more than 3,000 flight hours as it progresses through the robust and comprehensive certification process.
To adapt to the market impacts of COVID-19 and position the company for the future, Boeing continued its business transformation across five key areas including its infrastructure footprint, overhead and organizational structure, portfolio and investment mix, supply chain health and operational excellence. As the company resizes its operations to align with market realities, Boeing expects to continue lowering overall staffing levels through natural attrition as well as voluntary and involuntary workforce reductions, and recorded additional severance costs in the third quarter.
Table 2. Cash Flow
Third Quarter
Nine Months
(Millions)
2020
2019
2020
2019
Operating Cash Flow
($4,819)
($2,424)
($14,401)
($226)
Less Additions to Property, Plant & Equipment
($262)
($465)
($1,038)
($1,387)
Free Cash Flow*
($5,081)
($2,889)
($15,439)
($1,613)
*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 5, “Non-GAAP Measures Disclosures.”
Operating cash flow was ($4.8) billion in the quarter, reflecting lower commercial deliveries and services volume primarily due to COVID-19, as well as timing of receipts and expenditures (Table 2).
Table 3. Cash, Marketable Securities and Debt Balances
Quarter-End
(Billions)
Q3 20
Q2 20
Cash
$10.6
$20.0
Marketable Securities1
$16.5
$12.4
Total
$27.1
$32.4
Debt Balances:
The Boeing Company, net of intercompany loans to BCC
$59.1
$59.5
Boeing Capital, including intercompany loans
$1.9
$1.9
Total Consolidated Debt
$61.0
$61.4
1Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”
Cash and investments in marketable securities decreased to $27.1 billion, compared to $32.4 billion at the beginning of the quarter, primarily driven by operating cash outflows (Table 3). Debt was $61.0 billion, down from $61.4 billion at the beginning of the quarter due to the repayment of maturing debt.
Total company backlog at quarter-end was $393 billion.
Segment Results
Commercial Airplanes
Table 4. Commercial Airplanes
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Commercial Airplanes Deliveries
28
62
(55)%
98
301
(67)%
Revenues
$3,596
$8,249
(56)%
$11,434
$24,793
(54)%
Loss from Operations
($1,369)
($40)
NM
($6,199)
($3,813)
NM
Operating Margin
(38.1)%
(0.5)%
NM
(54.2)%
(15.4)%
NM
Commercial Airplanes third-quarter revenue decreased to $3.6 billion, reflecting lower delivery volume primarily due to COVID-19 impacts as well as 787 quality issues and associated rework. Third-quarter operating margin decreased to (38.1) percent, primarily driven by lower delivery volume, as well as $590 million of abnormal production costs related to the 737 program.
Commercial Airplanes added the final 777X flight test airplane to the test program and the GE9X engine received FAA certification. In October, the company decided it will consolidate 787 production in South Carolina in mid-2021, which did not have a significant financial impact on the program in the third quarter. Commercial Airplanes delivered 28 airplanes during the quarter, and backlog included over 4,300 airplanes valued at $313 billion.
Defense, Space & Security
Table 5. Defense, Space & Security
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Revenues
$6,848
$7,002
(2)%
$19,478
$20,168
(3)%
Earnings from Operations
$628
$754
(17)%
$1,037
$2,581
(60)%
Operating Margin
9.2%
10.8%
(1.6) Pts
5.3%
12.8%
(7.5) Pts
Defense, Space & Security third-quarter revenue decreased to $6.8 billion, primarily due to derivative aircraft award timing, partially offset by higher fighter volume (Table 5). Third-quarter operating margin decreased to 9.2 percent reflecting less favorable performance, including a $67 million KC-46A Tanker charge.
During the quarter, Defense, Space & Security received an award for eight F-15EX advanced fighter aircraft for the U.S. Air Force and a contract extension for the International Space Station for NASA, as well as contracts for nine additional MH-47G Block II Chinook helicopters for the U.S. Army Special Operations and four additional 702X satellites. Also in the quarter, the U.S. Air Force and Boeing team was awarded the Collier Trophy for aerospace excellence for the X-37B autonomous spaceplane. Significant milestones included inducting the 20th U.S. Navy F/A-18 into the Service Life Modification program as well as delivering the firstBell Boeing V-22 Osprey to Japan and the first MH-47G Block II Chinook to the U.S. Army Special Operations.
