AIA Issues Gloomy Forecast, Despite Strong 2011

Aerospace industry sales were a projected $218 billion in 2011, an increase of more than 3.5 percent, the Aerospace Industries Association reported at its annual Year-End Review and Forecast luncheon on Dec. 14. Despite the robust numbers, the association is estimating a decline of $400 million in spending for 2012, with a decline of $1.4 billion in military aircraft spending partially offset by a rise in civil aircraft purchases.

The numbers reported by the AIA for 2011 showed growth in every market segment, with military aircraft spending up 6.6 percent to $66.5 billion, civil aircraft spending up 3.1 percent to $49.7 billion, missile spending up 2.0 percent to $25.6 billion, and related products and services up 1.0 percent to $30.0 billion. The cumulative increase marked the seventh consecutive year of sales gains.

Even with the positive reports, AIA president and CEO Marion Blakey said that the momentum won't carry into 2012.

"Given the number we're projecting for 2011, you might imagine that we'll roll right on into 2012," she said. "Not so."

The organization's estimate of 2012 sales anticipates declines in military aircraft ($1.4 billion), space ($1.3 billion) and missile ($500 million) spending.

Employing much of the same language used at the rollout of the AIA's Second to None campaign in September, a public relations effort aimed at combating the momentum building to cut defense budgets, Blakey emphasized potential job losses, citing a report commissioned by the organization that claims more than 1 million jobs would be at risk as a result of sequestration. The number has been called into question by some experts, citing the conflict of interest in having a study funded by the organization.

When asked about the relative merits of job numbers as a result of government spending in the defense industry as opposed to other sectors, Blakey said that discussions she's been a part of haven't focused on picking winning and losing industries.

"No one I hear in Washington is talking about trading off jobs," she said. "It's about cuts."

Bids Submitted for Aegis Follow-On System

Lockheed Martin, Raytheon and Boeing have submitted proposals to take over support and development of the Aegis combat system, the companies said Dec. 14.

The Combat System Engineering Agent (CSEA) competition also is intended to provide a follow-on system to Aegis, the U.S. Navy's most capable weapon system and the foundation for its fleet air defense, surface warfare and ballistic missile defense (BMD) missions.

Lockheed has held the Aegis development and support contract since 1995, when it acquired Martin Marietta. The system was first developed by RCA starting in the late 1960s. General Electric then bought the company, which in turn was sold to Martin Marietta and subsequently merged with Lockheed.

Aegis, perhaps the world's most effective naval combat system, has been worth many billions of dollars to Lockheed over the years. All 27 Ticonderoga-class cruisers and at least 70 DDG 51 Arleigh Burke-class destroyers have been built with the system. Spain, Norway, Japan and the Republic of Korea operate Aegis warships, and Australia is building a new class of Aegis destroyers.

A combination of radars, computers and weapons, Aegis was first developed to counter massed attacks by Soviet anti-ship missiles, and has evolved into an effective surface warfare system. Although not designed to target ballistic missiles, the system has been modified with more powerful processors as the basis for the Navy's BMD systems, and is the foundation for the Phased Adaptive Approach effort for the land-based missile defense of Europe.

According to the Missile Defense Agency, 24 Aegis ships - five cruisers and 19 destroyers - have BMD capability. That number is to increase to 32 ships by the end of 2013 as more units are upgraded.

The CSEA effort is intended to provide for the design, development and integration of Aegis weapon system and Aegis combat system future capabilities for existing cruisers and destroyers, and potentially create a new system for DDG 51 Flight III ships beginning in 2016.

Dependent on development, Flight III ships may be fitted with a new combat system or continue with Aegis.

The Navy is expected to award the CSEA contract in the fall of 2012.

A separate competition is underway to develop a new phased-array radar for Aegis. The Air and Missile Defense Radar (AMDR) is to provide new radars to replace existing SPY-1 radars beginning with the U.S. Navy's 2016 Flight III destroyers.

Lockheed, Raytheon and Northrop are working to develop the AMDR, which will be a dual-band system. All three companies are working under Navy contracts to develop an S-band (AMDR-S) radar, with development contracts yet to be issued for the AMDR-X X-band system. The AMDR systems will also include a radar suite controller to integrate the radars.

