Global Business Brief: UAE has long wanted F-35; Days numbered for US using Russian rockets; Space Symposium delayed to mid-2021 and more.
It’s not new that the United Arab Emirates wants the F-35 Joint Strike Fighter — that’s been the case for a long time. As the Trump administration reportedly looks to fast-track an F-35 sale to UAE, part of a deal kept secret from disapproving Israel, I’m reminded of a cocktail party at the Emirati embassy in Washington more than a decade ago.
UAE was celebrating its first trip to the U.S. Air Force’s dogfighting wargames, Red Flag. With its Block-60 F-16s Falcons — jet fighters with better radars and a longer flying range than the earlier models flown by the U.S. Air Force — UAE was incredibly proud of its being invited to the prestigious event held in the skies over the Nevada desert north of Las Vegas.
Guests including then-Lockheed Martin CEO Bob Stevens and senior U.S. military officials watched a slickly-produced documentary of the planes flying in combat formations, titled “Desert Falcons,” and were gifted hard-covered coffee table picture books of the Emirate jets at Red Flag. During a speech, a top UAE official spoke of the tight bond between the U.S. and UAE air forces, and how one day they hoped to fly the F-35.
The F-35 is the successor to the F-16, so it’s natural that any country that flies a Falcon would eventually consider upgrading to the Joint Strike Fighter. But it becomes much more complicated when the country is from the Middle East, because the U.S. pledges to preserve Israel’s “qualitative military edge” over its regional neighbors. In 2016, Israel reportedly opposed Qatar’s desire to buy F-15s for a number of years until the U.S approved the sale.
Ellen Lord, the Pentagon’s top acquisition official, said Thursday that she has “spent quite a bit of time in the region over the years … actively talking about F-16 upgrades.” But when asked about the UAE deal during the press briefing at the Pentagon, she deferred all questions to the State Department. A State Department spokesman pointed to President Donald Trump’s comments at a Wednesday press conference, in which he said a sale was “under review” and that UAE “would like to order quite a few F-35s.”
It’s not the first time the F-35 has been used as a carrot. Last year, the U.S. began fast-tracking an F-35 sale to Poland culminating with Warsaw formally agreeing to terms of a deal in January.
“I think the Poland effort really shows what happens when all the agencies, such as [Defense Security Cooperation Agency, the arm of the Pentagon that oversees arms sales] and other DoD components, work very closely with [the] State Department and so forth,” Lord said. “So I think the six month time frame is a very good bogey.”
Even if the U.S. approves the sale in six months, it’s still subject to congressional approval. A contract would need to be signed and the planes would need to be built, so it will take years before F-35s were on the ramp at Al Dhafra Air Base outside of Abu Dhabi.
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Latest Revenue Rankings of the Largest Defense Companies
Lockheed Martin and Boeing remain the world’s top two defense firms based on 2019 revenue totals, according to the latest Defense News annual ranking of the Top 100 global defense companies. General Dynamics moved from No. 6 to No. 3, largely due to increased revenue across all of its business sectors, and Northrop Grumman fell from No. 3 to No. 4.
But really… Raytheon is down one slot to No. 5, but has since merged with United Technologies, which is No. 10. If you combine Raytheon and UTC revenue, it would make them No. 2, which is probably where they’ll fall on next year’s list.
Space Symposium Pushed to 2021
The Space Foundation had hoped to hold this year’s already delayed Space Symposium at the end of October, but the conference, which attracts space professionals from all corners of the world, has now been rescheduled for late August 2021 due to the coronavirus pandemic. “Following our postponement of this year’s Symposium in the spring, we worked with our partners, corporate members, and many others in hopes of bringing the space community together this coming fall,” Space Foundation CEO Tom Zelibor said in a statement. “Despite all of those efforts, it is clear to everyone that an in-person gathering will not be possible in 2020.” That second sentence is key and it’s unlikely any in-person conferences will be held this year. Typically the Space Symposium is held in early April, the perfect time for some spring skiing in Colorado. It will be interesting to see how other trade associations follow the Space Foundation’s lead by delaying until the second half of 2021.
