September 25, 2017 - No. 075 In This Issue SpaceX Swipes Boeing's Military Space Shuttle Business NordStar extends engine maintenance agreement with AJW TAT Technologies Awarded 5-Year APU MRO Contract by one of the world's leading carriers GE Shocks Private-Jet Industry That Preaches `No Plane, No Gain Air Canada and AAR Conclude USD 500M CAD Agreement for Airframe Maintenance in Quebec, Canada AAR purchases two maintenance facilities EasyJet and Lufthansa in talks to buy Air Berlin's aviation business Boeing inaugurates second phase of aerospace engineering facility Rostec and AECC CAE Agree Upon the Development of an Engine for a Long-range Wide- body Aircraft UAE's GCAA to hold aviation safety campaign in Kenya SpaceX Swipes Boeing's Military Space Shuttle Business The scoreboard this month reads Boeing (NYSE:BA) -- 5: SpaceX -- 1.* So why is SpaceX grinning, and Boeing is groaning? On Sept. 7, Boeing's X-37B military "drone" space shuttle lifted off from Cape Canaveral on its fifth mission for the U.S. Air Force. (What mission would that be, you ask? Top Secret). But for the first time ever, Boeing -- which built the X-37B -- didn't have a hand in actually launching the spacecraft it built. This could be the beginning of a bad trend for Boeing. Winning before beginning (to compete) You see, in all previous launches, X-37B had lifted off aboard Atlas 5 launchers operated by Boeing and its partner in United Launch Systems, Lockheed Martin(NYSE:LMT). For this month's launch, however, the U.S. Air Force awarded the X-37B launch contract to SpaceX. Now, that news in and of itself isn't a total shock. SpaceX and United Launch Alliance have been butting heads for several months now -- ever since the Air Force certified SpaceX to launch payloads for it, in fact. In one notable clash, in May 2016, SpaceX bid against the Boeing-Lockheed joint venture for the right to launch a GPS satellite for the Air Force. SpaceX bid $82.7 million, or "40% less" than the best price the Air Force had hoped to extract from ULA -- and won the contract. Chances are, if both SpaceX and ULA had entered similar bids to launch X-37B, the result would have been the same. What was really curious about this contract, though, is that ULA apparently wasn't offered a chance to compete at all. In a published statement, United Launch Alliance asserted that "ULA did not have the opportunity to bid for the Air Force's fifth X-37B Orbital Test Vehicle (OTV) mission." Now, when asked by Reuters, the Air Force declined to confirm Boeing's story that the Air Force awarded the contract to SpaceX without soliciting other bids. But assuming the story is true, that would mean that SpaceX did not really "beat" ULA in winning this contract. Given that ULA and SpaceX are the only two space launch companies certified to launch national security missions, and given that ULA was not allowed to bid, the X-37B contract would have gone to SpaceX by default. What it means for Boeing (and Lockheed Martin) The big question is "why?" According to the Air Force, the main reason it has certified both SpaceX and ULA to launch USAF payloads is to ensure the service has "flexible and responsive launch options" to choose from when launching its satellites. (A secondary objective, almost certainly, is to lower its launch costs by forcing SpaceX and ULA to compete on price). But if that's what the Air Force wants to accomplish, then why would it not invite ULA to bid for the X-37B contract? Was it because the Air Force already knows that ULA cannot compete with SpaceX on price? Or does the answer perhaps lie in ULA's creative use of the phrase "did not have the opportunity?" Parsed one way, what ULA might really have been saying was that it didn't have the opportunity -- i.e. ability -- to match SpaceX's prices, and so decided not to bid at all. Either way, as more than one dozen Air Force space launch contracts, come up for bid between now and 2019, the outlook doesn't look good for Boeing and Lockheed. Whether the Air Force is rejecting the possibility of ULA being able to compete with SpaceX out of hand, or whether ULA is recusing itself, either way, it looks like a lot of money could slip through ULA's fingers -- and into SpaceX's pocket instead. *By the way, following its successful launch of X-37B this month, SpaceX successfully relanded its Falcon 9 launcher back at Cape Canaveral -- its 16th such successful landing of a used rocket. So the scorecard for landing reusable rockets now stands at SpaceX -- 16: Boeing and Lockheed Martin -- 0. https://www.fool.com/investing/2017/09/23/spacex-swipes-boeings-military-space-shuttle- busin.aspx