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04 Jul 19. Leonardo reveals plan to absorb AWHero development. Leonardo’s board of directors has approved a plan for the company to absorb its unmanned aerial vehicle manufacturing Sistemi Dinamici subsidiary into the main business line of the firm.

Sistemi Dinamici develops, produces and sells UAVs, in particular the AWHero unmanned helicopter, and became a subsidiary of Leonardo in 2016 when it purchased the remaining shares of the company from IDS with which it held a joint venture to develop the UAV.

This merger is part of Leonardo’s ‘one company’ initiative that aims to achieve strategic and corporate optimisation of its aerospace, defence and security assets.

It brings about more efficiency and effectiveness in the operations across Leonardo’s industrial activities, and the AWHero development will be included in the company’s helicopters division if this plan goes ahead.

This plan will be presented to an extraordinary shareholders’ meeting, and the merger is expected to be effective for tax and accounting purposes from 1 January 2020. (Source: Shephard)

01 Jul 19. Safran modifies the operational management of its equipment activities. New presentation of segment information at June 30, 2019. Safran has decided to group together business activities with identified strategic and commercial complementarities in order to further boost the synergies to be derived from the integration of the Aerosystems and Aircraft Interiors activities purchased within the scope of the Zodiac Aerospace acquisition.

This new legal and operational organization will be accompanied by a change in presentation of segment information with effect from the publication of the 2019 interim consolidated financial statements on September 5, 2019. The Group’s activities will be organized into three operating segments:

  • Aerospace Propulsion;
  • Aircraft Equipment, Defense and Aerosystems;
  • Aircraft Interiors.

The 2019 outlook as announced at the first-quarter 2019 revenue release, and the 2018-2022 financial framework presented at the November 2018 Capital Markets Day, are not impacted by the new presentation of segment information.

Change in operational organization

The changes in operational management are designed to accelerate the implementation of the Group’s development strategy, particularly as regards more electric aircraft and connected cabins. They will promote knowledge-sharing by bringing together teams working in similar areas, the development of new customer offerings and the optimization of costs.

The changes in organization reflect the synergies identified between the various activities:

  • Combining electrical power generation and distribution systems with electrical interconnection systems in Safran Electrical & Power.
  • Grouping together avionics, electronics and defense in Safran Electronics & Defense.
  • Focusing Safran Aerosystems on safety and fluid management systems.
  • Creating Safran Passenger Solutions for complex cabin equipment and solutions focused on passenger comfort (Water and Waste management systems and In Flight Entertainment).

Change in presentation of segment information

With effect from the 2019 interim consolidated financial statements, segment information will be presented based on three segments: Aerospace Propulsion; Aircraft Equipment, Defense and Aerosystems; and Aircraft Interiors.

Comparative information with the former presentation of segment information in place since the takeover of Zodiac Aerospace is set out in the appendix.The new presentation of segment information brings together comparable activities in terms of financial performance, products, services and customers within three segments:

  • Aerospace Propulsion now includes Safran Transmission Systems, given its close relationship with engine activities.
  • The new Aircraft Equipment, Defense and Aerosystems segment combines the former Safran Aircraft Equipment activities with part of the former Zodiac Aerospace Aerosystems and Safran Defense businesses. Given the prevalence of equipment activities and civil customers in the former Defense segment, Safran has decided to combine with the aircraft equipment businesses.
  • In view of their complementarity with the Cabin and Seats businesses, the activities arising from the creation of Safran Passenger Solutions are included in the Aircraft Interiors segment.

Segment information restated in line with the new organization

Segment information restated in line with the new organization is provided below for the purposes of monitoring and comparing performance. As a reminder, the former Zodiac Aerospace Aerosystems and Aircraft Interiors activities were included in Safran’s consolidated financial statements as from March 1, 2018.

2018-2022 financial framework (presented at the November 2018 Capital Markets Day)

The operational reorganization and change in presentation of segment information have no impact on Safran’s revenue, operating margin and free cash flow growth ambitions for 2018-2022, which included an upward revision to the Zodiac Aerospace synergy ambition (from €200m to €250m in 2022). The effect of the new organization on segment operating margins ambitions in 2022 is set out below:

  • The operating margin ambitions for Aerospace Propulsion and Aircraft Interiors remain unchanged from those announced at the Capital Markets Day:

o above 20% for Aerospace Propulsion;

o up to 13% for Aircraft Interiors.

