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Industry Week in Review – September 19, 2013


This week, German airline Lufthansa announced a large order for wide-body jets.  The German flag carrier said it is ordering 34 new 777-9X jets from Boeing and 25 A350-900 jets from European rival Airbus as it updates its long-haul fleet to make it more fuel efficient and lower costs.

Rolls-Royce and United Technologies, two of the largest players in the worldwide aircraft engine industry, announced that they were abandoning plans to form a new joint venture to produce a mid-size commercial jet engine.  The companies cited the current regulatory environment as the reason for not proceeding with the partnership.

In the government space, the September 30th deadline for Congress to pass a funding bill is rapidly approaching.  On September 20th, the Republican-controlled House of Representatives passed a continuing resolution (“CR”) that ties discretionary spending to the defunding of the Patient Protection and Affordable Care Act (“PPACA”), which has been a politically charged issue since it was enacted in 2010.

The Democratic-controlled Senate has already declared a CR defunding PPACA as “dead on arrival,” and plans to pass a CR maintaining government funding at current levels through December 15th.  Even if a CR is successfully passed before September 30th, the government is on pace to reach its debt ceiling in mid-October, likely triggering another fiscal showdown in Congress.

Big Movers

The Boeing Company (Up 4.8%) – Shares were up this week after the successful maiden flight of the Company’s 787-9 aircraft on September 17th.  The 787-9 is a slightly longer version of Boeing’s 787-8 Dreamliner.  The Company currently has unfilled orders for 388 787-9 aircraft and 548 787-8 aircraft worth a combined $217 billion at list prices.

Triumph Group (Down 7.5%) – Shares were down this week after the Company announced lowered profit expectations due to production cuts to the Boeing 747-8, an aircraft for which Triumph is a key supplier.

Relevant Transactions

Secure Communications Systems, a portfolio company of Vance Street Capital, acquired Lark Engineering Co.,a manufacturer of radio frequency filters for the commercial, industrial, and military markets.  The acquisition will expand Secure’s product offering and cross-selling opportunities.  Terms of the deal were not disclosed.

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