Backlog at Defense, Space & Security was $62 billion, of which 30 percent represents orders from customers outside the U.S.
Global Services
Table 6. Global Services
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
Change
2020
2019
Change
Revenues
$3,694
$4,658
(21)%
$11,810
$13,820
(15)%
Earnings from Operations
$271
$673
(60)%
$307
$2,013
(85%)
Operating Margin
7.3%
14.4%
(7.1) Pts
2.6%
14.6%
(12.0) Pts
Global Services third-quarter revenue decreased to $3.7 billion, driven by lower commercial services volume due to COVID-19, partially offset by higher government services volume (Table 6). Third-quarter operating margin decreased to 7.3 percent primarily due to lower commercial services volume and additional severance costs.
During the quarter, Global Services signed an agreement with GECAS for 11 737-800 Boeing Converted Freighters, secured a six-year P-8A support contract for the Royal Australian Air Force, and was awarded F-15EX training and services support contracts by the U.S. Air Force. Global Services also delivered the first P-8A Operational Flight Trainer for the United Kingdom Royal Air Force.
Additional Financial Information
Table 7. Additional Financial Information
Third Quarter
Nine Months
(Dollars in Millions)
2020
2019
2020
2019
Revenues
Boeing Capital
$71
$66
$205
$207
Unallocated items, eliminations and other
($70)
$5
($73)
($340)
Earnings from Operations
Boeing Capital
$30
$29
$47
$86
FAS/CAS service cost adjustment
$353
$364
$1,055
$1,093
Other unallocated items and eliminations
($314)
($521)
($965)
($1,731)
Other income, net
$119
$121
$325
$334
Interest and debt expense
($643)
($203)
($1,458)
($480)
Effective tax rate
49.6%
0.8%
40.1%
(350.6)%
At quarter-end, Boeing Capital’s net portfolio balance was $2.0 billion. The change in revenue and earnings from other unallocated items and eliminations was primarily due to the timing of cost allocations. Earnings from other unallocated items and eliminations was also impacted by lower enterprise research and development expense. Interest and debt expense increased due to higher debt balances. The third quarter effective tax rate reflects tax benefits related to the five year net operating loss carryback provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act as well as the impact of pre-tax losses.
Non-GAAP Measures Disclosures
We supplement the reporting of our financial information determined under Generally Accepted Accounting Principles in the United States of America (GAAP) with certain non-GAAP financial information. The non-GAAP financial information presented excludes certain significant items that may not be indicative of, or are unrelated to, results from our ongoing business operations. We believe that these non-GAAP measures provide investors with additional insight into the company’s ongoing business performance. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. The following definitions are provided:
Core Operating Earnings, Core Operating Margin and Core Earnings Per Share
Core operating earnings is defined as GAAP earnings from operations excluding the FAS/CAS service cost adjustment. The FAS/CAS service cost adjustment represents the difference between the FAS pension and postretirement service costs calculated under GAAP and costs allocated to the business segments. Core operating margin is defined as core operating earnings expressed as a percentage of revenue. Core earnings per share is defined as GAAP diluted earnings per share excluding the net earnings per share impact of the FAS/CAS service cost adjustment and Non-operating pension and postretirement expenses. Non-operating pension and postretirement expenses represent the components of net periodic benefit costs other than service cost. Pension costs, comprising service and prior service costs computed in accordance with GAAP are allocated to Commercial Airplanes and BGS businesses supporting commercial customers. Pension costs allocated to BDS and BGS businesses supporting government customers are computed in accordance with U.S. Government Cost Accounting Standards (CAS), which employ different actuarial assumptions and accounting conventions than GAAP. CAS costs are allocable to government contracts. Other postretirement benefit costs are allocated to all business segments based on CAS, which is generally based on benefits paid. Management uses core operating earnings, core operating margin and core earnings per share for purposes of evaluating and forecasting underlying business performance. Management believes these core earnings measures provide investors additional insights into operational performance as they exclude non-service pension and post-retirement costs, which primarily represent costs driven by market factors and costs not allocable to government contracts. A reconciliation between the GAAP and non-GAAP measures is provided on pages 12-13.
