February 17, 2022 - No. 10 In This Issue : Aerospace firms grapple with fragile supply chain at Singapore Airshow : Warning over mysterious hackers that have been targeting aerospace and defence industries for years : 2022 Aircraft Cabin Air Conference : Ball Aerospace expansion cruising through regulatory approval process : Ukrainian Airline Takes Aircraft Out of the Country Aerospace firms grapple with fragile supply chain at Singapore Airshow • Boeing and Airbus suppliers face acute shortage of workers • Some suppliers had struggled financially before pandemic hit • Planemakers are ramping up narrowbody production SINGAPORE/SEATTLE, Feb 15 (Reuters) - Supply chain shortages and wage inflation are at the top of a list of concerns for aerospace companies attending a depleted Singapore Airshow amid tight health controls this week. Across aerospace, the suppliers that feed Boeing (BA.N) and Airbus (AIR.PA) factories are facing an acute shortage of skilled workers and weakened balance sheets after back-to-back crises triggered by a 737 MAX safety grounding and the COVID-19 air travel slump. A shortage of vital materials, from titanium to microchips, is worrying procurement executives, coming on top of existing fears over available stocks of steel and aluminium. Those factors - compounding a decade of pressure from Boeing and Airbus to cut prices - are fuelling doubts about the supply chain's ability to meet aggressive narrowbody production ramp-up plans this year and beyond, particularly at Europe's Airbus. "Wherever I look in the supply chain, I see problems," Gary Lowe, Chief Executive of Thyssenkrupp Aerospace North America, told a U.S. supplier conference on the eve of the air show. Referring to increases in production planned by Airbus and Boeing, he said, "I think it's going to be a lot more lumpy and problematic than people realise." A labour shortage is likely to fuel inflation as firms try and lure back workers who left the industry during the pandemic, while staffing up to meet demand. The aviation recovery has been swifter than expected, particularly in the narrowbody market, Kailash Krishnaswamy, senior vice president of aftermarket services at Spirit AeroSystems (SPR.N), said on the sidelines of the Singapore Airshow on Tuesday. "When you have cut down labour by 20% to 50%, ramping up that steep... it's just very challenging getting people back. And when you don't have people back, you don't have parts," he added. And many analysts say the maximum point of vulnerability is when suppliers have to invest in inventory or new equipment to respond to demand coming out of the crisis, rather than during the low point of demand when furlough schemes softened the pain. "Some of these supply chain guys have been stretched in terms of their balance sheets, cash flows, significant investment into plant and material prior to pandemic. So I am worried about their financial health," Domhnal Slattery, chief executive of aircraft lessor Avolon said in Singapore. Lowe urged suppliers across the industry to be transparent about what they need and avoid stockpiling materials. After months in which the aerospace industry broadly shrugged off the impact of the semiconductor shortage, aviation is beginning to feel pressure. Planemakers can still find supplies of the high-value, low-volume chips used for flight controls and avionics - whose designs are relatively old compared with the lightning pace of change in the consumer products world. But supplies of chips for more common uses such as aircraft seat electronics are beginning to dry up, a senior procurement source said. Eric Bernardini, global co-head of aerospace, defence and aviation at U.S. consultants AlixPartners, said the problem is more visible in the supply base of Airbus than Boeing. That is because Airbus is pushing ahead faster than its rival despite reservations from its engine suppliers, while delays in the 787 Dreamliner and a gradual recovery in the 737 MAX have left parts of Boeing's supply base with excess inventory. On Monday, executives from both companies said they were aware of supply chain risks and were factoring them into their planning. To offset cost pressure, suppliers in the United States are moving some production from states with high labour costs such as California, Bernardini said. He said the Omicron coronavirus variant has also taken a toll on assembly lines as COVID-19 infections left suppliers short-staffed. In some cases, the variant had put 25% of the workforce out of circulation. "This is very disruptive," Bernardini said. "The productivity has decreased." https://www.reuters.com/business/aerospace-defense/aerospace-firms-grapple-with-fragile-supply-chain-singapore-airshow-2022-02-15/ Warning over mysterious hackers that have been targeting aerospace and defence industries for years Cybersecurity researchers detail a hacking operation that has been conducting phishing campaigns and malware attacks since 2017, despite barely changing its tactics. An unknown criminal hacking group is targeting organisations in the aviation, aerospace, defence, transportation and manufacturing industries with trojan malware, in attacks that researchers say have been going on for years. Dubbed TA2541 and detailed by cybersecurity researchers at Proofpoint, the persistent cyber-criminal operation has been active since 2017 and has compromised hundreds of organisations across North America, Europe, and the Middle East. Despite running for years, the attacks have barely evolved, broadly following the same targeting and themes in which attackers remotely control compromised machines, conduct reconnaissance on networks and steal sensitive data. "What's noteworthy about TA2541 is how little they've changed their approach to cybercrime over the past five years, repeatedly using the same themes, often related to aviation, aerospace, and transportation, to distribute remote access trojans," said Sherrod DeGrippo, vice president of threat research and Detection at Proofpoint. "This