22 Feb 10. Aerospace deals ‘at 10-year low’. The value of mergers and acquisitions activity in the aerospace and defence industry hit its lowest level in a decade in 2009, a report suggests. The overall value of deals fell by 54% from 2008 levels to $10bn (£6.5bn) said consultants PricewaterhouseCoopers. Concerns about costs, delays, lower military orders and reduced passenger and freight travel had led to the falling value of orders, it added. However there were a flow of deals for the surveillance and security sector. The actual number of deals done in 2009 was “near record levels” the report said – but they were primarily smaller transactions. PricewaterhouseCoopers said that if stock markets continued to rise and if borrowing money became easier and cheaper, then firms would have more financial flexibility to consider larger targets in 2010. “As we look ahead into the new decade, small and strategic is likely to remain the name of the game in the short term but major restructuring forces are likely to be felt increasingly strongly in the long term with consequent implications for deal strategies and values,” said the firm’s global aerospace and defence leader, Neil Hampson. The two largest deals of 2009 were General Atlantic’s $1.65bn move for defence consultancy firm Tasc and Boeing’s $1bn takeover of a factory owned by US firm Vought, used to build the 787 Dreamliner. However these were small compared with 2008’s biggest deals, which were worth $5.6bn and $2.2bn. The record total value of deals was $41.6bn in 2007 – 76% above the 2009 level. (Source: BBC)

25 Feb 10. Profits at the defense division of Safran collapsed last year to 9m euros ($12.14m) from 40m in the previous year, undermined by a fresh charge for the A400M military airlifter and production problems on inertial navigation systems. A profit margin of 0.8 percent of annual sales in defense activities, the weakest of the four divisions, was due to a provision against the loss of 35m euros for the A400M navigation systems and difficulties in the production ramp up of inertial navigation gear, executive chairman Jean-Paul Herteman said Feb. 25 at a press conference on the 2009 results of the aero-engine and equipment manufacturer. The latest charges brings the total amount of Safran’s provisions on the A400M program to around 200m euros, including navigation kit and the TP400 turboprop engine, said finance director Ross McInnes. Of that overall amount, some 140m of provisions relates to the navigation equipment, of which about 60-70m is left unconsumed, he said. The inertial navigation operations are part of negotiations between Safran and Thales over a potential reorganization of their competing businesses, including optronics. Herteman said the talks with Thales were still continuing. The French procurement chief Laurent Collet-Billon told the parliamentary defense committee Jan. 14, 2009 he wanted to see a consolidation in the overlapping defense operations of Safran and Thales.
Safran is a “niche player” in defense, Herteman said. The low profitability of last year in defense did not reflect the importance of the business to the group. Defense sales rose 11.6 percent to 1.1bn euros, helped by a gain of over 10 percent in avionics, notably higher deliveries of the AASM propelled smart bomb kit and infrared seekers for the Mistral missile. Strong service activity also helped boost defense sales. A French order for a batch of 680 AASM bomb guidance and propulsion kits signed in late December was worth around 100m euros, Herteman said. The order was part of a planned long-term buy of 3,400 AASM kits. The December signing also included development and integration of the latest GPS module for the AASM, which also has laser and inertial guided versions. The French Air Force also has taken delivery of the GPS/laser Enhanced Paveway II bomb from Raytheon, as the glide munition costs less than the AASM propelled weapon. Safran’s Sagem delivered the AASM bomb kit