Back to Top NordStar extends engine maintenance agreement with AJW Russian carrier NordStar has extended its engine shop visit management agreement with British MRO provider AJW Group. The agreement lays out the terms for the provider's subsidiary AJW Engines to carry out maintenance on seven CFM International CFM56-7B engines installed on NordStar's narrowbody Boeing 737NGs. The previous agreement was signed in 2015, during the course of which NordStar thrice sent its engines to AJW for mainenance. The cooperation allowed for the carrier to save over $1 million, the British provider says. AJW Group helps its clients lower costs by reusing materials contained in its inventory. The provider runs a large network of vendors, and controls component quality at all times. NordStar currently operates a single Boeing 737-300 and nine 737-800s, along with five ATR 42- 500 regional turboprops. AJW Group does business with UTair Aviation and Air Astana. In February this year, AJW Group opened a branch in Moscow under the name of AJW Russia. The facility enhances the provider's outreach to customers in Russia and the CIS. AJW is currently mulling the possibility of partnering with the Russian holding company Technodinamika in carrying out maintenance of CFM56 engines in Russia. Maintenance of CFM56s in the country is currently done by Engineering Holding, but the demand far outweighs the company's capacities. http://www.rusaviainsider.com/nordstar-extends-engine-maintenance-agreement-ajw/ Back to Top TAT Technologies Awarded 5-Year APU MRO Contract by one of the world's leading carriers Estimated at Up To $40M in Revenue GEDERA, Israel, Sept. 24, 2017 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT), through its subsidiary Piedmont Aviation Component Services ("Piedmont"), has been awarded a 5 years Auxiliary Power Unit (APU) Maintenance Support for a large fleet of Boeing and Airbus aircrafts, estimated at up to $40M in revenue. "We are excited to expand our existing Heat Exchanger and Landing Gear support of such a Major Carrier Company fleet into APU MRO", said Mr. Igal Zamir, TAT's President and CEO. "This major agreement is affirmation of TAT's MRO services capabilities and customer services, emphasizing how TAT can apply commercial MRO and supply chain best practices to help its customers increase efficiencies and decrease costs". Maintenance work will be done at TAT's APU services facility in Greensboro (NC), starting Q4 2017. About TAT Technologies TAT Technologies is a global OEM and aftermarket solutions company, employing more than 600 employees globally. TAT Technologies supports commercial aviation and government customers through two operating segments: Thermal Management Solutions and Power & Actuation. TAT's Thermal Management Solutions include OEM and aftermarket of thermal management components and systems. TAT's Power & Actuation include aftermarket support (MRO) of APU, Landing Gear and Aero-engines components. TAT Technologies controlling shareholders is FIMI Private Equity Fund. For more information, you are welcome to visit our website: www.tat-technologies.com http://markets.businessinsider.com/news/stocks/TAT-Technologies-Awarded-5-Year-APU-MRO- Contract-by-one-of-the-world-s-leading-carriers-Estimated-at-Up-To-40M-in-Revenue-1002476863 Back to Top GE Shocks Private-Jet Industry That Preaches `No Plane, No Gain Imagine if Facebook Inc. founder Mark Zuckerberg announced he was unplugging from the internet to save time. That's how private-jet industry executives feel about General Electric Co.'s cost- cutting move to sell the bulk of its corporate fleet. GE's plan to shed five company-owned planes flies in the face of the boardroom axiom that such aircraft are time- and money-saving tools, not luxury items. GE sells jet engines to planemakers and will have a large presence next month at the National Business Aviation Association's annual conference, where the motto has been 'No Plane, No Gain.' Savings from selling corporate jets will be minimal, and using higher-cost charter flights risks winding up as more expensive, industry consultants and brokers said. GE won't raise much cash by selling aircraft into a used-jet market in which prices have been declining for several years, they said. "I guess they forgot what business they're in," said Janine Iannarelli, president of Par Avion, a Houston-based plane broker. "It makes no sense." Savings Strategy GE says cost-savings go beyond just the jets, as they'll eliminate spending related to facilities overhead, maintenance and crew. The company is also cutting down on travel overall, relying more heavily on