Free Cash Flow
Free cash flow is GAAP operating cash flow reduced by capital expenditures for property, plant and equipment. Management believes free cash flow provides investors with an important perspective on the cash available for shareholders, debt repayment, and acquisitions after making the capital investments required to support ongoing business operations and long term value creation. Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt. Management uses free cash flow as a measure to assess both business performance and overall liquidity. Table 2 provides a reconciliation of free cash flow to GAAP operating cash flow.
Caution Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) the COVID-19 pandemic and related government actions, including with respect to our operations, our liquidity, the health of our customers and suppliers, and future demand for our products and services; (2) the 737 MAX, including the timing and conditions of 737 MAX regulatory approvals, lower than planned production rates and/or delivery rates, and increased considerations to customers and suppliers, (3) general conditions in the economy and our industry, including those due to regulatory changes; (4) our reliance on our commercial airline customers; (5) the overall health of our aircraft production system, planned commercial aircraft production rate changes, our commercial development and derivative aircraft programs, and our aircraft being subject to stringent performance and reliability standards; (6) changing budget and appropriation levels and acquisition priorities of the U.S. government; (7) our dependence on U.S. government contracts; (8) our reliance on fixed-price contracts; (9) our reliance on cost-type contracts; (10) uncertainties concerning contracts that include in-orbit incentive payments; (11) our dependence on our subcontractors and suppliers, as well as the availability of raw materials; (12) changes in accounting estimates; (13) changes in the competitive landscape in our markets; (14) our non-U.S. operations, including sales to non-U.S. customers; (15) threats to the security of our or our customers’ information; (16) potential adverse developments in new or pending litigation and/or government investigations; (17) customer and aircraft concentration in our customer financing portfolio; (18) changes in our ability to obtain debt financing on commercially reasonable terms and at competitive rates; (19) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (20) the adequacy of our insurance coverage to cover significant risk exposures; (21) potential business disruptions, including those related to physical security threats, information technology or cyber-attacks, epidemics, sanctions or natural disasters; (22) work stoppages or other labor disruptions; (23) substantial pension and other postretirement benefit obligations; and (24) potential environmental liabilities.
Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.
Ultra-modern and high-tech manufacturing facility will be located at Toronto Pearson International Airport
Slated for completion in 2023, the one-million square-foot facility will be home to the most advanced aircraft manufacturing processes in the world
Strengthened commitment to Ontario’s aerospace industry, securing job growth and supporting economic development in the region for years to come
TORONTO, Dec. 04, 2019 (GLOBE NEWSWIRE) — Bombardier is pleased to announce that it has signed a long-term lease agreement with the Greater Toronto Airports Authority (GTAA) to build its new state-of-the art Global Manufacturing Centre located at Toronto Pearson International Airport. With preliminary site work underway in Mississauga and first production activities set to begin in 2023, the cutting-edge facility will optimize final assembly operations for all Global business jets, including the industry flagship Global 7500 business jet.
The Global Manufacturing Centre at Toronto Pearson International Airport, approximately 20 km from the current Global aircraft final assembly site at Downsview, will reinforce Canada’s leading position in the business aviation market.
“Today, I’m very excited to announce the relocation of our Global aircraft family production activities to a new, cutting-edge manufacturing facility at Toronto Pearson. This is a strategic move for Bombardier and a strong commitment to Ontario’s aerospace industry. It will allow us to offer world-class career opportunities and continue fueling the economic development of the region for years to come,” said Alain Bellemare, President and Chief Executive Officer, Bombardier Inc.
The one-million square-foot facility will combine thousands of highly-skilled employees with 21st century production and tooling innovation. Bombardier employs the highest caliber technology throughout the manufacturing process of the Global 7500 business jets, including a state-of-the-art automated positioning system that uses laser-guided measuring to ensure major aircraft structures, such as the wing and fuselage, are joined consistently and perfectly each time. Combining human ingenuity with the most advanced machines, the Global 7500final assembly line in Toronto is a testament to the industry’s most advanced business jet.