  • The operating margin ambition for the new Aircraft Equipment, Defense and Aerosystems segment above 14% in 2022 reflects the integration of the Defense activities and the improvements across all businesses as presented at the November 2018 Capital Markets Day.

26 June 19. Trouble down under for RPS. Citing weak trading conditions in Australia, an unexpected update from RPS (RPS) has warned that full-year results will be materially lower than expected. Australia and Asia Pacific accounted for a fifth of group revenue and a quarter of operating profit last year.

Predominantly working in the public sector, the group has suffered due to a hiatus in Australian infrastructure spending and the slower release of major defence projects. The subdued property market is also impacting private sector work – dwelling approvals are down by more than 20 per cent.

Having previously identified a softening in property and touting an “active” defence sector in February’s full-year results, the extent of the weakness appears to have caught the group off guard. Chief executive John Douglas believes the impact will be short term. As the integration of Corview continues and a new “business-friendly” government begins its work, he maintains the group is well positioned to capitalise on an Australian recovery.

The group is hoping to soothe shareholders’ concerns by pointing to progress elsewhere. However, the revival in energy remains vulnerable to oil price weakness. Political uncertainty continues to impact consulting in the UK and Ireland (the largest division), which is now expected to slightly underperform.

Lowering its forecast for the second time in nine months, Numis now forecasts adjusted pre-tax profit of £36.1m (from £51.6m) and EPS of 11.7p (from 16.8p) in 2019.

IC View

Confidence in RPS had been steadily recovering since last October’s profit warning sent investors heading for the exit. But this latest shock saw the shares tumble by over 37 per cent to a new 52-week low. At 106p, the shares are trading at just nine times forward earnings. A low rating, but unfortunately one that reflects the potential for the negative trajectory to continue. Move to sell. Last IC View: Buy, 173p, 21 Feb 2019. (Source: Investors Chronicle)

24 June 19. Porvair’s (PRV) aerospace and industrial revenues increased 48 per cent over its first half, accounting for nearly 45 per cent of its overall turnover, in spite of the US-China trade conflict and a difficult market backdrop for industrial businesses. The filtration specialist, which also achieved growth in its laboratory and metal melt quality businesses, delivered several large orders over the first half, which included spare parts for gasification. Porvair does not expect regular orders for more spares, according to group financial director Chris Tyler, nor does it expect a repeat of the nuclear clean-up work it did in the US. However, the division performed well as a whole and overcame a modest impact on its microelectronics work from the US-China tariff dispute – “set against some relatively weak comparatives in the prior year”, Mr Tyler admitted, when aerospace and industrial revenues grew only 6 per cent. Laboratory revenues were up 4 per cent, with seal analytical sales down 1 per cent, again owing to the effect of tariffs on Chinese demand, along with the switch to Porvair’s new AA500 flow analyser, which had the effect of lowering production.

Porvair’s working capital rose by £7.5m – this usually increases in the first half, Porvair’s group financial director says, partly because of the routine timing of several annual payments, including insurance and pension deficit contributions. Disproportionately strong May revenues and around £1m of Brexit-related stock on the balance sheet also played their part. Provisions rose £9.9m, compared with a comparable first-half fall of £363,000. “We have some very cautious provisioning on the large gasification contracts that have been going through the P&L and balance sheet over the past five years or so,” Mr Tyler says.

Bloomberg consensus gives adjusted November 2019 EPS of 24.8p, rising to 26p in FY2020.

IC View

Porvair has gone from strength to strength over the past 12 months, resisting external pressures that have undone industrial peers while growing its core businesses. Its order book looks strong, while the filtration specialist has succeeded in maintaining a net cash position while investing in acquisitions and capital expenditure, although this outlay admittedly did fall from £7m to £2.8m. Net cash is expected to hit £8.6m at November 2019, according to Peel Hunt. We see no reason to exit right now. Buy. Last IC View: Buy, 455p, 29 Jan 2019. (Source: Investors Chronicle)

20 June 19. Kape’s growth materially undervalued. Kape Technologies (KAPE:83p), a provider of cyber security software and a constituent of my 2017 Bargain Shares portfolio when the shares were priced at 47.9p and the company’s name was Crossrider, has issued a bullish update this morning on its October 2018 complementary acquisition of Berlin-based ZenMate – a digital privacy company that is focused on encrypting and securing internet connections and protecting individuals’ privacy and digital data through virtual private networks (VPNs).

