China to attempt entry into the widebody market
China & Russia collaborate on rival to the A330 & Boeing 787
On May 22, United Aircraft Corp (UAC) of Russia and Comac from China launched a full scale development project for a commercial widebody aircraft, with the aim of entry into service in 2027. This represents China’s first foray into the widebody market. It is particularly notable because this time China has chosen to collaborate with the Russians, unlike on the C919 narrowbody which it is developing autonomously (albeit with Western technologies). The Russians have more commercial aerospace experience, which when combined by the financial backing of the Chinese government makes a potentially powerful cocktail.
Read more...FY18 US Defense Budget
Not as radical a departure from Obama as the headlines suggest
President Trump released his first full US Defense Budget yesterday. It requests a base budget of $574bn for FY18, and $65bn in Overseas Contingency Operations funding (OCO), making a total request of $639bn (as shown in the chart below). This would be a 3% increase year on year, and it is 3% higher than Obama requested for FY18. Whilst I acknowledge that the market environment looks better for the defence industry under the Republicans compared to the Democrats, I think the headlines this morning are focusing on the bullish rhetoric rather than understanding the nuances of the numbers. This budget is positive for the overall trajectory of defence spending and there is clearly going to be a focus on providing good equipment for troops, However, most of the uplift is consumed by higher troop costs and the Budget Control Act means there is uncertainty over whether this budget will ever come to fruition. In today’s blog I examine what I consider to be the three key questions; what has changed in this budget from Obama’s plans? Where will the extra money be spent? And how likely is it that the proposed budget is enacted by Congress?
US base defence budget and Overseas Contingency Operations funding ($m) FY01 – FY22 (Source: FY17 DoD Green Book & FY18 Budget materials)
Global Xpress has lift off
4th and final satellite launched
Inmarsat’s high profile but somewhat beleaguered Global Express (GX) programme is now almost fully operational. The fourth and final satellite, I-5 F4, was successfully sent into orbit on 15 May. This is significant for the Aerospace and Defence industry because the Global Xpress network provides new bandwidth capacity for secure mobile communications from ships, aircraft and vehicles.
Read more...US strikes budget deal to end six month long Continuing Resolution
Trump secures 3% uplift for defence, half of what he requested
The Republicans and Democrats reached a compromise over the weekend to avoid a government shut down in the US. They have agreed at $1.6trn omnibus spending bill for 2017, with $593bn for defence. The US is currently in Continuing Resolution (CR) which as Ultra Electronics noted last week has led to lower levels of government spending in the first half of 2017. The House is expected to vote on the Consolidated Appropriations Act of 2017 today, followed by the Senate on Friday, putting it on track for enactment before Friday’s midnight budget deadline.
Read more...China launches its first indigenous aircraft carrier
A show of force which will force the West to take notice
China celebrated the launch of its first domestically built aircraft carrier yesterday (Wednesday 26th April). Known as Type 001A, the ship is as yet unnamed and is the largest ever warship to be built by China. The televised launch comes at a time when tensions are running high in the region’s waters after the US deployed warships and a submarine to the Korean peninsula.
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Is stability returning to aerospace in Dorset?
Cobham and Meggitt Q1 FY17
Meggitt and Cobham both provided in line trading statements this morning, although the current position of both companies is somewhat diverged.
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