2017…the year of the rooster, Trump and flying cars
What does the year have in store for Aerospace & Defence stocks?
The Aerospace & Defence sector has two distinct sides to it, with civil aerospace and defence often proffering very different investment narratives. Historically, terrorism and political instability have tended to cause the two sides of the sector to diverge, with defence valuations surging and civil valuations falling. This happened most notably after 9/11 in 2001. At the end of 2016 though, a year defined by terror attacks and political turmoil, the situation was quite different. Defence stocks were the stand out performers during last year, driven initially by the fact global defence spending is now growing, having been in decline from 2011 – 2015, and more latterly by Donald Trump’s US election victory. However, civil stocks have also performed well. Although there have been a high number of terror attacks during 2016, improved airport security measures have forced terrorists to seek new targets and so aerospace stocks have been largely unaffected, and in fact have continued to benefit from the structural growth of passengers numbers which continues to drive output growth. So what does 2017 have in store for aerospace and defence?
Read more...SFO shows its metal with £497m fine for Rolls-Royce
Black cloud over engine manufacturer should now start to lift
The Serious Fraud Office’s (SFO) five year investigation of Rolls-Royce has finally come to a conclusion, with a verdict that shows the SFO is getting tough on corruption, but one which should hopefully allow the dark cloud over Rolls-Royce to start lifting.
Read more...One man’s gift is another man’s bribe
How has the 2010 Bribery Act impacted Aerospace & Defence?
The recent BBC Panorama entitled ‘How Rolls-Royce bribed its way around the world” prompted me to revisit the 2010 Bribery Act. Crucially I wanted to understand whether Rolls-Royce’s business activities prior to the Act becoming law in July 2011 could be looked at retrospectively? And what punishments does the SFO have in its arsenal? In answering these questions, it is interesting to look at how the Aerospace & Defence industry is adapting in order to operate within the law.
Read more...Heathrow vs. Gatwick?
The airport expansion debate rages on
Are we finally about to get an answer to the Heathrow vs. Gatwick airport expansion question? MPs are scheduled to debate the question of UK airport capacity next Tuesday (18 October) as the Prime Minister has indicated a desire to finally make a decision on an issue the Conservative Government has thus far managed to sweep under the carpet. Interestingly, the debate will be set against the backdrop of new research which shows that it is the road traffic in and around the airport that is the main contributor to emissions, not the aircraft themselves.
Read more...Geared Turbofan engine too hot to handle?
Teething problems for Pratt & Whitney's new narrowbody engine
Pratt & Whitney’s struggles to deliver correctly functioning Geared Turbofan engines for Airbus A320neo aircraft is a reminder that aircraft development is always fraught with risks. Airbus clearly signposted in January that 2016 neo deliveries would be back loaded into the second half of the year. It is targeting 56 aircraft this year but as of the end of July has only delivered 11, so it has its work cut out in Toulouse. Where has it gone wrong?
Read more...The summer of hate
The impact of terrorism on the Aerospace & Defence sector
An article in the press today described the summer of 2016 as the “summer of hate”. The relentless pace of the attacks has invoked terror into the minds of ordinary people and politicians have been forced to make frequent declarations of their determination to protect their citizens. It therefore seems logical to me that the summer of 2016 will be one which shapes the near term future for Aerospace and Defence companies.
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