This segment of the cyber security market is a core driver of Kape’s growth. Having made the acquisition in March 2017 of CyberGhost, a leading cyber security software-as-a-service (SaaS) provider of VPNs, Kape has trebled that business’s user base to more than 400,000 customers in the past two years. The global cyber security market is worth $153bn (£120bn) and is growing at 12 to 15 per cent per year, so is a really hot area to be operating in. The global VPN market is growing even faster. It was valued at $15.3bn in 2016 and is projected to post compound annual growth of 18 per cent until 2022 when it could be worth $35.7bn, according to Statista, a leading provider of market and consumer research data.

It’s not difficult to understand why the cyber market is growing so quickly, either, as almost one billion adults in 20 countries globally experienced cybercrime in 2017 alone, based on research from Symantec, the US cyber security group. This favourable backdrop offers an opportunity for Kape to grow its businesses organically, and to make earnings-accretive acquisitions too.

Kape’s management team are clearly working their magic on ZenMate, realising $1.7m of annualised cost savings since acquisition to attain cash profitability in the first quarter this year. They have launched the ZenMate ultimate app across multiple online platforms and ZenMate Pulse, a comprehensive web firewall extension, which protects against pop-up ads, trackers, phishing schemes, malware and malvertising, as well as providing users with an explanation of the types of threats that they face on each website.

The contribution from ZenMate along with that from last summer’s $16m acquisition of Intego, a Mac and iOS cybersecurity and malware protection software-as-a-service (SaaS) business, should contribute to a step change in Kape’s profits this year and next. Analysts at broking house Arden Partners predict that Kape’s current-year pre-tax profits will increase by 58 per cent to $9.8m on 40 per cent higher revenue of $76m to produce earnings per share (EPS) of 5.5¢ (4.3p). The respective forecasts for 2020 are revenues of $89.8m, pre-tax profit of $16m and EPS of 9.1¢ (7.2p). Kape also retains a strong balance sheet to fund future earnings-accretive bolt-on acquisitions. Arden predicts year-end closing net funds of $35.4m (19.5p a share), rising to $40.2m (22.25p) at the end of 2020.

On this basis, Kape’s shares are rated on a modest cash-adjusted 2019 price/earnings (PE) ratio of just below 15, falling to a PE ratio of 8.5 in 2020. From my lens at least, the market is materially undervaluing the company’s projected earnings growth, which could see EPS increase by 160 per cent this year and next. Moreover, the potential for earnings upgrades on the back of merger and acquisition activity is effectively in the price for free. Strong buy. (Source: Investors Chronicle)

03 Jul 19. Broadcom nears $15bn deal to buy Symantec. Move signals shift to buying software assets after failed 2018 bid for Qualcomm. Chipmaker Broadcom is nearing a deal to buy US cyber security group Symantec in a transaction that could be worth more than $15bn, according to people briefed about the negotiations. A deal could be announced as early as Wednesday, although those briefed on the talks warned that no final agreement had been signed and the announcement could be delayed until after the US public holiday on July 4. Broadcom’s move to acquire Symantec signals that the acquisitive chipmaker is shifting its attention to buying up software assets, after it was blocked by US President Donald Trump from pursuing a bid for rival Qualcomm last year. The US-based company run by Hock Tan, the arch-consolidator amid a wave of dealmaking in the global semiconductor industry, acquired CA Technologies for $18.9bn a year ago. News of the potential acquisition, which was first reported by Bloomberg, sent Symantec’s shares up by more than 20 per cent in after-market trading on Tuesday, adding about $3bn to its stock market value. However, the news also wiped $5bn off Broadcom, which fell more than 4 per cent, reflecting Wall Street’s unease about the chipmaker’s sally into software. Mr Tan bought his way to the top of the chip industry with a series of big deals and earned a reputation as one of the industry’s most effective operators. He has sought to persuade investors that he can bring those same skills to bear in consolidating the fragmented enterprise software industry.