video conferencing for internal meetings, said Jennifer Friedman, a company spokeswoman. Employees have more options to travel on commercial airlines after the company moved its headquarters to Boston from Fairfield, Connecticut. "By reducing our corporate air services, we will see significant operational cost savings," Friedman said in an emailed statement. The business-aircraft industry is already sensitive about its image, especially after the public outcry that erupted in 2008 when auto executives flew their corporate jets to Washington to seek bailout money from Congress. Former President Barack Obama often railed against tax breaks for private planes. John Flannery, who took over as chief executive officer of GE last month, is seeking to follow through on predecessor Jeffrey Immelt's plan to cut $2 billion of costs by the end of 2018. Flannery is also trying to reverse this year's biggest stock slide on the Dow Jones Industrial Average. That's only the latest example of how GE has lagged the market: The share price has dropped 40 percent in the last decade, while the Standard & Poor's 500 Index has gained 64 percent. Jet Sharing GE isn't abandoning private aviation altogether. It will keep two small, short-range planes at its aviation unit for quick site visits, and own equity in a few larger jets shared by several owners. Fractional companies, such as Berkshire Hathaway Inc.'s NetJets, sell a portion of a jet in exchange for hours of flight. Scuttling the flight department is probably more of a symbolic move than a large contributor to cost cuts, said Pete Agur, founder of the aviation consultancy VanAllen Group. When executives at a company like GE rack up more than 250 hours of private fly time in a year, it's less expensive to own and operate a plane than to use charter or fractional services. "In the short term, it's going to have some benefits," Agur said. "Long term, there's no way a global company can operate only with the airlines or only with commercial options, including fractions." GE's jet-engine unit will keep a HondaJet, a small five-passenger plane with a cabin height of 4 feet, 10 inches -- not big enough to stand up for most people. GE will take delivery of a second HondaJet in January, said GE spokesman Rick Kennedy. GE makes the engine for the HondaJet. "GE Aviation is actively using small-business jets to achieve efficiency by traveling between its more than 40 sites in the U.S.," Kennedy said in an emailed statement. Less Flexibility Those small HondaJets can't cover all GE's needs to visit customers, suppliers and factories across its far-flung operations, said Steve Varsano, founder of The Jet Business, a London-based broker. Corporate jets provide more flexibility than commercial flights, allowing executives to hit multiple cities in one day or to push back takeoffs if meetings run late. The private meetings held on a corporate plane can't be done on commercial flights, said Varsano, who said he was "shocked and surprised" at GE's announcement. GE could have a hard time selling the two Bombardier Inc.Globals and three Challenger 605s that it owns, said Connie Marrero, an executive vice president at plane broker Freestream Aircraft. There are 15 pre-owned Global XRS aircraft available on the market now, and in the last six months only one has been sold, she said. Eighteen Challenger 605s are on the used market, and the average number of days they've been up for sale tops 280. Those planes won't move quickly "unless you aggressively price, in which you're taking a significant loss and hurting the rest of that pre-owned market," she said. It's unusual for a large, global company to eliminate its flight department, Agur said. It's more common for fleets to be shrunk or planes changed depending on business conditions. "In the long term, I wouldn't be surprised to see GE back with aviation services when life gets better," he said. https://www.bloomberg.com/news/articles/2017-09-22/ge-shocks-private-jet-industry-that- preaches-no-plane-no-gain Back to Top Air Canada and AAR Conclude USD 500M CAD Agreement for Airframe Maintenance in Quebec, Canada TROIS-RIVIÈRES, Quebec, Sept. 23, 2017 : Global aviation services leader AAR CORP. (NYSE: AIR) and Air Canada (TSX: AC) today announced they have signed a 10-year agreement to provide airframe maintenance for the airline's Airbus narrow-body fleet of A319, A320 and A321 aircraft, as well as a new five-year agreement for Air Canada's Embraer E-190 fleet. AAR will perform the work at its Maintenance, Repair and Overhaul (MRO) facility at Trois-Rivieres Airport in Quebec, previously known as Premier Aviation. The