Defense Business Brief: Paris Air Show; Raytheon reorg; Supersonic jetliner suppliers; and more.

The Paris Air Show is typically about high-performance fighter jets, military cargo planes, the latest in commercial jetliners, and prototypes of the next-generation aircraft. But walking around the tarmac here at the Le Bourget Airport this year, the number of missile launchers and tracking radars whose main mission is to shoot planes down are noticeable. 

It’s a sign of the times here in Europe, with Ukraine just 1,000 miles east. And the air and missile defenses on display here include counter-drone tech too—the war in Ukraine has highlighted the need for all of these types of defenses.

“In Ukraine, it's not just counter-air [defenses] It's counter cruise-missile, it's counter [drone], it's counter ballistic missile, right, all of those things,” said Wes Kremer, president Raytheon Technologies’ missiles and munitions division. “It's a complex threat environment and it also requires layered and integrated air and missile defense.”

Yet despite all of that Ukraine-related tech here, the predominance of the large companies—at least from what we’ve seen over the past two days—have talked more about future technologies and new generations of weapons needed not in Ukraine, but to counter China.

It’s my first time here since the show was last held in 2019; the pandemic canceled the biennial event in 2021. Back then, there was a lot of talk about European companies doing R&D for hypersonic weapons and new-generation fighter jets.

On that front, the Belgium Franco-German-Spanish effort to design and build a new combat fighter, known as the Systeme de Combat Aerien Futur, or SCAF. added Belgium as an observer nation.

Who’s here: China and its state-owned Aviation Industry Corporation, whose exhibit boasted military and commercial aerospace efforts. We also spotted some Ukrainian military officials in the U.S. pavilion of the exhibit hall, looking at weapon displays.

Who’s not here: Russia, whose aerospace companies were a mainstay in Paris, but have been barred from attending following Russia’s invasion of Ukraine. As we mentioned last week, the seniority of the U.S. delegation here was much lower than other trade shows like this in recent years.

Who else is here: More than 400 American companies. Organizers said it’s the largest number of U.S. businesses in attendance in the more than 100 years since the show began. Some 36 states are also here, with Govs. Glenn Youngkin, R-Va., and Sarah Huckabee Sanders, R-Ark., among those in attendance. 

The U.S. pavilion this year is inside the brand new Hall 3, which next year will serve as the International Broadcast Center for the 2024 Olympics. The hall, with its high ceiling and exposed wooden beams, is a noticeable upgrade over its predecessor. And the air conditioning works.

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Raytheon Technologies CEO Greg Hayes spent Day 1 of the Paris Air Show reassuring investors that the company is still on track to meet its long-term financial goals. “I know there is concern out there with investors that given everything that's happened in the last two years, whether it's inflation and supply chain and all the other geopolitical changes, that the 2025 objectives are not still achievable,” Hayes told me in an interview last week. “We will reaffirm all of those 2025” goals.

A lot has changed in the world since Raytheon and United Technologies announced in June 2019 that they would merge. That deal was announced one week before the 2019 Paris Air Show, and when the merger closed in April 2020, much of the world was in a lockdown from the coronavirus pandemic. 

While some programs envisioned at the time might not have played out, there are plenty of unexpected sales that came or are now anticipated in the wake of Russia invading Ukraine and the U.S. and its allies arming Kyiv with munitions and other weapons.

Hayes views the Congressional spending deal to raise the debt ceiling “very much a positive for the industry.” But he said the 3 percent spending increase for defense, which is in line with President Biden’s spending request, is “still gonna force some tough decisions.” 

He also said he sees “solid support in the House and Senate” for the F-35 engine core upgrade, an effort to increase the power in the Pratt & Whitney-made engine. Pratt & Whitney is a division of Raytheon.

“I think they're not gonna give short shrift to the F 35 program,” he said. “Question is, can they really fund everything they need on next-gen [fighters]. And that'll be a debate that they're gonna have to … wrestle to the ground this year.”

He was alluding to the Advanced Turbine Engine Program, an effort to build a new engine for next-generation fighter jets and possibly the F-35 as well. 

The company is on track for a July 1 launch of its new corporate structure, which moves the majority of its intelligence and space division into a single missile and defense business unit, which has been rebranded as Raytheon. 

About 6,000 employees of the intelligence and space division will move to Collins Aerospace, creating what Hayes called “a complete center of excellence for connected battlespace”—aka the Pentagon’s effort to network everything on the battlefield, known as Joint All-Domain Command and Control.

The remaining 35,000 employees will be part of the Raytheon division. That divides the company into three units, which make about $25 billion each.

Boeing Defense Space and Security CEO Ted Colbert set measured expectations for second quarter earnings. While he said the company is still assessing the numbers,  “Second quarter from a performance perspective, BDS is going to look very similar to first quarter, from a margin perspective. That's where we are right now, we're continuing to assess all of our programs. But it will look similar to last quarter, as we see where we are right now.” Boeing defense booked $6.5 billion in revenue in the first quarter.

Paris Speed Read

• Boom Supersonic, the startup trying to build a supersonic flying jetliner called Overture, announced partnerships with Aernnova for wings, Leonardo for the fuselage and wing box, and Aciturri for the empennage. 
• Air India announced deals for 470 planes from Boeing and Airbus, while IndiGo announced orders for 500 Airbus planes.

French firm Turgis & Gaillard announced a new medium-altitude, long-endurance drone called Aarok.