While the United Nations Assembly was meeting in New York, Airbus and Boeing announced that each company has received permission from the U.S. government to sell commercial aircraft to Iran. Boeing plans to sell 80 new aircraft and lease an additional 29 Boeing 737s to Iran for ~$25 billion. Airbus, on the other hand, only received approval from the U.S. Treasury on one of the two licenses it requested, allowing it to sell 17 aircraft to Iran for ~$1.8 billion, rather than the 112 aircraft requested.
The constant dynamic of Continuing Resolutions (“CR”) and looming budget sequestration over the last eight years hinders the U.S. military by shifting focus from modernization efforts to fulfilling current combat needs. Ironically, spending caps and budget requirements under CRs increase cost inefficiencies and waste for the Armed Forces.
According to Breaking Defense, Under Secretary of Defense for Acquisition, Frank Kendall, firmly believes Congress will be unable to implement a new defense funding bill before October 1st. With the Senate failing to pass the bill for the third time earlier this week, the real question has changed to whether the Continuing Resolution (“CR”) will last for three or six months.
This past week, Boeing announced that it will not raise commercial aircraft list prices for the first time in seven years. The Company typically raises prices annually (2.9% and 3.1% in 2015 and 2014, respectively) to account for increases in cost of materials, services, and labor.
The Department of Defense (“DoD”) announced Lockheed Martin has been awarded an indefinite delivery / indefinite quantity (“IDIQ”) contract with the U.S. Air Force for the production of the Super Hercules C-130J transport plane. The decade long contract covers production of an estimated 100 aircraft for domestic and foreign military sales through August 2026 and has a ceiling value of $10 billion.
Top military officials addressed the increasing threat of hypersonic glider weapons at the Space and Missile Defense Symposium this week. The development of hypersonic gliders strain current missile defense systems due to the gliders’ increased speed, lower travel altitude, and unpredictable trajectory compared to traditional intercontinental ballistic missiles (“ICBMs”).
With the looming Continuing Resolution (“CR”), Air Force Secretary, Deborah Lee James, warned congressional members that up to 60 program budgets would be impacted. The potential long-term CR would underfund the Air Force by an estimated $1.3 billion compared to its requested FY2017 budget.
After overcoming cost overruns and development concerns, the F-35A has officially been declared ready for combat, 15 years after Lockheed Martin originally won the contract. As a result of achieving the initial operational capability (“IOC”) milestone, the first F-35 operational formation can now be deployed anywhere in the world.