This strengthened commitment to the Greater Toronto Area will also leverage significant recent R&D investments and a continued collaboration with Ontario’s colleges and universities for world class training, research and development.
Bombardier also confirmed it will continue to support the aerospace heritage of the Downsview site with a multi-million-dollar contribution to the Downsview Aerospace Innovation and Research Consortium (DAIR) to develop a visionary aerospace hub for academic research and training activities. The contribution includes $2.5 million CAD in capital funding to refurbish the historic Moth Building, where wartime Mosquito fighter bombers and Tiger Moth trainers were produced.
United to debut exciting Star Wars: The Rise of Skywalker- themed content, including new aircraft paint design, safety video and opportunities to experience the Star Wars saga
CHICAGO, Oct. 25, 2019 /PRNewswire/ — United Airlines today announced that the carrier has teamed up with Star Wars: The Rise of Skywalker – the epic conclusion of the Skywalker saga, to offer customers and employees alike exciting opportunities in the coming weeks to experience the Star Wars saga first-hand on the ground, in the air and throughout the airline’s galaxy.
Customers will begin flying the friendly galaxy in November when United officially unveils an all-new Star Wars-themed paint design on one of its Boeing 737-800 aircraft with a re-designed onboard experience to celebrate the movie. The airline will also offer Star Wars: The Rise of Skywalker-themed amenity kits and launch its latest inflight safety demonstration video featuring characters from the new film. In addition, the airline will provide once-in-a-lifetime opportunities for MileagePlus members – including access to attend the US premiere of Star Wars: The Rise of Skywalker – through MileagePlus Exclusives, the airline’s platform that lets MileagePlus members use miles to bid and buy exclusive items and experiences.
“United Airlines and the Star Wars franchise share a common goal: connect people and unite the world,” said Mark Krolick, United’s vice president of marketing. “We are thrilled to join forces and help promote the concluding chapter of the Skywalker story, while at the same time enlisting help from our new friends from the Star Wars universe to demonstrate the importance of safety for our customers and colleagues.”
PARIS, Oct 16 (Reuters) – France and Germany have signed a binding deal on arm exports control rules for jointly developed programmes, such as the tank and the warplane of the future, the two countries said on Wednesday in a statement issued after a joint cabinet meeting held in Toulouse.
German curbs on arms exports to non-European Union or non-NATO countries have been a thorn in bilateral co-operation for years. Germany’s SPD party, part of the ruling coalition, is particularly concerned about the trade.
According to the deal signed on Wednesday, Germany will not block French exports to third countries provided equipment was made with less than 20% German components.
French firms, such as Nexter and Arquus, previously known as Renault Trucks Defense, say German restrictions have hindered export deals. Nexter was also worried about the feasibility of the tank of the future project (MGCS) that should be developed with German firm Krauss-Maffei Wegmann.
Airbus Defence & Space and Dassault equally complained that the SCAF fighter jet project with Germany and Spain could be left in limbo.
France and Germany tentatively agreed to speed up the development of the warplane in the next few months, French President Emmanuel Macron said during a news conference with German Chancellor Angela Merkel.
The two countries will sign in January 2020 a deal to develop the SCAF demonstrator programme, French minister of Armed Forces Florence Parly said on Twitter.
Besides defence deals, Paris and Berlin also said they agreed to give preferential treatment to European companies for the launch of space rockets.
(Writing by Benoit Van Overstraeten and Tangi Salaün; Editing by John Irish)
PARIS, Oct 7 (Reuters) – France’s Dassault Aviation and Europe’s Airbus have stepped up pressure on France and Germany to agree on the next stage of a planned fighter project, warning Europe’s arms industry and long-term security could suffer from delays.
The two companies are the leading industrial partners in a project to build a futuristic swarm of manned and unmanned warplanes, announced by the leaders of France and Germany two years ago and expanded earlier this year to include Spain.
