By Avascent Analytics team
A quick look at the biggest stories of the week. Boeing could see multiple major contracts in the coming months, South Korea is interested in operating four P-8As, the French MoD issued an updated budget data summary, the Philippines may increase its defense spending by 14% next year, India has decided not to order additional submarines from French contractor DCNS, the first A400M ordered by the Spanish Air Force made its maiden flight on September 6th, Poland plans to become the sixth NATO country that deploys the Patriot missile defense system, and the U.S. is poised to approve the sale of the Mk-48 ADCAP torpedo to Taiwan after years of delay.
Boeing Could See Multiple Major Contracts in the Coming Months
After many years of delay, Congress is likely to approve $7 billion worth of arms sales to Qatar and Kuwait. Despite concerns from Israel and other allied nations, Qatar is poised to receive 36 Boeing F-15s ($4 billion) while Kuwait would obtain 28 F/A-18E/F Super Hornets with an option for 12 more ($3 billion).
South Korea is purportedly interested in operating four P-8As to expand their surveillance and ASW (anti-submarine warfare) capabilities following recent SLBM (submarine launched ballistic missile) tests by North Korea. If the purchase goes through, South Korea joins the U.S., India, Australia, and eventually the UK in operating the P-8. Potential contracts in the Middle East and Asia would represent significant gains for Boeing as it continues to expand its international customer portfolio. The Republic of Korea Navy (ROKN) currently operates 16 P-3CK Orion maritime patrol aircraft acquired secondhand from the United States and due to be retired by the close of the decade, and is expected to supplement their fleet of P-3CK Orion MPA with refurbished S-3B Viking MPA to be brought out of retirement from the U.S. However, this may only represent a stop-gap measure until new MPA can be purchased. Currently, the P-8A Poseidon is the front-runner for that eventual purchase.
The French Ministry of Defense issued an updated budget data summary this week, including personnel, armed forces’ equipment and overseas deployment figures. The November 2015 attacks on French soil have led French President Francois Hollande to implement updated measures to the Military Programming Law, originally released in July 2015 and running through 2019. These updates will reinforce France’s renewed defense against terrorism and include cancellation of approximately 10,000 scheduled job cuts, as well as additional funding to the Military Programming Law next year. The summary is not a full update of the French defense budget, but offers some useful insights into high-level policy changes.
The Philippines may increase its defense spending by 14% next year, 96% of which would contribute directly to the armed forces. A significant portion of the defense budget is oriented towards the acquisition of aircraft and ships that are needed to help counter Chinese activities in the South China Sea and combat domestic terrorists. The Philippines recently won an arbitration case against China in regards to ownership of contested islands in the South China Sea, but that ruling was rejected by China. Internally, an Islamist terrorist group called Abu Sayyif, which has been linked to the Islamic State, has become active in the Philippines. Maintaining the security of the Philippines, both externally and internally, is a priority of the government and has incentivized a number of purchases recently. According to Avascent Analytics data, the majority of the future growth in the Philippines defense market will be focused on platforms and weapons – and more than 65% of those markets remain opportunities as yet unawarded to any contractor.
India has decided not to order additional submarines from French contractor DCNS following a data breach that released information about the submarines’ capabilities. DCNS is already contracted to build six Scorpene submarines for India, a deal inked in 2005 but reduced from the originally anticipated 24 units. Information about the Scorpene’s weapons, diving depth, and intelligence-gathering capabilities were reported by an Australian newspaper last month. India’s submarine fleet, which consists of a dozen (frequently dry-docked) Kilo- and HDW-class submarines, are due to be retired by 2020. The Indian market for submarines is expected to grow considerably by 2021.
The first A400M ordered by the Spanish Air Force made its maiden flight on September 6th, marking a key milestone toward its delivery. The delivery, scheduled for the coming weeks, will make Spain the sixth country to introduce the airlifter into operational use. Spain originally ordered 27 A400Ms to replace its aging fleet of C-130s and KC-130s, though rising costs and significant program delays have led to the postponement of nearly half of the A400M orders until after 2024. With A400M assembly in Sevilla, it would be a drastic move for the Spanish government to halt A400M orders before the second half were produced. But, given the Spanish defense ministry’s fiscal challenges and its desire to replace its KC-707 tankers with three Airbus A330 MRTTs, there is a possibility that Spain will stop at 14 A400Ms and invest in a trio of MRTTs instead.
Poland plans to become the sixth NATO country that deploys the Patriot missile defense system, Warsaw and Raytheon announced. In a $5 billion deal for eight Patriot systems, Poland is expected to send an official letter of request (LoR) to the U.S. in the coming days. However, the deal is all but done: Raytheon has announced that it has already signed eight contracts with Polish companies, and will complete at least half of the work itself. Patriot missile systems are in high demand in Europe, and Warsaw’s request is a direct response to Russian aggression in the region. Avascent Analytics’ first data release after the conclusion of this contract will reflect full details of the deal.
The U.S. is poised to approve the sale of the Mk-48 ADCAP torpedo to Taiwan after years of delay. These torpedoes are intended for Taiwan’s two Sea Dragon-class submarines undergoing life extensions, as well as the future indigenous attack submarine program currently in design. However, the immediate delivery of these torpedoes still seems unlikely: the indigenous submarine program is expected to face its own delays due to Taiwan’s lack of domestic submarine manufacturing capabilities, and it appears more probable that the Mk-48s will not be delivered until the early 2020s. With 140 units to be delivered for approximately $560 million, the latter schedule appears more in line with potential in-service dates for Taiwan’s indigenous attack submarines.
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