Even at $15bn, a deal would value Symantec some $6bn below where it stood in late 2017, before it faced waning investor confidence over flagging growth. The security software company was also dented by news that claims from a whistleblower had prompted a board-level investigation into unspecified financial issues. Recommended EU tech regulation Vestager revives dormant antitrust weapon against tech groups One of the pioneers of consumer antivirus software, Symantec has struggled to show it can expand into new corners of the security market to revive its fortunes. The company has been through a succession of chief executives and spent $7bn on two acquisitions, of enterprise security company Blue Coat Systems and LifeLock, which protects against identity theft, in search of more sustained growth. Its flagging growth and solid free cash flow, which topped $1bn last year, have attracted interest from prominent private equity firms. Activist hedge fund Starboard Value owns more than 5 per cent and has a board seat. Its directors also include Ken Hao, a partner at Silicon Valley private equity firm Silver Lake, who was a close ally of Mr Tan and helped build Broadcom before that company’s detour into software put the two in potential conflict. (Source: FT.com)

02 Jul 19. HEICO Corporation Acquires Leading French Interconnect Business. HEICO Corporation (NYSE:HEI) (NYSE:HEI.A) today announced that its Buc, France-based 3D PLUS subsidiary acquired substantially all of the assets and business of Bretigny-sur-Orge, France-based BERNIER, SAS (“BERNIER”) in an all cash transaction. 3D PLUS is part of HEICO’s Electronic Technologies Group.

No further financial details were disclosed, but HEICO expects the acquisition to be accretive to its earnings within the first 12 months after closing.

Founded in 1933, BERNIER is a leading French designer and manufacturer of interconnect products used in demanding defense, aerospace and industrial applications, primarily for communications-related purposes. BERNIER’s products are sold mostly within France, the European Community, Asia, the Middle East and the USA.

The business will continue to operate under the BERNIER name and in its current engineering and production facility located in Bretigny-sur-Orge. Further, BERNIER, 3D PLUS and HEICO stated that they do not expect any staff turnover from among BERNIER’s approximately 40 talented Team Members to result from the acquisition.

Dominque Gaucher, BERNIER’s General Manager, commented, “We are very pleased to have 3D PLUS and HEICO as our new partners. BERNIER’s employees, including its management team, strongly supported the 3D PLUS/HEICO purchase because of their culture and the way they do business. We look forward to a strong future together.”

Pierre Maurice, 3D PLUS’ Co-Founder and CEO, stated, “We are proud to welcome BERNIER in the group and are excited to work with their wonderful team we have gotten to know over the recent months. We are grateful for their confidence, BERNIER’s customers’ confidence and the confidence of the Government of France for entrusting us with this special business. Moreover, BERNIER’s products will be a great addition to our existing product lines and will give 3D PLUS access to new markets.”

Laurans A. Mendelson, HEICO’s Chairman and Chief Executive Officer, along with Victor H. Mendelson, HEICO’s Co-President and Chief Executive Officer of its Electronic Technologies Group, jointly remarked, “We have great respect for BERNIER and its entire team. For 86 years, they have been serving their customers with excellent products and top-notch service, so this is exactly the kind of company that belongs in HEICO. We welcome everyone at BERNIER to the HEICO family.”

3D PLUS and HEICO were advised in the transaction by Thibaut de Monclin of investment banking firm Oaklins France and the law firm Archers, both in Paris. (Source: BUSINESS WIRE)

01 Jul 19. Astronics Announces Acquisition of Freedom Communication Technologies. Augments radio test solution offerings. Astronics Corporation (Nasdaq: ATRO), a leading provider of advanced technologies for global aerospace, defense, and other mission critical industries, announced today that it has acquired Freedom Communication Technologies, Inc. (FCT) a developer and manufacturer of communication test equipment for the land-based mobile radio test market providing innovative solutions to Long-Term Evolution (LTE) high-speed wireless communications customers globally. Astronics has acquired 100% of the equity of FCT for $22m in cash.

Peter J. Gundermann, Chairman, President and Chief Executive Officer commented, “FCT is a leader in wireless communications testing, primarily for the civil land mobile radio market. Their market focus and technology complements those we already have, and together, we will offer a broader range of test solutions to an expanded market. The acquisition gives us a stronger market position in the radio test arena, a strong brand for our offerings and a larger addressable market. We are excited to expand our test capabilities and to bring FCT on board with our Test business.”