work to be performed on Air Canada's fleet of 125 narrow bodies will require approximately 350 aircraft mechanics at AAR's Trois-Rivieres facility. The total value of the contract over its term is estimated to be approximately $500 million CAD. "We have been very pleased with the quality and turnaround time of AAR and the Trois-Rivieres facility for the work performed on our narrow-body fleet over the past five years and are especially delighted that additional work can now be performed in Trois-Rivieres Quebec," said Richard Steer, Senior Vice President, Operations at Air Canada. "This contract further supports the development of Quebec's aviation sector by encouraging industry expertise and job growth in the coming years, and Air Canada is proud to be a significant contributor to the economy of the region." "We are honored by Air Canada's confidence in AAR's airframe heavy maintenance expertise, and look forward to continuing our long-term relationship," said Chris Jessup, Chief Commercial Officer, AAR. http://www.newkerala.com/news/fullnews-274396.html Back to Top AAR purchases two maintenance facilities AAR Corp., a global aftermarket solutions company, recently agreed to purchase two aircraft maintenance, repair and overhaul (MRO) facilities from Premier Aviation, a Canadian maintenance and aircraft painting company. The terms of the deal were not disclosed. The first facility is located at Trois-Rivières Airport in Québec. It is 150,000 square feet and can accommodate up to seven narrow-body aircraft. Premier opened the facility in 2002 and expanded in 2011. The second facility is located at Windsor International Airport in Ontario. It is 143,000 square foot and can service up to six narrow-body aircraft. It was built in 2012. Collectively the facilities employ more than 300 well-trained aviation mechanics and personnel. The employees will retain their positions. "We are excited to add an experienced workforce and two world-class facilities to our award- winning MRO network, and we look forward to growing our position in, and bringing more flexibility and value to, the Canadian market," John Holmes, president and chief operating officer of AAR, said. "The culture of continuous improvement and execution excellence at these facilities is consistent with AAR's commitment to the highest levels of service." AAR has maintenance, repair and overhaul facilities in five U.S. states, component repair facilities in New York and Amsterdam, and landing-gear services in Florida. https://transportationtodaynews.com/news/5634-aar-purchases-two-maintenance-facilities/ Back to Top EasyJet and Lufthansa in talks to buy Air Berlin's aviation business Air Berlin's creditors have picked German flagship carrier Lufthansa and Britain's easyJet as possible buyers for the insolvent carrier's aviation business and will negotiate with them for the next three weeks. "Authority was granted to conclude one or more agreements with one or more of these bidders," Air Berlin said in a statement late on Thursday. Talks over other Air Berlin assets, such as its aircraft maintenance unit, will continue with other bidders, it said. Air Berlin, which has about 8,000 employees and operates 144 mostly leased planes, filed for insolvency in August after major shareholder Etihad pulled the plug on funding. Two sources familiar with the matter had told Reuters on Thursday that Lufthansa was set to pick up a large part of the carrier. Lufthansa's chief executive said earlier that the carrier wanted to secure the 38 crewed planes it leases from Air Berlin, and was interested in a further 20-40 short-haul planes. Air Berlin said negotiations with Lufthansa and easyJet would continue until 12 October, which means Air Berlin's board may not make a final decision on 25 September as had been expected. The news comes ahead of a national election on Sunday in which Chancellor Angela Merkel is set to win a fourth term. At a rally in the western city of Neuss, where dozens of Air Berlin workers wearing fluorescent yellow crew jackets joined Merkel supporters, the Chancellor said: "There are pilots from Air Berlin that we of course wish all the best to, like all people who have a job and would like to keep it." The prospect of getting access to Air Berlin's airport slots, planes and crews had drawn interest from airlines and other investors, including former Formula One driver Niki Lauda, jointly with Thomas Cook's German airline Condor, and aviation entrepreneur Hans Rudolf Woehrl. Also, two people familiar with the matter had told Reuters earlier this week that British Airways owner IAG had joined the field of bidders