:: March 2000 Newsletter ::
Greetings! What a great month for news. It seemed like one of those months where something aviation-related made the headlines every day, and none of it involved an unpleasant crash. This is good, because the only idea I have for this month’s letter is a roundup of current events.
The UAE finally signed the F-16 Block 60 launch order. This is bad for Eurofighter and Dassault, but given the strong prospect of a JSF delay (or even cancellation), F-16-60 may be the only fighter this country exports in any numbers for the coming ten years. In a sign that the entire segment remains depressed, Lockheed Martin and Northrop Grumman stocks barely budged, despite the $5 billion deal.
Northrop Grumman, meanwhile, politely inquired to DoD about its role in JSF. The company pointed out that unless it gets a 20% role in the program, it has no reason to maintain its aircraft integration capabilities. The company also seemed to hint that if DoD wasn’t going to include Northrop Grumman in any aircraft competitions (with Common Support Aircraft dead, there are no other competitions), then why didn’t they let them merge with someone else? Didn’t the government stop the LockMart/NGC merger to keep competition alive?
DoD, as this is written, is scheduled to release a decision about JSF work shares. I don’t get it. Did DoD decision makers spend the last four years sleepwalking? Did they suddenly wake up and say “come to think of it, this multi-billion dollar program might just affect the fighter industrial base. We should plan for that.”? As my dad used to say, there’s nothing like a government job.
The Boeing SPEEA strike ended. After thirtysomething days of blithering obstinacy and lost ground, Boeing agreed to pretty much give the engineers what they wanted. The damage could have been a lot worse.
Across the pond, the UK Government proudly announced that they were giving 530 million pounds to BAE for the A3XX project. The subsidy (er, make that “repayable loan”) will help BAE keep their share of Airbus, which, of course, wasn’t really open to question. The announcement was a real departure from the typical European approach of making very little noise about this sort of thing. I suspect it had very little to do with getting the A3XX dinosaur off the ground, and more to do with increasing the valuation of BAE’s Airbus assets. With this support, BAE’s Airbus component is essentially insulated from the risks inherent in a large new aircraft venture, which could make the unit more attractive to a suitor. If nothing else, it lowers the cost of capital for BAE if Airbus decides to press ahead. The Commercial Jet Transports overview, included in this supplement, reviews the A3XX situation, and includes deliveries starting in 2009.
On the smaller end of the jetliner scale, Comair placed a huge order for Bombardier regional jets. The Delta subsidiary ordered 94 firm and 406 (!) option aircraft, including 50-seat CRJ-200s, 74-seat CRJ-700s, and some strange 40-seat CRJ variant which sounds like merely a shrunken CRJ-200. The latter effort more or less puts an end to speculation about a new 35-seat Bombardier RJ based around the Continental business jet. Meanwhile, BAE officially launched the new RJX, the third incarnation of the venerable Hawker Siddeley 146. Unfortunately, no launch customers were announced. This could be an uphill battle. Ditto for Alliance Aircraft, which has announced plans for a new family of 70/100-seat planes to compete with the CRJ-700/900, Fairchild Dornier 728/928, and Embraer ERJ-170/190.
Next month, there will be a long-overdue business jet update. As always, e-mail in advance if you want a spreadsheet or early copy of the report. I’ll also update JSF, Mirage 2000, 737, and numerous others. Let me know if you have any requests. And enjoy the start of Spring.
Yours, ‘til Someone Gives Me A Large Repayable Loan,
© Richard Aboulafia 1997-2006, All rights reserved.