Industry Week in Review – July 19, 2019

KippsDeSanto & Co. Industry Week in Review – July 19, 2019

Industry Week in Review – July 19, 2019

Aerospace & Defense Update

This week, Boeing announced it will set aside almost $5 billion in compensation for airlines who have lost revenue as a result of the continued grounding of the 737 MAX airplane.  The amount is set to be paid out through a combination of cash and concessions, which include delivery timing, discounts, and added features and services.  The expense will also likely result in a substantial quarterly loss, as Boeing had previously projected quarterly profit to reach approximately $1.2 billion.  Airlines have lost a considerable amount of profit as they have been forced to cancel thousands of flights following the groundings, with a return to commercial flights now estimated for early 2020.  Despite the recent groundings, Boeing and its suppliers are still preparing to increase monthly production of the 737 MAX from 42 to 57 planes in the new year.

Secretary of Defense nominee Mark Esper and chairman of the Joint Chiefs of Staff nominee Mark Milley have been approved by the Senate Armed Services Committee in a set of separate votes.  This will set up a Senate confirmation hearing that will likely take place next week.  Mark Esper appears to have broad support across both sides of the aisle in the Senate, and his potential appointment should end a stretch of nearly 200 days that the Pentagon has been without permanent leadership since the resignation of Jim Mattis in January.  Esper’s confirmation will also end what has been a lengthy nomination process, which included the withdrawal of Patrick Shanahan, the former acting Secretary of Defense, from the process.

Big Mover(s)

The Boeing Company (Up 3.1%) – Share prices were up this week after the company announced that it would pay a lower than expected compensation amount of $4.9 billion to airlines as a result of delayed 737 MAX deliveries

Booz Allen Hamilton Holding Corporation (Down 3.1%) – Share prices were down this week after President and CEO of Booz Allen Hamilton Horacio Rozanski sold 31,000 BAH shares

Transactions

AE Industrial Partners, LLC has agreed to acquire Columbia Helicopters, LLC, a provider of heavy-lift rotorcraft, manufacturing, and MRO services to a variety of end markets including military support, firefighting, and on-shore oil & gas. Terms of the transaction were not disclosed.

Airbus Helicopters, a subsidiary of Airbus SE, has acquired Aersud Elicotteri S.r.l, a provider and distributer of Airbus helicopters. Terms of the transaction were not disclosed. 

Akzo Nobel N.V. has acquired Mapaero SAS, a provider of water-based and eco-friendly aerospace coatings. Terms of the transaction were not disclosed.  

Firan Technology Group Corp. has acquired Colonial Circuits, Inc., a provider of manufactured circuit boards for aerospace and defense markets. The deal is valued at an estimated $3.1 million. 

First Aviation Services Inc. has acquired Aviation Blade Services, Inc., a provider of helicopter rotor blade repair, overhaul, and modification. Terms of the transaction were not disclosed.

Saudi Arabian Military Industries has acquired Aircraft Accessories and Components Company Ltd., a provider of maintenance, repair and overhaul services for aircraft hydraulic systems and secondary energy systems for multi-platforms. Terms of the transaction were not disclosed.

Sintavia, LLC has acquired QC Laboratories, Inc., a provider of specializations in radiographic (X-ray & Gamma), fluorescent penetrant, ultrasonic, magnetic particle and eddy current inspections. Terms of the transaction were not disclosed.

XTEK Ltd. has agreed to acquired HighCom Armor Solutions, Inc., a provider of high-performance body armor, personal protective equipment, and armor systems and related accessories. The deal is valued at an estimated $2.5 million.

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