InSight

Exit and Growth Strategies for Middle Market Businesses

Archive for the ‘Aviation/Aerospace’ Category

M&A News From the Aviation, Aerospace & Defense Industry

By Joe Contaldo | Nov 18, 2016

Aviation, Aerospace & Defense IndustryWorldwide shipments of general aviation airplanes, a key demand driver for manufacturers of aerospace products and parts, fell 4.5% in the first half of 2016 compared to the same period in 2015, according to the General Aviation Manufacturers Association (GAMA). Among airplane types, turboprops saw the biggest decline in shipments, with a drop of 4.9%, followed by piston planes (off 4.5%), and business jets (down 4.3%). Global rotorcraft shipments declined by 16.1%, led by an 18.3% reduction in turbine helicopter shipments. Piston helicopter shipments decreased by 10.1%. Demand for general aviation aircraft has been dampened by sluggish global economic growth, according to GAMA. The association has also criticized Congress for not moving to streamline the general aviation product certification process as part of the FAA Extension bill in July 2016. GAMA argues that a reformed regulatory environment would bring safer, more innovative products to market faster and reduce manufacturer costs.

  • US durable goods manufacturers’ shipments of military aircraft and parts, an indicator of demand for aerospace products and parts for military use, fell 11.6% year-to-date in August 2016 compared to the same period in 2015.
  • US durable goods manufacturers’ shipments of nondefense aircraft and parts, an indicator of demand for aerospace products and parts, fell 3.9% year-to-date in August 2016 compared to the same period in 2015.
  • US steel mill product prices, an indicator of commodity steel costs for aerospace products, rose 1.1% in September 2016 compared to the same month in 2015.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 4th Quarter Newsletter Here


M&A News – Aviation, Aerospace and Defense Industry

By Joe Contaldo | Jul 14, 2016

Aviation, Aerospace and Defense IndustryIllustrating increased competition in a key market segment in the aviation, aerospace and defense industry, Boeing, in March 2016, struck a deal for United Airlines to order 25 737-700 single-aisle jets, beating out smaller rivals Bombardier and Embraer. The agreement followed a similar deal in January, when United agreed to buy 40 737-700s. The airline is working to replace its aging fleet of smaller, 50-seat aircraft. The competition for the United orders was fierce as Bombardier hoped a win would help boost demand for its CSeries narrow-body jets, the company’s first product that aims to compete directly with Boeing. Executives at other airlines were said to watch the United decision closely, and are expected to weigh the outcome when considering the Bombardier CSeries as a potential part of their own narrow-body strategies, according to The Wall Street Journal. Single-aisle jets are expected to account for more than 70% of global new aircraft deliveries through 2034, according to a recent Airbus market report. 

Global shipments of general aviation aircraft fell more than 6% in the first nine months of 2015 compared to the same period in 2014, according to the General Aviation Manufacturers Association (GAMA). Industry watchers suggest demand for US-made general aviation aircraft may have been harmed when Congressional authorization for the US Export-Import Bank lapsed in July 2015. The Export-Import bank provides financing to US export manufacturers who are unable to secure financing in the private sector. The Export-Import Bank was reauthorized in December 2015. Worldwide shipments of business jets were a bright spot, which increased more than 4%. However, shipments of piston aircraft in the first nine months of 2015 dropped nearly 11% and turboprop aircraft deliveries were off more than 9%. Overall, rotorcraft shipments were down nearly 6%; a 1% rise in piston rotorcraft shipments was more than offset by an 8% fall in turbine rotorcraft deliveries.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 2nd Quarter Newsletter Here


BREXIT on Display at the Farnborough International Airshow

By Daniel Sirvent | Jun 30, 2016

Commercial Aerospace “Supercycle”?Front Row Seats for the End of the Commercial Aerospace “Supercycle”?

It goes without saying that Britain’s vote to exit the European Union, or the now familiar BREXIT, has had the media buying ink by the containership as opposed to the proverbial barrel.  Wall Street analysts, corporate forecasters and a fresh wave of armchair economists are all weighing in on what BREXIT will mean for global trade, U.S. interest rates and their retirement portfolios.

The Economics of Commercial Aircraft Orders

While it may appear overly simplistic the principle remains fundamental; a stronger dollar drives dollar-denominated commodity prices lower. The aerospace industry is aware not only of the sharp contraction in crude oil prices since the Thanksgiving Massacre in 2014 (who could miss the relentless media attention), but also of the nearly silent decline in jet fuel prices which has gone virtually unnoticed in the headlines.  As those lower prices have eased a major cost pressure, operators have drawn back the throttle and next generation aircraft and engine acquisitions driving slowdown in new order velocities. Read more »


