This week, U.S. House lawmakers, seemingly frustrated by Air Force and Army decisions to cancel weapons in the 2013 budget, have taken the first steps toward reinstating funding for those programs. In its markup of the 2013 defense authorization bill, the House Armed Services subcommittee on tactical air and land forces recommended adding $1.1 billion above what the Pentagon requested for certain weapons programs. The draft legislation blocks the previously speculated cancelation of the Northrop Grumman Block 30 Global Hawk. If the legislation is approved, it will not only add $263 million to the requested $75 million to fund continued operations, the Air Force will be required to operate the unmanned aircraft through the end of 2014.
The subcommittee seeks to fully fund procurement of 29 Lockheed Martin F-35 Joint Strike Fighter aircraft, and to buy the additional 12 General Atomics MQ-9 Reaper unmanned aircraft, the subcommittee recommends a $180 million addition to the Air Force’s $920 million request. The markup also authorizes multiyear procurement of the Bell-Boeing V-22 Osprey, funds production of 21 tilt-rotor aircraft in 2013, extends the Boeing F/A-18E/F Super Hornet multiyear for a fifth year, and funds 26 F/A-18s and 12 EA-18G Growler electronic attack aircraft.
Army budget requests were also revisited. In its markup of the authorization bill, the subcommittee says there is not enough information available about the Army’s future needs or the risks associated with temporarily closing the combat vehicle production lines. In the absence of the force-mix study results and a quantitative analysis of the impacts to the combat vehicle industrial base, the subcommittee recommends providing funding to keep those production lines open. The subcommittee recommends an additional $181 million for continued M1 Abrams tank upgrades and $140 million for upgrades to the Bradley fighting vehicle. It also adds $62 million to increase 2013 production for the M88A2 Improved Recovery Vehicle.
Dynamics Research Corp. (Down 23.3%) – Shares are down this week after the Company further reduced 2012E expectations, citing continuing deferral of procurement decisions and program cuts, together with intensified price competition as the main drivers for the downward shift.
Safran SA (Up 14.3%) – Shares rose this week as brisk overhaul demand for jet engines underpinned stronger than expected first quarter sales. The Company posted first-quarter revenue of 3.1 billion euros ($4.1 billion), above market forecasts of around 3 billion, boosted by a 15.1% rise in the economically sensitive after-market for civil jet engines.
Blackland Aerospace acquires Lewis Machine Company, a provider of complex precision-machined components for clients in the commercial and military jet engine, airframe, missile and power plant industries. The acquisition of Lewis Machine represents the third in fourteen months and reaffirms Blackland’s commitment to building a leading platform in the sector. The terms of the transaction were not publically disclosed.
Six3 Systems acquires Ticom Geomatics, a provider of interoperable, mission-ready, precision Geolocation and ISR systems and services. The acquisition combines Ticom’s expertise in Tactical precision Geolocation and COMINT with Six3’s strong capabilities in the National ISR/SIGINT and Cyber market. Together the Company will be able to offer customers comprehensive solutions and services that span from National through Tactical ISR needs and address all elements of the Multi-INT market. While some reports show Ticom’s latest reported revenue to be almost $30 million, the specific terms of the transaction were not publically disclosed.