for parts or all of Air Berlin. Bidders had been especially interested in Air Berlin subsidiary Niki, which operates short-haul flights from Germany and Austria to tourist hot spots. The deadline for bids for its maintenance unit, which has about 850 employees, has been extended to 6 October, Air Berlin said. Lufthansa declined to comment further on Thursday evening. EasyJet declined to comment and Condor was not immediately available for comment. http://www.independent.co.uk/news/business/news/easyjet-lufthansa-talks-to-to-buy-air-berlin- aviation-business-insolvency-a7960521.html Back to Top Boeing inaugurates second phase of aerospace engineering facility Boeing's additional new facility at the Boeing India Engineering and Technology Centre (BIETC) was inaugurated here on Saturday by Minister of State for Civil Aviation Jayant Sinha. The additional facility will enable Boeing to focus on state-of-the-art technology areas such as data analytics, internet-of-things, avionics, aerospace design, manufacturing, testing and research, to support Boeing products and systems, more efficiently in India, and around the world. The hub also includes laboratories for research to support next-generation innovations in aerospace. With this expansion, Boeing has nearly doubled its existing facility in Bengaluru. The number of engineers will also double by the end of 2017. "Boeing's commitment to growth of capability and capacity in the Indian aerospace sector is commendable," said Sinha. "I congratulate the team on this brand new addition to the Boeing India Engineering and Technology Centre and am proud that Boeing is leveraging India's engineering talent and its expertise for some of the most advanced aerospace products in the world, and developing complex solutions for the world." This significant expansion comes soon after Boeing opened its engineering centre in January earlier this year, demonstrating Boeing's commitment to building an innovative, and world-class, competitive aerospace ecosystem in India. "As a source for innovative and cutting-edge engineering, India offers us tremendous growth potential," said Pratyush Kumar, President, Boeing India. "This is a winning formula for India and our own global growth strategy for improved productivity, enhanced engineering efficiency and cost advantage, while focusing on quality." Recently, Boeing announced a partnership with the Ministry of Civil Aviation and Air India Engineering Services Ltd (AIESL) to develop an Aircraft Maintenance Engineers Accelerated Apprenticeship Programme. The key objective of the programme is to improve the employability of AMEs through training and hands-on experience with actual aircraft. Boeing's other contributions to the industry include software tools that are used to support efficient airspace management and decongestion at Indian airports. In addition to developing engineering capabilities, Boeing is also actively involved in developing skills across the aviation sector by partnering with leading Indian vocational training institutes, industrial training institutes and Indian partners, to train workers for the aerospace industry. http://www.sundayguardianlive.com/news/11017-boeing-inaugurates-second-phase-aerospace- engineering-facility Back to Top Rostec and AECC CAE Agree Upon the Development of an Engine for a Long-range Wide- body Aircraft The United Engine Corporation (UEC, part of Rostec State Corporation), as part of Aviation Expo China 2017, has signed a memorandum with the Chinese company AECC Commercial Aircraft Engine Co., Ltd. (AECC CAE). The Memorandum determines the objectives and main principles of interaction in the joint development of a gas turbine engine for a prospective long range wide-body aircraft (LRWBA/C929). Under the Memorandum, the primary objectives of the program for creating an engine for the LRWBA will include engaging in joint research and competitive analysis, defining the potential customers' requirements to the engine, forming the appearance of the engine, and determining its basic technical parameters. "The signing of the Memorandum on the development of the engine for the LRWBA is a milestone for the civil aviation of Russia and China. It's not just a matter of being competitive, it is a matter of technological independence for our countries," - said Sergey Chemezov, CEO of Rostec State Corporation. "Our ultimate goal is the creation of our own powerful world-class engine certified in accordance with the highest international standards." The UEC has previously started to develop a high-thrust civil engine PD-35 for prospective wide- body long-haul aircraft. There