No Saab Story Here

By Richard Pettibone, Forecast International

saab

As it faces an austere and highly competitive global defense market, Saab is building its strategy to increase revenues and profits.  Under this effort, the company plans to reduce costs and focus on successful niche markets and opportunities abroad.

While cost reductions have been ongoing throughout its operations, the company has so far maintained a high level of R&D. Much of this funding will be targeted to niche areas, especially the growth market of unmanned vehicles.

Around the globe, Saab has been quite successful in building its presence.  Through a series of acquisitions and joint ventures, Saab has been aggressively penetrating new markets in India, Brazil, and most interestingly, the U.S.

Though not without risk in this downturn/recovery, the push into the world’s largest defense market does make sense.  However, with U.S. defense spending set to be reduced, Saab may face some difficulty in penetrating the market.  The pressure from the U.S. government to buy local will be high in the face of budget cuts and the resulting layoffs at manufacturers.

A big part of this drive will entail Saab establishing partnerships with U.S. aerospace and defense firms.  Such teaming would make the acceptance of Saab products for military consumption all the more palatable if it is perceived as supporting a local firm as well. True to this strategy, the company teamed with Boeing in late 2013 to offer a new, clean-sheet aircraft design for the USAF T-X trainer program.

Saab’s operations in the U.S. have also been consolidated under a new organizational umbrella, Saab Defense and Security USA (SDAS).  This new organization includes Saab Training USA, Saab Barracuda, Saab Support and Services, and the defense-related operations of Saab Sensis.  SDAS will focus its energies on providing defense and homeland security systems and services to the U.S. market.

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In South America, Saab scored a major coup when its JAS 39E Gripen NG was selected to fulfill the needs of Brazil’s FX-2 fighter competition.  The Gripen beat the Dassault Rafale and Boeing F/A-18E/F Super Hornet after a lengthy tender process. The deal is for the purchase of 36 fighters for an estimated cost of $4.5 billion. The contract is expected to be finalized by December 2014 and completed by 2023.

However, along with the good news the company had to deal with the bad when Swiss voters rejected a proposed acquisition of 22 JAS 39E Gripens. The deal, which had been worth an estimated $3.5 billion, was opposed by 53.4 percent of the voters. A reworked deal with Switzerland is considered unlikely in light of the vote. Despite that setback, Saab is proposing the Gripen for upcoming fighter procurements in Bulgaria, Croatia, Denmark, Greece, Malaysia, and Slovakia, among others.Next Generation SubmarineAt sea, Saab expanded its maritime activities with the purchase of the Kockums submarine yard from Germany’s ThyssenKrupp Industrial Solutions AG. The acquisition was pursued after a falling out over price and submarine exports between Sweden and ThyssenKrupp.  As a result, Sweden pulled A26 submarine work from the firm and tasked Saab with coming up with a plan for the country to maintain an indigenous submarine-production capability.  Under the $50.5 million deal, Saab will acquire operations in Malmö, Karlskrona, and Muskö and add around 900 employees.

All told, Saab has been very proactive in adapting to the new aerospace and defense marketplace. Although it has at times been challenging, Saab has proved over the years that it can adapt quickly and successfully correct its course. With competition in these markets becoming even more fierce as government spending declines, this skill will be critical in the years ahead.

@RPettiboneFI

Bell 525 to Fill Super Medium Niche

by Douglas Royce, Forecast International

P1060400 (Small)

Bell Helicopter launched the all-new Model 525 Relentless at Heli-Expo in February 2012.  The twin-engine design will be the largest helicopter in Bell’s commercial product line when it is certified. It will be capable of carrying 16 passengers in a standard configuration, and Bell has promised a high-capacity configuration seating 20 passengers.  The 525 is targeted at the oil and gas, search-and-rescue, and VIP/corporate transport markets.

P1060401 (Small) P1060398 (Small)

Bell is targeting a maximum takeoff weight of 19,300 pounds (8,750 kg). Bell calls the 525 a “super medium” helicopter, placing it in the gap between the AgustaWestland AW139 and Eurocopter EC 175 at the top end of the light helicopter market and heavy commercial models like the Eurocopter EC 225 or Sikorsky S-92.  This is the same market space targeted by the AgustaWestland AW189.