group is a persistent threat to targets throughout the transportation, logistics, and travel industries." Attacks begin with phishing emails designed to be relevant to individuals and businesses in the sectors being targeted. For example, one lure sent to targets in aviation and aerospace resembles requests for aircraft parts, while another is designed to look like an urgent request for air ambulance flight details. At one point, the attackers introduced COVID-19-themed lures, although these were soon dropped. While the lures aren't highly customised and follow regular templates, the sheer number of messages sent over the years – hundreds of thousands in total – and their implied urgency will be enough to fool victims into downloading malware. The messages are nearly always in English. TA2541 initially sent emails containing macro-laden Microsoft Word attachments that downloaded the Remote Access Trojan (RAT) payload, but the group has recently shifted to using Google Drive and Microsoft OneDrive URLs, which lead to an obfuscated Visual Basic Script (VBS) file. Interacting with these files – the names of which follow similar themes to the initial lures – will leverage PowerShell functions to download malware onto compromised Windows machines. The cyber criminals have distributed over a dozen different trojan malware payloads since the campaigns began, all of which are available to buy on dark web forums or can be downloaded from open-source repositories. Currently, the most commonly delivered malware in TA2541 campaigns is AsyncRAT, but other popular payloads include NetWire, WSH RAT and Parallax. No matter which malware is delivered, it's used to gain remote control of infected machines and steal data, although researchers note that they still don't know what the ultimate goal of the group is, or where they are operating from. The campaign is still active and it's been warned that the attackers will continue to distribute phishing emails and deliver malware to victims around the world. https://www.zdnet.com/article/these-prolific-hackers-have-been-targeting-the-aerospace-and-defence-industries-with-trojan-malware-for-years/ Ball Aerospace expansion cruising through regulatory approval process Ball Aerospace & Technologies Corp. won preliminary approval from the Boulder City Council to continue moving forward with plans to expand its east Boulder campus. A site review for the expansion project was approved on first reading Tuesday, with a public hearing and final vote set for March 1. The aerospace arm of Westminster-based metal-packaging manufacturer Ball Corp. (NYSE: BLL) intends to add 310,000 square feet of new building space to its campus at the roughly 27-acre site on the north side of Arapahoe Road between 48th Street and Range Street. That would bring the total square footage to just under 751,000. “This is such incredible work to see the evolution of Ball because in many ways, the legacy of this company is the legacy of our community,” Boulder City Council member Matt Benjamin said. Once the site plans are approved and building permits issued, construction of the expansion is expected to occur in four phases over the next 15 years with full build-out expected by 2037. Ball has requested certain land-use-regulation variances to allow buildings to be built up to 55 feet and with a floor to area ratio greater than is allowed under current zoning rules. The expanded campus could house as many as 2,000 Ball employees. “I’ll give a congratulations to Ball Aerospace,” Boulder Mayor Aaron Brockett said. “Ball has been an important part of our local community for many, many years and does extraordinarily important work.” Ball has operated in Boulder since 1956 and has since spread operations to surrounding communities with cheaper, more-plentiful land for expansion. In 2019, Ball broke ground on a new four-building, 186,000-square-foot Westminster headquarters located at the existing site of Ball’s Packaging Office Center at 9343 W. 108th Circle in Westminster. The same year, the firm unveiled plans to add 137,000 square feet of office and research and development space to Ball’s existing roughly 121,000-square-foot Broomfield R&D operation on 10 Longs Peak Drive. https://em-ui.constantcontact.com/em-ui/em/page/em-ui/email#edit/activity/efecf6f5-8e16-443d-8e43-7fc6a0035e25 Ukrainian Airline Takes Aircraft Out of the Country Following warnings by the United States of a possible imminent start to war in Ukraine, Ukraine International Airlines (UIA) has had aircraft moved out of the country. Kiev — Following warnings by the United States of a possible imminent start to war in Ukraine, Ukraine International Airlines (UIA) has had aircraft moved out of the country. The insurance for its flights in Ukrainian airspace has been suspended, the company told dpa in Kiev on Monday. Five planes had been flown out to Spain. Two more planes would be taken to Belgrade in Serbia for "scheduled technical maintenance." In total, the company has 25 aircraft. The day before, the government in Kiev had provided the equivalent of $590 million in aviation guarantees. Previously, the Dutch airline KLM had completely suspended flights to Ukraine. The Ukrainian company SkyUp had to divert a return flight from Madeira to Chisinau in neighbouring Moldova because of the insurance issue. The passengers were later brought to Kiev by bus. Germany's Lufthansa, on the other hand, is continuing to fly to Ukraine for the time being. When asked, a spokesman explained that they had appropriate insurance cover. He said: "If there was no insurance, we wouldn't fly either." For weeks, the US in particular has been warning of an allegedly imminent Russian invasion of Ukraine, citing an increased Russian troop presence not far from the border. The Kremlin regularly rejects the accusations; Kiev also does not see any concrete preparations for an attack. https://www.aviationpros.com/airlines/news/21256779/ukrainian-airline-takes-aircraft-out-of-the-country Curt Lewis