Aviation, Aerospace and Defense M&A Industry News

By Joe Contaldo | Feb 25, 2016

Aviation, Aerospace and Defense M&AGlobal shipments of general aviation aircraft fell more than 6% in the first nine months of 2015 compared to the same period in 2014, according to the General Aviation Manufacturers Association (GAMA). Industry watchers suggest demand for US-made general aviation aircraft may have been harmed when Congressional authorization for the US Export-Import Bank lapsed in July 2015. The Export-Import bank provides financing to US export manufacturers who are unable to secure financing in the private sector. The Export-Import Bank was reauthorized in December 2015. Worldwide shipments of business jets were a bright spot, which increased more than 4%. However, shipments of piston aircraft in the first nine months of 2015 dropped nearly 11% and turboprop aircraft deliveries were off more than 9%. Overall, rotorcraft shipments were down nearly 6%; a 1% rise in piston rotorcraft shipments was more than offset by an 8% fall in turbine rotorcraft deliveries.

Boeing Forecasts Fewer 2016 Commercial Aircraft Deliveries – Potentially indicating reduced demand for aircraft engine and parts manufacturers, industry leader Boeing expects lower earnings and aircraft deliveries in 2016 compared to 2015 levels, according to the company’s fourth-quarter 2015 earnings report released in late January 2016. The company said it would deliver between 740 and 745 planes in 2016, compared to the 762 delivered in 2015. Days before Boeing’s earnings announcement, the company said it would cut 2016 747-8 production in half amid lower-than-expected demand for new cargo-hauling aircraft.  Aviation industry  watchers note that a slowing global economy has reduced demand for freight aircraft and more cargo has shifted to being shipped by sea. November 2015 air cargo traffic was down 1.2% compared to a year earlier, according to the International Air Transport Association. In contrast, November 2015 passenger traffic increased nearly 6%.

  • US durable goods manufacturers’ shipments of military aircraft and parts, an indicator of demand for aerospace products and parts for military use, rose 3.1% year-to-date in November 2015 compared to the same period in 2014.
  • US durable goods manufacturers’ shipments of nondefense aircraft and parts, an indicator of demand for aerospace products and parts, rose 14.2% year-to-date in November 2015 compared to the same period in 2014.
  • US steel mill product prices, an indicator of commodity steel costs for aerospace products, fell 19.8% in December 2015 compared to the same month in 2014.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 1st Quarter Newsletter Here


M&A News From the Aviation Industry

By Joe Contaldo | Dec 03, 2015

Fighter JetA bid by Airbus to increase its US presence will fuel competition between the Netherlands-based company and its archrival Boeing. Airbus opened its first US commercial aircraft manufacturing plant in Mobile, Alabama, in September 2015. The facility is slated to deliver its first commercial aircraft in the spring 2016 and produce between 40 and 50 single-aisle aircraft per year by 2018. Having a US plant should help Airbus win more contracts with airlines based in North America, where the company expects most jets built at the plant will be delivered. Airbus, which already employs 1,400 workers in the US for other activities such as helicopter manufacturing and flight training, could also increase its capacity to build military aircraft, according to The Wall Street Journal. Among the factors that attracted Airbus to Mobile were the city’s easy port access and nonunion labor force.

Airbus’s establishment of a major manufacturing plant in Alabama increases competition in the North American market and further shifts the US airliner manufacturing industry to southern states. Boeing, which is responsible for Washington state’s traditional pre-eminence in the market, has increased production at its Charleston, South Carolina-based plant in recent years.

  • US durable goods manufacturers’ shipments of military aircraft and parts, an indicator of demand for aerospace products and parts for military use, rose 0.4 percent year-to-date in August 2015 compared to the same period in 2014.
  • US durable goods manufacturers’ shipments of nondefense aircraft and parts, an indicator of demand for aerospace products and parts in the aviation industry, rose 15.5 percent year-to-date in August 2015 compared to the same period in 2014.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 4th Quarter Newsletter Here


News from the Aviation Industry

By Joe Contaldo | Aug 27, 2015

airplane runwayStrong growth on the commercial side of the aviation industry, especially large manufacturers such as Boeing and Raytheon, have created strong cash stockpiles on the balance sheets of major corporate players. Those funds need a home and acquiring new technology (i.e. Raytheon’s merger with Websense) is a productive use of the money. In addition, limits on defense spending has had a tepid impact on companies heavily invested in the public sector leading them to branch out into the private sector through M&A (again, Raytheon’s merger with Websense).