Sweden Sets Export Record of $1.95B

HELSINKI - Sweden's military exports set a record in 2010 despite a contraction of sales to the home market. Moreover, defense industry leaders are forecasting a stronger year in 2012, with Saab's $3.2 billion agreement to deliver 22 Gripen fighter jets to Switzerland providing a lift.

Arms exports by Sweden amounted to $1.95 billion in 2010. This contrasts with an equally high export level of $1.9 billion in 2009 and relatively modest exports, valued at $429 million, in 2001. The Netherlands was the biggest recipient in 2010, with purchases valued at $300 million.

The significant increase in exports has been motivated by a Swedish government policy to look to the wider international market for off-the-shelf weapons and equipment solutions. With fewer contract opportunities available, Sweden's defense industry has started to generate a higher proportion of its sales through exports.

Sweden exported military equipment and materials to 63 different countries in 2010. This compares with export sales to 52 countries in 2000 and 33 in 1990. Despite the government's broader procurement policy, the defense industry has gained from the establishment of the Defense Export Agency, which was established this year to support export initiatives by small, medium and large defense companies.

Exports of military equipment and materials from Sweden hit the $1 billion mark for the first time in 2004. The upward movement in exports since that time has produced export sales of $1.5 billion in 2006, $1.8 billion in 2008 and the $1.95 billion recorded in 2010.

The industry is forecasting exports will break the $2 billion barrier in 2011, when about 62 percent of production will be exported.

Italy Gives Bombing Stats for Libya Campaign

ROME - In their first official breakdown of facts and figures about Italy's air campaign over Libya this year, officials said military aircraft deployed 710 guided bombs and missiles during sorties. Italian Air Force Tornados and AMX fighter bombers deployed 550 bombs and missiles, while Navy AV8s deployed 160 guided bombs, the officials said during an event at Trapani Air Base in Sicily to honor military personnel involved in the conflict.

The Air Force total included Storm Shadow missiles, which sources put at between 20 and 30, which were fired from Tornado IDS aircraft - the first time the Air Force has deployed the missile during operations. The success rate of the Storm Shadow was 97 percent, one official said.

Otherwise, the Air Force deployed Paveway and JDAM guided munitions. AMX bombers for the first time used Litening III targeting pods, while Tornado IDS aircraft used JDAM munitions operationally for the first time.

Although the Air Force used guided bombs in its Kosovo campaign, Libya marked its first "extensive" use of guided munitions, said Air Force chief Gen. Giuseppe Bernardis.

With up to 12 different aircraft flying missions on given days during the seven-month operation, the Air Force racked up 1,900 sorties and 7,300 flying hours using Tornado IDS and AMX aircraft for strike missions, Tornado ECR for air defense suppression, F-16s and Eurofighters for no-fly zone patrol, C-130J and 767 tanker aircraft for refueling, and the unarmed Reaper UAV for reconnaissance.

Patrol and air defense flights accounted for 38 percent of flying hours, surveillance and reconnaissance flights took up 23 percent, ground-attack missions made up 14 percent, air defense suppression flights took up 8 percent, refueling flights took up 8 percent, flights detecting electromagnetic emissions and undertaking electronic warfare were 4 percent, while "armed reconnaissance and attacks on targets of opportunity" took up 5 percent.

More than 340,000 high-resolution pictures were taken by Reccelite pods on Tornado and AMX aircraft while 250 hours of video was transmitted in real time by Reaper UAVs.

Eight Italian Navy AV8 Harrier jets, which enforced the no-fly zone over Libya and operated bombing missions, flew 1,221 hours from the carrier Garibaldi, while 30 ship-based helicopters, including the EH-101, SH-3D and AB-212 types, flew 1,921 hours as part of the operation.

The Air Force also rushed into service its new Boeing 767 tanker aircraft. A third aircraft was delivered in November and the final aircraft is expected in the first quarter of 2012.

Italian Navy statistics released about the campaign revealed that two submarines, the Todaro and the Gazzana, were involved in the NATO Unified Protector operation.

Germany Prolongs Afghan Mandate

BONN - The German Cabinet decided Dec. 14 to extend the Bundeswehr's mission in Afghanistan by one more year, until Jan. 31, 2013, but also reduced the maximum number of troops to be deployed from 5,350 to 4,900 soldiers. The decision still has to pass the parliament.

The reduction is partly achieved by scrapping the flexible force reserve. However, the remaining 4,900 will also include German personnel of the Airborne Warning and Control System reconnaissance aircraft operated by NATO over Afghanistan. Before the end of this mandate's period, the government wants to further cut troop numbers to 4,400.

