On the face of it, Thielert AG of Hamburg appeared to be a well-positioned company, leveraging respected German engineering to modify a Daimler diesel engine for use in aircraft. The ability to use “heavy” fuel offers light civilian aircraft a convenient, less-expensive option, and can also be an important asset for armies who want a single fuel supply chain for land vehicles and UAVs. That commonality offers lifetime cost savings of its own, less operational risk, and more operational flexibility – which is why the US Army’s flagship MQ-1C SkyWarrior UAV uses Thielert’s 135 hp Centurion engine. By many accounts, the engine itself performs well, though some reports say the engines have some reliability issues and suffer from poor field support. The aero-diesel niche has few competitors at the moment, but several new competitors are expected to unveil products over the next year.
Those alternative options have now become a more urgent matter, given recent developments in Germany. In brief, Thielert is facing advanced stage criminal investigations for serious accounting fraud, providing false evidence, and more. The alternative explanation is that a long list of firms including General Atomics, Northrop Grumman, and Lockheed Martin each left millions of dollars in supplier invoices unpaid for over a year.
Regardless of which explanation is true, Thielert faced financing needs that the firm’s own April 10/08 release described as “an urgent liquidity crisis.” As a first step, the founder tried to sell his entire stake to a Russian hedge fund. Even so, the firm’s own statements confirm that much more cash will be needed, and shareholder lawsuits enabled by German court rulings that have voided their financial reports could drive that figure higher.
The latest developments are three-fold: the dismissal of the CEO and CFO for cause in light of criminal investigations, the collapse of the new investors consortium, and the firm’s filing for bankruptcy. Meanwhile, the US Army says it was unaware of the situation at Thielert, which raises questions concerning its contractor General Atomics’ communications and program risk transparency with the US military.
In late 2007, European aerospace and defence giant said that they were looking to make at least 2 acquisitions in the American market, as part of a larger strategic plan they called “Vision 2020.” Buying PlantCML of Temecula, CA from Golden Gate Capital, a San Francisco-based private equity fund, for approximately $350 million appears to be the first step.
EADS has created a strong position for itself in the market for “professional mobile radios,” and are responsible for building several national law enforcement and first responder networks using TETRA technology. PlantCML complements these strengths by offering solutions that take advantage of this base, and handle back-end call/command center activities like call management and radio dispatch, emergency notification services, Computer Aided Dispatch (CAD) applications, and mapping services. These services can add to EADS offerings in Europe and beyond, while giving the firm a foothold for its full range of solutions in North America. PlantCML has U.S. operations in California, Alabama, Indiana, and Tennessee, and a Canadian operation in Quebec, and EADS’ release reports that PlantCML’s existing margins and profitability are strong.
According to this Forbes article, EADS’ Vision 2020 aims to have 20% of the firm’s employees and 40% of its sourcing outside Europe by 2020, with defense and homeland security revenues rising in proportion to Airbus revenues, and service revenues rising from 10% to 25%.
Raytheon recently announced a competitive contract win in The Netherlands for 200 of their Enhanced Paveway II dual-guidance GPS/laser-guided bomb kits. The contract is a direct commercial sale rather than a Foreign Military Sale, and the kits will fit 500 pound bombs, turning them into precision-guided GBU-49s. Cost was not disclosed.
The GBU-49 has been used extensively in Iraq, and will not be blocked by haze, sandstorms, and other weather conditions. Adding it to the Dutch arsenal will give their F-16s potent options for close air support in Afghanistan. Dual-guidance precision bombs are becoming more popular; France and Britain have recently taken similar steps.
In late September 2007, US Air Mobility Command at Scott Air Force Base, IL issued a slew of indefinite-delivery/ indefinite-quantity, firm-fixed-price contracts for “International Airlift Services” to various commercial carriers. The total value of these contracts has a higher ceiling of just over $3 billion in 2007, compared to $2.32 billion in 2006 and $2.29 billion in 2005.
The 2007 contract also appeared to bring far more consortia into the fold, as opposed to the 2006 and 2005 awards. The way these awards work is that each contractor submits a bid, and the US military allocates awards according to each bid’s scope and competitiveness.
Recent developments include an additional award to Lynden…