Dassault and Airbus won a 65-million-euro contract in January to develop the concept for the Future Combat Air System (FCAS) but await a new contract to build demonstrators for interlinked fighters, drones and an “air combat cloud” by 2026.
Dassault Aviation Chief Executive Eric Trappier told a conference of policymakers last month that the demonstrator contract should have been launched in September but this was now slipping towards end-year. He called it “indispensable” to avoid any further delays in order to maintain the 2026 deadline.
No reason has been given for the delays.
On Monday evening, Dassault and Airbus amplified those warnings with a joint statement.
“If Europe does not move forward — and move forward quickly — on this programme, it will be impossible to maintain the development and production capabilities needed for a sovereign defence industry,” the companies said.
The warplane system is expected to be operational from 2040, with a view to replacing Dassault’s Rafale and the four-nation Eurofighter, in which Airbus represents both Germany and Spain.
The new project faces competition from Britain and its plans for a new combat jet dubbed “Tempest”.
The fighter developments have split the current Eurofighter consortium and led to a shake-up of industrial alliances as Italy joins Eurofighter partner Britain on Tempest, turning its back on Germany and Spain, while Sweden has opened the door to abandoning its independent stance by co-operating on Tempest.
The FCAS is also overshadowed by differences between France and Germany over export policy after Germany imposed a ban on arms exports to Saudi Arabia over the death of killing of journalist Jamal Khashoggi a year ago by Saudi operatives.
The ban, recently extended to March, has raised questions over a long-delayed Saudi border systems contract run by Airbus.
Airbus Defence and Space Chief Executive Dirk Hoke called in a magazine interview last week for the export ban to be relaxed. German Chancellor Angela Merkel’s government has said there is no reason for the moratorium to be lifted.
France and Germany are expected to discuss the issue at ministerial meetings this week.
AIRBUS SETBACK IN SPAIN
Airbus meanwhile faces a battle to shore up its position as a top defence contractor in Spain after losing its place as the representative of Spain’s interests on the upcoming fighter project to local defence electronics firm Indra Sistemas.
Spain last month named Indra as contractor for the Spanish share of the Franco-German-led FCAS project, displacing Airbus from the Spanish coordinator role it had held on Eurofighter.
Airbus officials have pledged to try to overturn the move but a Spanish defence source told Reuters there was no change in the decision.
Indra declined to comment.
Publicly, Airbus has said it was surprised by the decision but has pledged to continue to defend Spain’s best interests.
Dassault will meanwhile mark a long-awaited milestone on Tuesday when it delivers the first of 36 Rafales to India, the culmination of a fighter procurement process that lasted almost 20 years and involved the cancellation of a much larger deal.
La Tribune reported on Monday that France and India were discussing a possible repeat order for 36 more Rafales.
(Additional reporting by Emma Pinedo Gonzalez in Madrid, Tassilo Hummel in Berlin, Editing by Deepa Babington)
SEOUL, Oct 1 (Reuters) – South Korea showcased newly acquired F-35 stealth fighter jets to mark Armed Forces Day on Tuesday as President Moon Jae-in tried to allay concerns that his policy of engagement with North Korea would weaken the South’s commitment to defence.
At an event marking the founding of the South Korean military, Moon said South Korean fighter jets conducted patrol flights offshore, including over islands at the centre of a bitter territorial dispute with Japan.
North Korea has criticised the South’s weapons procurements and its joint military drills with the U.S. military as undisguised preparations for war that are forcing it to develop new short-range missiles.
Moon has thrown his support behind dialogue to end the North’s nuclear and ballistic missile programmes, urging that working-level negotiations between the North and the United States be held soon. No new dates or locations have been set.
Moon marked Armed Forces Day at a ceremony at an airbase in the city of Daegu that highlighted four of the eight Lockheed Martin F-35A jets delivered this year. Forty of the aircraft are to be delivered by 2021.
During the event, an F-15K jet patrolled over the islands claimed by both South Korea and Japan and called Dokdo in Korea and Takeshima in Japan.
Moon made no direction mention of North Korea or Japan but said today’s security climate was highly unpredictable, requiring strength and innovation.