As a result of near over-capacity utilization in the aircraft production industry, Airbus and Boeing booked fewer commercial aircraft orders during the Paris Air Show in June 2015 than they did two years earlier at the bi-annual event. Together, the rival aircraft makers booked $109 billion in orders and commitments; the two companies secured $134 billion in orders at the show in 2013. The drop in orders was not unexpected, as Boeing and Airbus have been building their order backlogs as the world’s airlines and aircraft leasing firms order new, more efficient aircraft to update their fleets. Airbus’ commercial jet backlog stands at about 6,300, and Boeing’s is about 5,700. Both companies have suggested that they may increase production rates to address the large backlogs and long waits for new planes, which could further reduce orders.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 3rd Quarter Newsletter Here


Aviation Industry M&A News

By Joe Contaldo | Jun 11, 2015

Jet EngineAs manufacturing continues to gain steam across North America, M&A activity in the aviation industry space is expected to remain strong as larger companies look to gain capabilities and accelerate growth. In addition, mega deals in the cyber security space remain a topic of conversation as the aforementioned Raytheon acquisition of Websense and Bain Capital’s acquisition of Blue Coat Systems foretell the importance of staving off cybercrime.

According to data from rom the Interindustry Economic Research Fund (IERF), revenue for US aerospace manufacturing is forecast to grow at an annual compounded rate of 5 percent between 2015 and 2019.

Aerospace has been a major factor behind increased manufacturing activity in the United States. The global aerospace industry is increasingly opting to situate manufacturing operations in the US instead of low-cost rivals such as China and Mexico, according to new data from ICF International reported by Reuters. Between 2000 and 2012, aerospace manufacturing investments were strongest in China, Mexico, India, and Brazil. Since 2012, more investment has been returning to the US amid rising wages in the developing world. Robotic automation has helped manufacturers in developed countries become more competitive with low-cost producers. Boeing has moved more production in-house as it has reduced outsourcing of work on its 787 Dreamliner. Airbus’s decision to build a plant in Mobile, Alabama, is also attracting aerospace supplier investment to the region.

Aircraft makers based in China and Japan are taking on longtime incumbents Embraer and Bombardier in the regional jet market. Mitsubishi Aircraft expects to begin test flights of a 76 to 88-seat regional jet in the second quarter of 2015, with deliveries beginning in 2017. The company has set the goal of attaining 50 percent of the global market for regional jets over the next 20 years, according to The Wall Street Journal.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 2nd Quarter Newsletter Here


Aviation, Aerospace and Defense Industry News

By Joe Contaldo | Mar 27, 2015

Jet PlaneAmong aviation, aerospace and defense companies in 2014 divestitures and spin-offs were strong, in part, due to the desire to exit businesses directly impacted by sequestration. There was also strong transaction activity in the fragmented and high-margin maintenance, repair, and overhaul (MRO) business supported by rising passenger traffic and higher utilization rates in growing regions.

According to First Research, an industry research organization, Aircraft makers based in China and Japan are taking on longtime incumbents Embraer and Bombardier in the regional jet market. Mitsubishi Aircraft expects to begin test flights of a 76 to 88-seat regional jet in the second quarter of 2015, with deliveries beginning in 2017. The company has set the goal of attaining 50 percent of the global market for regional jets over the next 20 years, according to The Wall Street Journal. Commercial Aircraft Corporation of China (COMAC) is also readying a new regional jet; the company recently took new orders for a 75- to 90-seat aircraft that is expected to be certified by 2015. COMAC hopes to capture booming demand for regional jets in China, a market that Embraer recently forecast will account for 16 percent of the global market for 70 to 130-seat jets by 2033.

Posted by Joe Contaldo.

Read the Entire Aviation, Aerospace & Defense M&A 1st Quarter Newsletter Here


M&A News for the Aviation Industry

By Joe Contaldo | Dec 12, 2014

Private JetAccording to First Research, global shipments of general aviation aircraft, a demand indicator for aircraft parts, increased 4.8% in the first half of 2014 compared to the same period in 2013, according to the General Aviation Manufacturers Association (GAMA). Business jets saw the largest jump in demand as shipments increased by 12.4%. Makers of aircraft parts serving the general aviation market may want to focus marketing and production resources on business jets and piston aircraft, which are experience strong demand.

In addition, Aerospace companies are increasingly following the lead of many automakers and choosing to situate new US facilities in the southern part of the country, according to Stateline, the news service of the Pew Charitable Trusts. Companies that have recently established facilities in the South or announced plans to do so include Airbus (Alabama), Boeing (South Carolina), GE Aviation (North Carolina), and Gulfstream (Georgia).

Read the Entire Aviation, Aerospace & Defense M&A 4th Quarter Newsletter Here


Q3 Aviation, Aerospace & Defense M&A Industry Report

By Kim Levin | Oct 03, 2014

Nose WheelM&A activity in the North American Aerospace and Defense sector for Q2 2014 included 29 closed deals according to data provided by S&P Capital IQ. Total deal value soared to $443 million, while average deal value reached $44 million. High deal value is largely attributed to several mega deals, the largest being The SI Organization’s $215 million acquisition of QinetiQ North America. Three additional deals, valued at more than $60 million added to the high deal value of the quarter.

Aerospace M&A remains robust with volume expected to match the record high set in 2013. However, deal making on the defense side has not been as strong.

Read the Entire Aviation, Aerospace & Defense M&A 3rd Quarter Newsletter Here