Based in Kilgore, TX, FCT was founded in 2015 and offers communications analyzers for testing and maintaining Land Mobile Radio (LMR) communications systems. FCT also provides an extensive range of capabilities, including automated radio testing and alignment, coverage mapping, and interference analysis. In 2018, FCT had $11m in revenue and is expected to contribute approximately $10m in revenue in the second half of 2019. (Source: BUSINESS WIRE)

02 Jul 19. Leonardo, Thales consider joint bid for Maxar’s MDA space division: Leonardo CEO. Italian aerospace and defense firm Leonardo SpA (LDOF.MI) and France’s Thales SA (TCFP.PA) are considering the joint acquisition of a space business from U.S. firm Maxar Technologies Inc (MAXR.N), Leonardo’s CEO said on Tuesday. The sale of the business – dubbed MacDonald, Dettwiler and Associates (MDA) – could fetch more than $1bn and help address concerns about Maxar’s $3.2bn debt pile, people familiar with the matter told Reuters last month.

“We are considering that with our partner Thales,” Leonardo CEO Alessandro Profumo said in a phone interview from Jakarta, where he is looking to boost sales of maritime patrol equipment and helicopters in Asia to help diversify revenue.

“For us, they have a very good technology in the antennas for satellites, so it is an option we are considering,” he said of MDA.

Canada-based MDA is already a supplier to Thales Alenia Space, owned 67% by Thales and 33% by Leonardo, Profumo said, but he cautioned a deal was not guaranteed.

“We do have the capability of being a customer of Maxar and MDA also without this acquisition,” he said.

“It is not something that is necessary to complete for our business. There is industrial sense in terms of integration but we are already a customer of them,” Profumo added.

Thales did not respond immediately to a request for comment.

Italian newspaper La Repubblica last month reported that Leonardo and Thales were interested in MDA, without citing sources.

Thales Alenia Space on Monday was awarded a contract by Indonesia’s Ministry of Communication and Information Technology to design and manufacture a telecommunications satellite to be launched in late 2022.

Leonardo was talking to the Indonesian government about several other products, Profumo said, including manned and unmanned maritime surveillance options, as it looked to step up its presence in the Asian market.

Leonardo last year signed a memorandum of understanding with Kangde Investment Group of China to develop, produce and assemble composite materials for the Chinese and Russian CR929 widebody commercial jet project.

Profumo said the pair was interested in the work but a contract had not yet been awarded, noting rivals such as Spirit AeroSystems Holding Inc (SPR.N) were also competing.

“We are bidding. We are not yet involved,” he said.

U.S.-based Spirit did not respond to a request for comment outside usual business hours. (Source: Reuters)

01 Jul 19. L3Harris Technologies Merger Successfully Completed; Board of Directors, Leadership and Organization Structure Announced.

Highlights:

  • Global aerospace and defense technology leader with a broad portfolio of capabilities
  • Experienced Board and management team with proven track records
  • Four mission-focused segments serving government and commercial markets

L3Harris Technologies (NYSE:LHX) today announced the successful completion of the all-stock merger between Harris Corporation and L3 Technologies on June 29, 2019. Headquartered in Melbourne, Florida, L3Harris is the sixth largest defense company in the U.S., and a top 10 defense company worldwide – with approximately $17bn in revenue and 50,000 employees, including 20,000 engineers and scientists.

Shares of Harris common stock, which traded on the NYSE under the ticker symbol “HRS”, will begin trading today under the ticker symbol “LHX”. L3 Technologies (NYSE:LLL) shares ceased trading upon market close on June 28 and have converted into 1.3 L3Harris shares for each L3 share.

Board of Directors

L3Harris’ new Board of Directors consists of 12 members with a deep understanding of Harris and L3 businesses, a diverse mix of background, skills and experience, and a track record of driving long-term shareholder value. The L3Harris Board members, drawn equally from Harris and L3, are:

  • William M. Brown – Chairman and CEO, L3Harris
  • Christopher E. Kubasik – Vice Chairman, President and COO, L3Harris
  • Sallie B. Bailey – former EVP and CFO, Louisiana-Pacific
  • Peter. W. Chiarelli – General, U.S. Army (Retired)
  • Thomas A. Corcoran – former President and CEO, Allegheny Teledyne
  • Thomas A. Dattilo – former Chairman, CEO and President, Cooper Tire & Rubber
  • Roger B. Fradin – former Vice Chairman, Honeywell
  • Lewis Hay III – former Chairman and CEO, NextEra Energy
  • Lewis Kramer – retired Partner, Ernst & Young
  • Rita S. Lane – former Vice President, Operations, Apple
  • Robert B. Millard – Chairman, MIT Corporation
  • Lloyd W. Newton – General, U.S. Air Force (Retired)