“As the recent drone attack in the Middle East region demonstrated to the world, the challenges that we will face will be entirely different from those of the past,” he said in an address to the military. “The war of the future will be a fight of science and intelligence against all elements that threaten our people’s safety and property.”
Analysts have said the F-35 stealth jets put North Korea’s anti-aircraft and anti-missile defence systems in a vulnerable position.
Negotiations aimed at dismantling North Korea’s nuclear and missile programmes have stalled since a second summit between U.S. President Donald Trump and North Korean leader Kim Jong Un broke down in February over disagreements on denuclearisation.
North Korea blamed the United States on Monday for a failure to restart talks, with Pyongyang’s U.N. ambassador Kim Song saying it was time for Washington to share proposals for talks that showed Washington had adopted a new “calculation method”.
South Korea and the United States have separately begun talks for a new military burden-sharing agreement to decide how much South Korea will pay for stationing what is now about 28,500 U.S. troops in the country.
Moon told Trump during a summit in New York last week what South Korea would contribute, including an increase in purchases of U.S. weapons and future purchase plans, a senior official at South Korea’s presidential office said.
(Reporting by Joyce Lee Editing by Jack Kim, Paul Tait and Gerry Doyle)
OTTAWA (Reuters) – Airbus SE <EADSY> on Friday pulled out of a multibillion-dollar competition to supply Canada with 88 new fighter jets, a decision that boosts the chances of rival Lockheed Martin Corp <LMT>.
The defense arm of Airbus, which indicated last month it might withdraw, cited onerous security requirements and a late decision by Ottawa to loosen the rules for how much bidders would have to invest in Canada.
Airbus and other contenders had already complained the government appeared to be tilting the race in favor of Lockheed Martin’s F-35 plane, which the Royal Canadian Air Force wants. Canada is part of the consortium that developed the plane.
Canada launched the long-delayed competition last month and said it was confident no favoritism had been shown. Ottawa says the contract is worth between C$15 billion ($11.30 billion) and C$19 billion.
Canada’s official opposition Conservative Party, which is seeking to defeat Liberal Prime Minister Justin Trudeau in an October election, accused the government of gross mismanagement.
Reuters revealed in July that Airbus and Boeing Co <BA.N> had written to Ottawa to say they might pull out.
The firms are unhappy that in late May, the government dropped a demand that bidders must guarantee to give Canadian businesses 100% of the value of the deal in economic benefits.
Such legally watertight commitments, which Boeing, Airbus and Sweden’s Saab AB <SAABb.ST> had already agreed to, contradict rules of the F-35 consortium. Ottawa’s move allowed Lockheed Martin to stay in the competition.
“One of the strongest points of our bid was the fact we were willing to make binding commitments,” said an Airbus source, who requested anonymity given the sensitivity of the situation.
“Once this was loosened up to a point where these commitments were no longer valued in the same way”, the firm decided “that’s just too much”, added the source, who also cited security challenges.
European jets must show they can meet stringent standards required by the United States, which with Canada operates the North American Aerospace Defense Command.
“NORAD security requirements continue to place too significant of a cost on platforms whose manufacture and repair chains sit outside the United States (and) Canada,” Airbus said in a statement.
Canadian Procurement Minister Carla Qualtrough said she respected the Airbus decision, adding Ottawa was determined there should be a level playing field.
“This included adapting the economic benefits approach to ensure the highest level of participation among suppliers,” she said in emailed comments.
Canada has been trying unsuccessfully for almost a decade to purchase replacements for its aging F-18 fighters. The former Conservative administration said in 2010 it would buy 65 F-35 jets but later scrapped the decision, triggering years of delays and reviews.
Trudeau’s Liberals took power in 2015 vowing not to buy the F-35 on the grounds that it was too costly, but have since softened their line.
“Justin Trudeau has spent the past four years delaying and dithering on new fighter jets for Canada only to completely mismanage the competition process,” said Conservative defense spokesman James Bezan.
Lockheed Martin declined to comment while Boeing and Saab did not respond to requests for comment.
($1 = 1.3275 Canadian dollars)
(Reporting by David Ljunggren; Editing by David Gregorio)