Mega F-16 Deal For Lockheed
Just when you think F-16 production is drying up, the Pentagon has awarded Lockheed Martin a deal for 90 jets for Taiwan and Morocco. The deal could be worth $62 billion over the next 10 years if additional options are exercised. Breakdown of the deal: 66 Block-70 aircraft for Taiwan and 24 Block-70 aircraft for Morocco. The planes will be built in Greenville, South Carolina, where Lockheed moved the F-16 production line in 2017. The additional 90 planes add to Lockheed’s existing backlog of 38 F-16s. “We see continued demand around the world for new production F-16s and opportunities for both new production F-16s and F-16V upgrades totaling more than 400 aircraft,” a Lockheed source said. “We see opportunities into the late 2020s and hope to extend beyond that as additional customers select the F-16.”
The Bids Are In for Canada’s New Jet Fighter
The Lockheed Martin F-35 Joint Strike Fighter, Boeing F/A-18 Super Hornet, and JAS 39 Gripen are the contenders to replace Canada’s nearly four-decade old F/A-18 Hornets. Lockheed says the F-35 could inject nearly $17 billion into Canada’s economy through supply chain jobs, CBC reports.
Despite Coronavirus Setback, F-35 Production Decision on Track
Lord expects defense leaders to decide whether the F-35 can enter full-rate production in March 2021. That’s despite delays in delivering software that simulates everything from weather to enemy weapons. “I am confident that we are going to meet the March date,” Lord said during a press briefing on Thursday. “We have the entire government-industry team focused on that. There have been setbacks within the [Joint Simulation Environment] from COVID — it is a very very close working environment.” After reconfiguring the work site, operations resumed and employees are working six or seven days a week and “almost 24 hours,” Lord. said. “COVID has been significant.”
Raytheon Hands Off GPS Business to BAE
The completion of the deal is the second of two divestitures required by the U.S. government as part of Raytheon’s merger with United Technologies earlier this year. BAE Systems acquired Raytheon Technologies Airborne Tactical Radios business in March.
Space Force Sticks With ULA, SpaceX for Satellite Launches
The two firms beat out Jeff Bezos’ Blue Origin and Northrop Grumman. Competition for space launches has saved the Air Force approximately $7 billion since 2013. The deals with ULA — a partnership between Lockheed Martin and Boeing — and Elon Musk’s SpaceX will mark an end to the military’s use of the Atlas V rocket, which is powered by Russian engines. ULA plans to replace the Atlas V with the Vulcan, a new rocket that has been in development for a number of years.
New Reports on Hypersonics, Innovation
- The Atlantic Council has a handy new hypersonic weapon backgrounder that lays out many of the technological, operational and political challenges to fielding fast-flying hypersonic missiles. It also gives an assessment of Russia and China’s hypersonic weapons development.
- The Ronald Reagan Institute has a new report about ways to strengthen the U.S. National Security Innovation Base.Among its findings: “Washington has not yet fully adjusted to the new reality that national-security-relevant technologies are largely being driven by the commercial sector—not the USG, the DOD, or even the Aerospace and Defense (A&D) sector, as was true in the past.”
Making Moves
SAIC is looking for a new chief financial officer as the company announced current CFO Charles Mathis will retire at the end of January 2021. Speaking of CFO, Aerojet Rocketdyne announced Dan Boehle has been named as the company’s chief financial officer. He replaces Paul Lundstrom, who will join Flex Ltd as its CFO.
President Trump has nominated Air Force Lt. Gen. David Allvin, to receive his fourth star and become the Air Force vice chief of staff, replacing the current vice chief Gen. Stephen “Seve” Wilson who is retiring.
SAIC has named Nyla Beth Gawel — a former Verizon and Booz Allen Hamilton executive — senior vice president of strategy. “In this new role, she will be responsible for developing the company’s strategy to drive significant organic growth and market leadership, working with leaders across the organization to ensure strategic business plans are successfully executed,” the company said in an emailed statement.
Former Deputy Pentagon Comptroller Elaine McCusker has joined the conservative American Enterprise Institute where she “will focus on defense strategy, budget, and innovation; the US military; and national security.”