UTC Acquires Rockwell Collins along with Some Additional Industry News!

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BREAKING NEWS
United Technologies Corp has struck a $30 billion agreement to buy avionics and interiors maker Rockwell Collins Inc, the companies said on Monday. Further, it creates one of the world’s largest makers of civilian and defense aircraft parts. United Technologies will pay $140 per share for Rockwell Collins, split between $93.33 per in cash and $46.67 in stock, according to the companies. The price represents about a 20% percent premium to Rockwell’s $119 share price (before the talks earlier). We do understand that United Technologies was down around 5%. While the deal was announced today, we don’t expect finalization till late fall or early this winter. We do also understand that Rockwell shares have gone up around 10% or so, in the last few weeks. Interestingly, Rockwell has share values around $21 Billion, while UTC has a value of around $92 Billion, going down a bit in the last few weeks.

While the impact on Rockwell IFE is certainly unclear at this time we expect that if the deal goes through, the company will be positioned for new customer demands and may increase and enhance their integrated digital offerings (avionics) Further, it may improve and increase the looming big data issues coming along with better inflight data collection and connectivity – not to mention security increases. The areas of information, avionics, and seating will assuredly be affected, and hopefully improved – as long as aircraft manufacturers and airlines see no issues – and that could be a problem.

We do understand Boeing, according to Aviation Week, might have issues with the acquisition: “We intend to take a hard look at the proposed combination of United Technologies and Rockwell Collins. Until we receive more details, we are skeptical that it would be in the best interest of—or add value to—our customers and industry.  Our interests and those of our customers, employees, other suppliers and shareholders are in ensuring the long-term health and competitiveness of the aerospace industry supply chain.  Should we determine that this deal is inconsistent with those interests, we would intend to exercise our contractual rights and pursue the appropriate regulatory options to protect our interests.  Also, both companies are significant suppliers to Boeing and other OEMs, and at a time of record industry production, their first priority should be delivering on existing cost, schedule and quality commitments for their customers and ours.” This statement came shortly after the announcement and rightfully so. Wall Street has noted that Boeing and Airbus have concerns about their suppliers becoming too powerful.

Basically, the deal is not done and the served suppliers might have a say in the issue so readers, just Stay Tuned to this one.


AIRBUS (re DS353 Ruling)
An Airbus Press Release notes: “ In a new round of the more than decade-long spat at the World Trade Organization (WTO), the Appellate Body (AB) has today reversed a 28 November 2016 report which found that the Washington State tax subsidies that paid for Boeing’s development and manufacture of the 777 X aircraft were “prohibited” under the Agreement Subsidies and Countervailing Measures (ASCM). However, an ongoing separate review in the DS353 case has confirmed that those subsidies are illegal and actionable causing massive harm to Airbus.  An obligation for their withdrawal or removal of their adverse effects remains applicable.

In total, combining the different WTO’s rulings addressing the illegal subsidies to Boeing, the total impact of the subsidies is estimated to add up to US$ 100 billion in lost sales to Airbus.

Airbus reiterates its long-stated view that this transatlantic spat, which lead the WTO to a huge amount of serious work and a large number of important panel reports over many years, can only finally be resolved by negotiations aimed at finding a global agreement to come to a level playing field in government support for the large civil aircraft industry.

Airbus would like to take this opportunity to thank the European Commission and the governments of France, Germany, the UK, and Spain for their continued efforts to defend the industry and fair trade practices at the WTO.

“Boeing illegal subsidies are still illegal and need to be removed. If it is a “No” or a “No No” does not make big difference in global fair trade & play”, says Rainer Ohler, Airbus Executive Vice President Communications. ‎“The “game” is far from over.”

While the legal procedures continue Airbus is providing a more playful perspective on the topic. Check out our new mobile app called “WTO Warriors” for iOS and Android devices, available in the AppStore and on GooglePlay”.

BOEING (re DS353 Ruling)
The Boeing Team responded: “The Office of the U.S. Trade Representative (USTR) achieved a significant victory today in its long-running dispute with the European Union over aerospace subsidies.

The WTO Appellate Body announced a reversal of last November’s prohibited subsidy ruling against a tax incentive for the production of the Boeing 777X in Washington state. It also upheld an earlier dismissal of the EU’s claims against the remainder of the incentives. Today’s ruling confirms that the tax treatment Boeing (NYSE: BA) and others are receiving in Washington state is not a prohibited subsidy.

In addition to reversing the previous ruling on the tax incentive, the new ruling ends the most recent of two WTO cases the EU brought against the United States in retaliation for the successful U.S. challenge of the massive subsidies European governments provide to Airbus.

“The WTO has rejected yet another of the baseless claims the EU has made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal,” said Boeing General Counsel J. Michael Luttig. “No further appeal of today’s decision is available to the EU,” he added.

“The latest of the false claims Airbus and its government sponsors have made has now been rejected by the WTO. The EU and Airbus, meanwhile, continue to be in flagrant breach of WTO rulings and must eliminate the massive illegal subsidies the WTO said a full year ago had not been addressed, or risk U.S. sanctions against European exports,” Luttig said.

