Industry Week in Review – June 21, 2013

The Paris Air Show lived up to the industry’s high expectations in terms of optimism and new aircraft order activity.  At center stage this past week stood Airbus and Boeing, whose combined new aircraft orders exceeded 840 aircraft worth nearly $140 billion.

Both companies raked in new orders for high-profile new platforms.  Boeing gained over 100 orders for its new, stretched version of its 787 Dreamliner, the 787-10.  Airbus, meanwhile, generated buzz with the maiden flight of its new A350 widebody, which generated dozens of orders.  The strong order activity adds to already robust, long-term backlogs for both aerospace companies.  Defense order activity, and overall presence by prime contractors and suppliers, was subdued, with many companies sending smaller contingents to the show.

On the domestic front, concern over privacy issues intensified following the NSA leak by former contractor Edward Snowden as FBI Director Robert Mueller acknowledged that the FBI has used drones for surveillance operations inside the U.S. in a “very, very minimal way.”  He did not give any examples when drones could have been used, though this marks the first time an intelligence chief admitted to domestic drone surveillance operations.

Big Movers

TransDigm Group (up 9.2%) – shares were up for the week following their announced acquisition of the Electromechanical Actuation Division of GE Aviation, referenced below.

Bombardier Aerospace (down 8.3%) – shares fell for the Canadian manufacturer following the loss of a $2.5 billion rail contract to Siemens AG. Shares recouped lightly following the announcement of $1.8 billion in orders from the Paris Air Show, only to continue their gradual decline thereafter.

Relevant Transactions

TransDigm Group Inc. to acquire GE Aviation’s Electromechanical Actuation Division, a producer of electromechanical motion control systems, such as motors and control electronics, for the civil and military sectors, for about $150 million in cash. The division has revenues of approximately $80 million.

Subsystem Technologies, Inc. acquired Alapko, Incorporated, a provider of executive information integration and program support to the national security community.  The acquisition enables Subsystem Technologies to expand its defensible security strategies to address cyber-related issues while expanding its financial management offerings. Terms of the deal were not disclosed.

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