Two 1,800-shp GE CT7-2F1 engines equipped with Full Authority Digital Engine Controls (FADEC) will power a five-bladed, fully articulated main rotor. A new Garmin G5000H integrated avionics suite will give pilots a high level of situational awareness even in poor weather, according to Bell.

The manufacturer plans to achieve certification in 2015, but schedules announced at launch of an all-new aircraft program are rarely met.  It is likely that deliveries will begin in 2016.

Pratt F135 Woes

By William Alibrandi, Forecast International

Pratt & Whitney’s F135 program has been under great scrutiny after several high-profile incidents, the latest involving an engine fire. While these have been a dark cloud hanging over the program, any new engine could have issues like this in development testing; it’s actually par for the course. The bigger problem may be with the F-35 Lightning program. The Pentagon decided to design, build, test and fly the F-35 all at the same time rather than in consecutive order as in past aircraft programs. Now, any problems with the F135 are exacerbated because the test schedule is so compressed, and any problems or flaws in the engine mean expensive rework – setting back the entire program. Arguably, if the normal development process had been followed, we might not be seeing as many engine-related issues with the Joint Strike Fighter.

The issue that resulted in the July 3rd grounding of the F-35 fleet has turned out to be an interference problem in the third-stage fan of the integrally bladed rotor (IBR) in the engine’s low-pressure compressor section. Normally an abradable strip maintains the tight clearances necessary to reduce pressure loss in this area, but the teardown has determined the rubbing to have generated excessive heat, causing micro fissures in the blades. The resultant failure caused the blades to come apart, resulting in the fire. The official word from the Pentagon is that the problem appears isolated, and all 98 F135 engines in service have been inspected. Pratt & Whitney’s president, Paul Adams, said the issue is not related to any previous incident. Pratt was already redesigning the first stage fan of the IBR and is switching from a hollow blade design to a solid blade. Plans for the redesign have been submitted to the Pentagon’s F-35 Joint Program Office for approval.

F135

No F-35B? No Big Deal

By Ray Peterson, Forecast International

Okay, everyone wants to see the F-35B at the Farnborough Airshow. The U.S DoD has already deployed the aircraft and it doesn’t look good if it can’t deploy to this major aeronautical event. Lockheed Martin is staking its reputation on the fighter that can do it all and it’s not doing the company any good if the planes are sitting on a tarmac in America. And Britain, home to legends of reggie spotters, would like the bragging rights that come with having such a notable aircraft appearing for the first time at the home of British aviation.

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The F-35B is a no-show for Monday’s opening day, probably Tuesday, too. In fact, it’s likely the fighter may not make it to the show during the five trade days or the two public days on Saturday and Sunday.

However, the F-35B’s absence from the show won’t result in a flood of cancellations, nor is it likely that any country considering procuring the aircraft will be negatively influenced if its military officials can’t see it fly at Farnborough. It’s quite common for new aircraft programs to experience issues of one kind or another at some point during their development or early operations. Just ask Airbus (A380 and A400M), Boeing (787), and Bombardier (CSeries).

Coincidentally, the U.S. Navy last week awarded Boeing a $1.9 billion contract for 11 F/A-18E/F Super Hornets, 21 EA-18G Growler EW aircraft, and 12 EA-12Gs for Australia. As Forecast International’s defense analyst Shaun McDougall notes, the Navy has increased Super Hornet procurement in recent years to offset potential fighter shortfalls stemming from F-35 delays.

By the way, the Super Hornet will be flying during the show. For the F-35, there will always be Paris next year.

 

Thirty Years of Farnborough Air Shows

By Ray Peterson, Forecast International

I first visited the Farnborough Air Show 30 years ago and, after covering the various aircraft programs for more than three decades, I can justifiably say that I’ve seen them come and I’ve seen them go.