One day earlier, the control of the first of two German Provincial Reconstruction Teams (PRT) in the northern part of Afghanistan was handed over to a civil official. The Defense Ministry is no longer responsible for the PRT Feyzabad; instead, a diplomat of the country's foreign office in Berlin is in charge.

"This forms part of the changing nature of international commitments in Afghanistan," German Foreign Minister Guido Westerwelle said in a press statement. "They are increasingly taking on a civilian face, as is the case with the incremental transfer of responsibility for security to Afghan authorities and the reduction in international troop numbers."

However, German combat troops might stay in Afghanistan after the planned drawback in 2014. Defense Minister Thomas de Maizière confirmed this in a joint interview together with the foreign minister about two weeks ago. In the newspaper Bild am Sonntag, he mentioned the possibility that German troops would remain in the country to help train local forces.

Rafale Best Jet On Offer for Brazil: French PM

SAO PAULO - French Prime Minister Francois Fillon said Dec. 14 he was confident of selling Rafale fighter jets to Brazil and could beat off rival bids because the aircraft's technology cannot be matched.

The Rafale is competing against Boeing's F/A-18 Super Hornet and Saab's Gripen for a tender from Brazil to supply 36 multi-role combat aircraft.

The French premier begins a three-day visit to Brazil on Dec. 15."We are confident because we believe that the French offer has the best possible transfer of technology, without equivalent," Fillon said in an interview published with local media.

French Defense Minister Gerard Longuet was quoted earlier this month in Le Monde as saying that unless the Rafale can find a foreign buyer, the government will have to stop funding its production by Dassault Aviation.

The Rafale was used in the recent war in Libya but the fighter has repeatedly lost out in tenders in countries including Singapore, South Korea, Morocco and, earlier this month, Switzerland.

No Clear Signal Yet From Japan on F-35 Selection

TAIPEI, WASHINGTON and TOKYO - The F-35 could see its wings emblazoned with the red sun roundel, if Japanese media reports are correct.

The Lockheed Martin Joint Strike Fighter (JSF) has been in competition with the Boeing F/A-18 Super Hornet and Eurofighter Typhoon for the Japanese F-X program for several years. The F-X will replace Mitsubishi F-4EJ Kai Phantoms, due to begin retirement in 2015.

Japan plans to purchase between 40 and 50 fighters for roughly $10 billion. Tokyo is also considering replacing F-15Js within the next 10 years, increasing the number of F-X fighters to 150.

However, both the Japanese Ministry of Defense (MoD) and the U.S. Pentagon's Joint Program Office are denying any final decision has been made. Boeing discounted the reports, holding out hope the Japanese government will continue to work with the company, as it has with the F-15J.

"We've seen the speculation on the JSF winning but won't comment on that aspect," said Lorenzo Cortes, international communications, Boeing Defense, Space & Security. "The Japanese government could best respond to what's going on. We are expecting a formal announcement as early as this week, but ultimately, it's Japan's discretion as to when they want to do that."

The MoD has repeatedly said they "were unable to confirm neither decision in favor of the F-35 nor the public release of the announcement for Dec. 16," an MoD spokesman said. "Nothing has been decided on the selection, and we can't confirm when the decision will be announced."

Richard Aboulafia, an analyst with the Teal Group, Fairfax, Va., said that if true, Japan's selection of the F-35 is a "very strong endorsement from a respected service." The F-35 has been under attack in the U.S. Congress and media due to a variety of production and program problems.

"Despite all the doubts, they still see the F-35s capabilities and technology as the future," he said. "It's the first new customer outside the original partner nations."

Despite the Japanese endorsement for the F-35, there will be challenges finding a role for Japan's indigenous aviation industry, which is facing layoffs and reduced production with the end of the Mitsubishi F-2 fighter, the country's only active fighter line, scheduled to close soon.

"No licensed production will be tantamount to disaster," a Japanese defense industry source said. "We have excellent engineers, and a generation of skills will be lost."

A U.S. defense industry source in Tokyo said the F-35 program is a "complex multinational program that will take some negotiation to carve out a Japanese aviation industry role."

Part of the problem is the limited number of F-X fighters, 40 to 50, which "means investment would be quite high, so question is, does this position the F-35 to fulfill the F-XX/F-15J replacement program?"