Structure and Leadership

L3Harris has organized its operating businesses into four segments to best meet customers’ mission requirements and leverage the combined company’s broad technical capabilities:

  • Integrated Mission Systems — led by Sean Stackley, headquartered in Palm Bay, Florida, with approximately $4.9bn in revenue. Includes intelligence, surveillance and reconnaissance; advanced electro optical and infrared solutions; and maritime power and navigation
  • Space and Airborne Systems — led by Ed Zoiss, headquartered in Palm Bay, Florida, with approximately $4.0bn in revenue. Includes space payloads, sensors and full-mission solutions; classified intelligence and cyber defense; avionics; and electronic warfare
  • Communication Systems — led by Dana Mehnert, headquartered in Rochester, New York, with approximately $3.8bn in revenue. Includes tactical communications; broadband communications; night vision; and public safety
  • Aviation Systems — led by Todd Gautier, headquartered in Arlington, Texas, with approximately $3.8bn in revenue. Includes defense aviation products; security, detection and other commercial aviation products; air traffic management; and commercial and military pilot training

Executive officers in addition to Brown, Kubasik and the segment presidents include Jay Malave, SVP and Chief Financial Officer, and Scott Mikuen, SVP, General Counsel and Secretary.

“We’ve created an agile technology provider with the scale, resources and capabilities to provide affordable, innovative and rapidly fielded solutions to address our customers’ critical mission needs,” Brown said. “Each member of our Board and leadership team brings decades of experience, and I look forward to working with them to capture the targeted synergies and create significant value for our shareholders.”

“Our seasoned segment leaders and mission-focused operating structure will enable us to leverage our broad range of capabilities and complementary technologies to deliver advanced solutions and capture opportunities across multiple domains,” said Kubasik.

Leadership photographs and biographies are available on the company’s website. More information and additional segment details can be found here, and L3Harris intends to provide total company and segment guidance for 2H CY2019 and pro forma 1H CY2019 financial information in conjunction with reporting Harris’ Q4 and full year FY2019 results. (Source: BUSINESS WIRE)

28 Jun 19. Defense contractor consolidation a security concern: U.S. Air Force acquisition head. The number of major U.S. defense contractors has shrunk to the point of becoming a national security concern, according to the U.S. Air Force’s acquisition head, who said his service needed to have more frequent competitions to benefit smaller companies.

The comment came after U.S. President Donald Trump this month expressed concern that United Technologies Corp’s plan to (UTX.N) combine its aerospace business with that of Raytheon Co (RTN.N) could harm competition and make it more difficult to negotiate defense contracts. The $121bn deal would be the sector’s biggest-ever merger.

Will Roper, assistant secretary of the U.S. Air Force for acquisition, technology and logistics, said when his service was formed in 1947, over a dozen companies could make airplanes.

“Right now we are down to just a couple of companies who can build tactical airplanes for us. We need to do everything in our power to start opening up that envelope again,” he told reporters on the sidelines of a defense technology conference in Singapore on Friday.

He said U.S. Air Force tenders for major equipment typically required so much design effort that it was unaffordable for all but the very biggest defense contractors to compete.

“For competition to be positive it has to occur frequently enough that the winners are happy but the losers don’t have to fundamentally change their company,” he said.

Roper, who oversees an annual budget of more than $40bn, said because the United Technologies-Raytheon deal was not finalised, the U.S. Air Force did not have a position on it.

But he said the service was focused on funding start-ups and working with smaller companies like Kratos Defense and Security Solutions Inc (KTOS.O), which is developing the $2m to $3m Valkryie combat drone designed to fly alongside crewed aircraft.

The Valkyrie is “attritable”, which Roper said is defined as expensive enough to be lethal but cheap enough to take the risk that it will not return from a mission.

“In my mind the cap was a missile defense interceptor cost, so nothing more than, say, $10mi,” he said.

Boeing Co (BA.N) in February unveiled a larger unmanned fighter-like jet developed in Australia, and Lockheed Martin Corp (LMT.N) is also investing in attritables.

Roper said there would be room in the market for different types of the drones, which could fight alongside F-35s and F-15s controlled by those jets’ pilots.

“I think that we will have large systems that are designed to have many takeoffs and landings but not be kept for decades,” he said. “I think we’ll have very small systems that are somewhere between a weapon and a very small drone that I think of as more reusable weapons.” (Source: glstrade.com/Reuters)