1984

A big attraction at the 1984 show was the Northrop F-20 Tigershark, which evolved out of the company’s F-5E Tiger II. The Tigershark was built as a relatively inexpensive export fighter, and only three prototypes were built before Northrop canceled the program in 1986.

Also making an appearance 30 years ago was the British Aerospace 146-100 regional aircraft, which first flew in 1981. Dubbed “the world’s quietest jetliner” at that time, it made a discreet pass by the viewing area. You could say that today about the four-engine A380 – the engine technology has come that far. The BAe 146 was superseded by the Avro RJ in 1993.

In contrast to the unobtrusive BAe 146 that year was the U.S. Air Force’s EF-111, whose twin Pratt & Whitney TF30 engines briefly stopped shoptalk within the halls during its demonstration. The EF-111A, or “Spark Vark,” was retired in 1998.

A memorable incident in 1984 involved a de Havilland Canada twin-turboprop DHC-5 Buffalo. During the first day’s flying display, the Buffalo’s pilot was taking part in a STOL demonstration when he came in too hard on a rather short landing and destroyed the aircraft. Fortunately, no one was injured and the flight demonstrations resumed shortly after.

Then as now, show organizers were a helpful lot. When a co-worker of mine politely asked one of the women working in the press center if she would retype his hand-written notes, not only did she comply without hesitation, but she then agreed to send the message to the States, no charge, by teletype (that’s right, teletype!). Pardon me for stating the obvious, but a lot has happened in three decades!

2014

 

New Product Development Re-shaping Large Jetliner Market

By Raymond Jaworowski, Forecast International

On the eve of the 2014 Farnborough Air Show, Forecast International notes that Airbus and Boeing are playing point-counterpoint on a colossal scale in terms of new product development.  Currently in development, the Airbus A320neo and the Boeing 737 MAX, with respective orders numbering in the hundreds, are re-engined versions of the two companies’ current and very popular narrowbody airliner families.

In the market’s widebody segment, Airbus and Boeing have engaged in a series of moves and countermoves.  The Boeing 787’s introduction led to Airbus responding with the A350 which, in turn, has led to Boeing launching the new 777X series.  The advent of these new aircraft is transforming the large airliner market.

In its new study “The Market for Large Commercial Jet Transports,” Forecast International projects that a total of 15,716 large commercial airliners will be produced from 2014 through 2023.  The Connecticut-based market research firm estimates the value of this production at $2.38 trillion in constant 2014 U.S. dollars.

During the 10-year forecast period, the A320neo, 737 MAX, 787, A350 and 777X will account for nearly 65 percent of new production. The A320neo and 737 MAX alone will account for some 43 percent of unit production during that time.

Forecast International predicts that annual production of large airliners will rise each year from 2014 through 2020, with production increasing from 1,379 aircraft in 2014 to 1,730 in 2020.  The company expects output to decline somewhat during a minor, economically driven cyclical downturn in the 2021-2022 period before it resumes an upward track in 2023.

According to the Forecast International projections, Airbus and Boeing will account for more than 95 percent of the large airliners that are forecast to be produced during the 2014-2023 timeframe.  This level of dominance indicates that the market will essentially remain a duopoly during this period.  However, the Airbus/Boeing rivalry is unusually competitive for a duopoly, with both companies spending substantial resources on new product development.  Simultaneously, they severely discount prices on existing products in order to accumulate sales.

Forecast International senior aerospace analyst Raymond Jaworowski said, “The fiercely competitive nature of the Airbus/Boeing rivalry arises from the relatively limited size of the customer base, efforts by the two manufacturers to increase profit margins, and the desire of both companies to continually increase aircraft production rates.”

Airbus and Boeing continually raise production rates in order to improve production efficiencies, reduce wait times for customers, and stave off new competitors in the marketplace.  These new competitors are appearing in the narrowbody segment of the large jetliner market, and include such aircraft as the Bombardier CS300, the COMAC C919, and the Irkut MC-21. However, their introduction will have little impact on Airbus’ and Boeing’s overall market share through the 2014-2023 forecast period.

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