“Airbus has a long history of putting European taxpayer money at risk through the unsecured loans that created and continue to sustain the company. Now Airbus and its sponsor governments are putting other European exporters at risk of U.S. sanctions by blatantly ignoring WTO rulings and bringing counterclaims against the U.S. that have no basis in law or in fact,” Luttig said.

“By contrast, Boeing has supported U.S. government actions to comply with its WTO obligations. We supported and facilitated changes to Boeing contracts with NASA and the U.S. Department of Defense for R&D work that the WTO deemed inconsistent with its rules,” Luttig said.

“This was a sweeping and clean win for the United States,” he added.  “It is now up to the European Union to comply with the WTO findings against it, and end the enduring practice of launch aid, which Airbus’ government supporters have continued to provide to each and every Airbus model.”

Notes CNBC: “Monday’s decision by the World Trade Organization’s appellate body reverses a ruling by a lower WTO panel in November that said that Washington state — which is home to much of Boeing’s plane manufacturing operations — had provided prohibited subsidies through a tax incentive for production of the Boeing 777X.” They went on; “The WTO has rejected yet another of the baseless claims the EU has made as it attempts to divert attention from the $22 billion of subsidies European governments have provided to Airbus and that the WTO has found to be illegal,” Boeing general counsel Michael Luttig said in a statement. Stay Tuned!


SITA

Airlines and airports are estimated to spend nearly US$33 billion on IT this year, according to the SITA 2017 Air Transport IT Trends Insights released today. And they are focusing their technology investments on similar priorities. Top of the agenda for CIOs at both airlines and airports, are investments in cyber security and cloud services. In addition, they are prioritizing investments in passenger self-service. SITA’s research of the world’s airlines and airports shows that IT spend remains strong. Airlines’ spend as a percentage of revenue will rise to an estimated 3.30% or US$24.3 billion[1] in 2017. For airports, the rise is to an expected 5.05% for this year or US$8.43 billion. Looking ahead to 2018 over 70% of airlines and 88% of airports are expecting IT spend to increase or remain at the same levels as today. As IT spend increases, both airlines and airports agree that the number one priority for their investments is cyber security. Nearly all of them – 95% of airlines and 96% of airports – plan to invest in major programs or R&D on cyber security initiatives over the next three years. This shows alignment across the industry on the importance of investing in this area.

Cloud services are another top investment priority with 95% of airlines and 85% of airports planning to invest over the next three years, continuing an upward trend that SITA has recorded since 2015. The third key area of investment that was highlighted by both airlines and airports is to provide extra self-service options to passengers.

Airlines are focusing on providing mobile services. Today the vast majority of airlines provide check-in (73%), boarding (70%) and flight status notifications (68%) via mobile and by 2020 more than 97% plan to do so. A key area of growth will be providing real-time flight updates over social media which will jump from 31% of airlines doing so to 92% in the next three years.

Providing a seamless experience is key to the airlines. In total, 94% rate streamlining services into a single app as a priority, with 58% rating this as a high priority. Mobile app capabilities and usability are developing quickly and an increasing number of airlines plan to use mobile as a customer service tool, including at times of disruption.

At airports, self-service processes at check-in, bag drop and boarding are increasingly popular with passengers and 89% of airports are investing in these processes. Airports operators have a keen focus on improving the journey through the terminal and are looking to new technologies such as the Internet of Things, beacons and sensors, to support their goals. SITA’s insights show that 80% are investing, or planning to invest, in these technologies over the next three years. Nearly three quarters, 74%, are investing in way-finding solutions and 68% in solutions to improve personalization for the passenger. SITA’s IT Trends are well established as the global benchmark research for the air transport industry. Senior IT executives at the top airlines and airports took part in the research earlier this year. The 2017 results once again provide a clear insight on the air transport industry’s IT strategic thinking and developments.


SATCOM DIRECT
Following hard on the heels of LABACE, the business aviation connectivity company Satcom Direct (SD) has become the first service provider to activate the Inmarsat Jet ConneX technology for a Brazilian registered executive aircraft. The privately owned Gulfstream G650, based in São Paulo, will begin using the service in September. The activation of the Jet ConneX, Ka-band technology will enable passengers and crew to maximize high-speed data transfers to support a variety of functionality. Live video and TV streaming, WiFi internet capability across multiple personal devices, video conferencing, as well as voice and text services, will all be available, across the globe. The always-on connectivity is provided through the on-board Satcom Direct Router, SDR which maximizes the cabin’s connection to the Inmarsat Global Xpress satellite network. The SDR also facilitates the use of SD value-added technologies, providing increased control and functionality of the cabin Wi-Fi network. SD was one of the first companies to activate the Jet ConneX service for business aviation customers over the entire Global Xpress (GX) network in June 2016. Jet ConneX is the only globally available, high-speed internet solution available today for business jets.

 

 

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