Industry Week in Review – January 3, 2014
2014 looks to be an important year for execution for three major aerospace OEMs and their newer model landmark aircraft. Airbus is now facing a crucial twelve months as it enters the second half of the A350-900 flight-test program and moves towards addressing items required for certification. Tests have been mostly successful with three more aircraft expected to join the flight-test program in the next six months. With 814 firm orders for the A350, 549 of which are for the A350-900, there is little room for error as Airbus expects the aircraft to receive its type certificate late in the third quarter in time for the first delivery to Qatar Airways in early fourth quarter. Boeing’s successful launch of its 777X at the Dubai Airshow now positions the company in an intense phase of program execution following a recent union vote to keep production facilities in the state of Washington. In addition, following a turbulent year for its 787-9, Boeing will look to ramp up efforts to improve reliability and stabilize production lines to complete certification and deliver the first aircraft by mid-year. Lastly, Bombardier is looking to lock down an entry-into-service date for its highly-anticipated CS100, which date appears like it might slip into 2015. With only 182 firm CS100 orders as of December, Bombardier will spend much of 2014 establishing its aircraft in the marketplace against aggressive competition.
The Department of Homeland Security has decided to take another look at the EAGLE II functional category one unrestricted portion of the contract, which had 26 protests filed with the Government Accountability Office and Court of Federal Claims since being awarded in mid-September. Several companies that filed protests mentioned the RFP explicitly stated that price was less important than technical capabilities. However, based on the vehicle awards, many feel EAGLE II was exercised as Lowest Price Technically Acceptable. The decision to take a “second look” will further lengthen the EAGLE II delays, giving incumbents more time to move work from EAGLE I to other contract vehicles.
Big Movers
Kratos Defense & Security Solutions, Inc. (Up 13.0%) – Shares were up this week after the Company’s Defense and Rocket Support Solutions Division received a contract option award of $17 million to support certain foreign allied militaries’ deployed weapon systems.
Relevant Transactions
Engility Holdings, Inc. to acquire Dynamics Research Corporation, a provider of management consulting, science, engineering, technical, and IT services and solutions for various federal agencies and governments. Engility will acquire all outstanding common shares for $11.50 each, representing a value of approximately $120 million.
Huntington Ingalls Industries, Inc. acquired The S.M. Stoller Corporation, a provider of environmental, nuclear, and technical consulting and engineering services to the Department of Energy, Department of Defense, and the private sector. Terms of the deal were not disclosed.
Motorola Solutions, Inc. acquired Twisted Pair Solutions, Inc., a provider of push-to-talk-over-broadband applications for secure, real-time communication used in critical solutions by military, government, and commercial organizations. Terms of the deal were not disclosed.
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