Honeywell International announced that it is no longer pursuing an acquisition of United Technologies, roughly two weeks after it placed a $90 billion bid (excluding debt) for the target. Honeywell believes that a strategic combination will create value for both shareholders as both firms have complementary business portfolios; however, United Technologies has been unwilling to negotiate, stating the transaction would receive heavy anti-trust regulatory scrutiny and create resistance among customers.
The chairman of the Senate Armed Services Committee (“SASC”), Senator John McCain, stated he will not authorize the Long Range Strike-Bomber (“LRS-B”) if the procurement is on a cost-plus basis. Senator McCain expressed concern of the additional costs associated with the contract structure and voiced opposition to hear the Air Force’s perspective on the matter. Following the Senator’s remarks, the Air Force revealed the contract will be divided into two parts, cost-plus and firm fixed price.
The Government Accountability Office (“GAO”) denied Boeing and Lockheed Martin’s protest of the Pentagon’s award of the Long Range Strike Bomber (“LRS-B”) contract to Northrop Grumman. However, Boeing still has the option of pursuing the matter in court, and has suggested it’s considering doing so. Northrop Grumman was initially awarded the contract on October 27, 2015, but the decision was soon after protested.
The Securities and Exchange Commission (“SEC”) has launched an investigation to determine whether Boeing properly accounted for the costs and expected sales of the 787 Dreamliner and the 747 jumbo aircraft. The probe, prompted by a whistleblower’s complaint, concentrates on projections made by the Company about the long term profitability of two of its best known jetliners. Both aircraft are renowned for the technological advancements they introduced into the aerospace industry.
This week, Defense Secretary Ash Carter previewed the GFY2017 defense budget request in anticipation of the full release next week. According to Carter, the $583 billion budget takes a “long view” approach, as the U.S. prepares for challenges decades down the road. The planning of the budget was driven by several key factors including the rise of Russia and China, the threat of North Korea, Iran’s influence in the Gulf Coast, and the current fight against the Islamic State.
Boeing released its financial guidance for 2016, which included plans to deliver fewer commercial jets this year than last. The guidance sent shares down 8.9% to end Wednesday trading at $116.58, its lowest close since October 2013. However, Boeing achieved first flight of its 737 MAX on Friday, hoping to stay competitive against Airbus for the next decade in short-haul airliners.
The U.S. State Department approved the sale of more than 33,000 F-16 Block-52 weapons and munitions to Iraq for roughly $2 billion. According to the Defense Security Cooperation Agency, Iraq will use the weapons systems and logistic services to maintain its F-16 fleet functionality and support pilot training.
The U.S. Air Force selected Orbital ATK and SpaceX to develop prototypes of rocket engines as a part of the persistent push to end reliance on the Russian RD-180 boosters for military space launch. Orbital ATK secured a $47.0 million contract to develop prototypes of its GEM 63XL strap-on solid rocket motor, the common booster segment solid rocket motor, and an extendable nozzle for Blue Origin’s BE-3U engine.