Industry Week in Review – August 21, 2015

Aerospace & Defense Update

The Pentagon plans to increase the number of drone flights per day from its current 61 flights to 90 flights by 2019, representing a 50% increase over the next three years.  This is the first significant increase since 2011, as pressure has been mounting on military efforts to address recent global events.  The planned increase will be supported by the Army, government contractors, and the Special Forces Command, with an additional sixteen, ten, and four daily flights, respectively.  This increased activity coincides with the expectation of continued growth in the UAV market beyond 2019. According to a recent Teal Group report, worldwide UAV production will increase from $4 billion to $14 billion annually by 2025, totaling $93 billion over the next decade.  And while commercial applications continue to increase, military spending is still expected to dominate, accounting for roughly 72% of the market.

Airbus has finalized a $26.5 billion deal with IndiGo, India’s largest domestic airline, for 250 A320neo family aircraft.  This is Airbus’ largest order based on quantity of aircraft, and its second largest order based on contract value. India’s airline market is instrumental in Airbus’s future growth strategy, as India is one of the fastest growing airline markets in the world, expecting to become the third largest global aircraft market by 2031, according to the International Air Transport Association.  Furthermore, forecasts indicate India’s market will account for nearly 1,700 aircraft orders over the next 20 years.  With IndiGo flying roughly one in every three passengers in India, Airbus’ relationship with IndiGo will be pivotal in Airbus maintaining its 80% market share in India’s commercial aircraft industry.

Government Technology Solutions Update

President Barack Obama made the Presidential Innovation Fellows Program a permanent part of the Federal government through executive order this week.  The program focuses on attracting experienced individuals from the private sector to serve one-year terms in government agencies in an effort to foster innovation throughout the Federal government, particularly in the technology sector.  Additionally, some of the most innovation-focused areas of the Federal government, such as General Services Administration’s (“GSA”) 18F and U.S. Digital Service, are fostered through the program.  While Fellows serve one-year terms, many continue in their government positions, a favored outcome for those looking to bring private sector experience and ideas to the government.

GSA has released two Requests for Proposals (“RFP”) for the Human Capital Training Solutions (“HCaTS”) contract: (1) HCaTS and (2) HCaTS Small Business (“SB”). HCaTS and HCaTS SB are both multiple-award contracts that focus on the provision of training and other human resources services as part of a new Federal category management strategy.  Under the new category, the Office of Personnel Management (“OPM”) will oversee human capital-related procurement spending, with the goal of making it easier for Federal agencies to purchase these services.  The deadline for submission for RFPs is October 16th.

Big Movers

The Boeing Company (Down 9.2%) – Shares were down this week in response to both macroeconomic trends and news of a potential shortage in its production of the 737 jetliner.

Airbus Group (Down 6.1%) – Shares were down this week as macroeconomic trends overwhelmed positive news of a $26.5 billion deal with IndiGo for 250 A320neo family aircraft.


MAG DS Corporation acquired Bosh Global Services, Inc., a provider of global support and operational services for unmanned ground, air, sea, and space programs.  Terms of the deal were not disclosed.

Air Partner Plc acquired Baines Simmons Ltd., a provider of training, consulting, and outsourced services to civil aviation, defense aviation, and regulatory authorities.  The deal is worth an estimated $9.4 million.

Pro Star Aviation acquired HL Tooling, LLC, a provider of high quality precision machining.  Terms of the deal were not disclosed.

HEICO Corporation acquired a majority stake (80.1%) in Aerospace & Commercial Technologies Inc., a producer and installer of aircraft modification kits for the F16 aircraft.  Terms of the deal were not disclosed.

Satcom Direct Communications, Inc. to acquire Airbus DS SatCom Government, Inc., a provider of government satellite communications services.  Terms of the deal were not disclosed.

American Systems acquired EM Business Holdings, a provider of engineering, science, and advanced technology solutions to classified Federal customers dealing with Intelligence, Surveillance, Reconnaissance and Targeting (“ISRT”) missions.  Terms of the deal were not disclosed

MicroPact merged with Iron Data, a provider of case management, Business Process Management (“BPM”), and vertical Commercial Off-The-Shelf (“COTS”) software solutions.  The combined company will retain the name MicroPact, and seeks to enhance their technologies and solutions at the platform level through the merger.  Terms of the deal were not disclosed.

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