is currently research and development groundwork under way under the PD-35 program in order to bring the degree of its development up to level 6 that will allow implementing research and development work as a whole with minimal technical risk. During the implementation of the PD-35 project, the scientific and technical groundwork carried out during the development of the new Russian PD-14 engine for aircraft MS-21-300 will be widely used. "The Memorandum of interaction in the joint development of a gas turbine engine for a prospective long range wide-body aircraft defines the basic principles and tasks of Rusaian and Chinese parties within the framework of the project, - said Denis Manturov, Minister of Trade and Industry of Russian Federation. "In general the project is carried out according to the agreed schedule - the start of engine test is scheduled for 2022, its certification for 2027". AECC CAE is part of the Aero Engine Corporation of China, created in 2016, and is engaged in the development, manufacture and maintenance of civil gas turbine engines. The UEC is working closely with AECC and its divisions. Rostec Corporation is a Russian corporation that was established in 2007 to facilitate the development, production and export of high-tech industrial products designed for civilian and military applications. The Corporation comprises over 700 organizations that are currently part of eleven holding companies operating in the military-industrial complex and three holding companies working in civilian industry, as well as 80 directly managed organizations. Rostec's portfolio includes well-known brands such as AVTOVAZ, KAMAZ, Kalashnikov Concern, Russian Helicopters, VSMPO AVISMA, UralVagonZavod, etc. Rostec companies are located in 60 constituent entities of the Russian Federation and supply products to more than 70 countries. In 2016 the consolidated revenue of Rostec reached 1.266 trillion rubles, while the consolidated net income and EBITDA amounted to 88 billion and 268 billion rubles respectively. In 2016, the average monthly salary in the Corporation was 44,000 rubles. According to Rostec's strategy, the main objective of the Corporation is to ensure that Russia has a technological advantage in highly competitive global markets. Rostec's key objectives include the introduction of a new techno-economic paradigm and digitalization of Russian economy. http://www.aviationpros.com/press_release/12369719/rostec-and-aecc-cae-agree-upon-the- development-of-an-engine-for-a-long-range-wide-body-aircraft-lrwba-c929 Back to Top UAE's GCAA to hold aviation safety campaign in Kenya WAM (Emirates News Agency) DUBAI- The UAE's General Civil Aviation Authority, GCAA, will hold a Safety Campaign event in Dakar, Kenya, with the support of Pratt and Whitney Canada. The event, which will take place from 6th to 8th December follows the success of the 4th Safety Campaign event in Kenya, which was supported and organised by the GCAA, and held at the Ole Sereni Hotel in Kenya. The Safety Campaign is part of the GCAA's wider strategic objectives to increase aviation safety awareness not only in the UAE but also around the world. It is also one of the GCAA's initiatives to support the 'Year of Giving' by helping to improve aviation in emerging economies. Saif Mohammed Al Suwaidi, Director-General of the GCAA, said, "Given the complexity, volume and interconnected nature of air travel today, aviation safety is a global issue that affects everyone, ensuring that civil aviation operations and regulations conform to global norms is critical in every region of the world; nowhere more so than in emerging markets where critical infrastructure and training can often be lacking." During the conference, renowned speakers and international aviation experts will hold presentations and workshops to discuss key issues affecting aviation safety. There will also be a series of seminars hosted by international experts which cover 'Threat and Error Management', 'Emergency Preparedness' and 'Maintenance'. Laila bin Hareb, Assistant General Manager of the Strategic and International Affairs Sector, said, "The Safety Campaign has been a great success, with renowned international experts lending their weight to the event. As a result, we are looking at holding another event at the end of the year. Safety must always be our number one priority and helping emerging markets as part of the Year of Giving will have a real tangible impact on the safety and security of a huge number of people. https://www.zawya.com/mena/en/story/UAEs_GCAA_to_hold_aviation_safety_campaign_in_Kenya- WAM20170924124046001/ Curt Lewis