Industry Week in Review – May 31, 2019

KippsDeSanto & Co. Industry Week in Review – May 31, 2019

Industry Week in Review – May 31, 2019

Aerospace & Defense Update

Honeywell is using blockchain to revolutionize the market for used aircraft components, facilitating the ability to check the certification and origin of a part and speed up transactions.  Blockchain is a decentralized system that makes it possible to create and share a digital ledger of transactions.  Earlier this year, Honeywell’s Aerospace unit introduced an online marketplace based on blockchain that lets more than 800 international buyers and sellers trade aerospace parts in real time.  The marketplace, called GoDirect Trade, has notched more than $2 million in sales thus far, and Honeywell Aerospace targets sales of $10 million by year-end.  Participants include Dassault Falcon Jet Corp. and aircraft-repair specialist StandardAero Aviation.  Before blockchain, a transaction took, on average, two phone calls and four emails to arrange and another two days to close.  With blockchain, a buyer can locate a part and purchase it immediately.  So far, the average transaction has been about $8,000.

The U.S. Army is freeing up $10 billion to apply to its top priorities in its next five-year budget plan.   As part of a review of programs and spending, the U.S. Army set out to find $10 billion within the budget that could be reallocated toward priorities in 2021 – 2025.  The money shook out through another round of what the U.S. Army informally calls the “night court,” a review process that had freed up $30 billion in the last budget cycle to get modernization programs off the ground.  The U.S. Army is also working to shift spending so that 50 percent is applied to new programs and 50 percent to legacy systems in 2024 – 2025.  The U.S. army had been applying 80 percent to legacy programs and just 20 percent to new capabilities as recently as two years ago.

Big Mover(s) 

The Boeing Company (Down 3.7%) – Share prices continued to fall this week as Boeing recovers from the controversy surrounding the two fatal crashes of its 737 MAX jets.  As Boeing works to get its jets back in the air, it will have to overcome scrutiny from regulators that could extend the grounding of the aircraft.

Transactions

Applied Energetics, Inc. has agreed to acquire Applied Optical Sciences, Inc., a provider of technologies and IP related to the application of optical physics in a broad range of areas, including photonics and advanced Ultra-short Pulse (“USP”) laser development.  Terms of the transaction were not disclosed.

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