By Avascent Analytics team
A quick look at the biggest stories of the week.
The Philippine Air Force (PAF) is preparing its fourth bid in two years for the procurement of close-air support (CAS) aircraft to replace its aging fleet of OV-10 Broncos, typically used for counterinsurgency missions. Previous bids were for the acquisition of six aircraft and associated logistics support for approximately $101 million. The new Request For Proposals is expected by the end of this year, with the Embraer EMB 314 Super Tucano and Beechcraft T-6 Texan II competing; the Super Tucano is currently thought to be the favorite. The relaunched tender is a product of new president Rodrigo Duterte’s pivot from the South China Sea towards a focus on internal security. The procurement effort has repeatedly failed in the past due to payload and specification requirements deemed unacceptable by the PAF.
Japan is interested in developing more advanced unmanned aerial vehicles (UAVs). Last week the Ministry of Defense identified UAVs capable of 1) acting as wingmen for manned aircraft and 2) functioning as ballistic missile defense (BMD) sensor platforms as being of predominant interest. The wingman UAVs would need to perform complex aerial maneuvers and accompany stealth aircraft, while the BMD UAVs would be high-altitude, long endurance (HALE) aircraft. Interest in these systems appears to be a response to an increasingly hostile threat environment for Japan, with both China and North Korea exhibiting more aggressive behavior over the course of the last few years. According to Avascent Analytics’ data, 49% of the $414M UAV market in Japan over the next five years is still unawarded.
The State Department has approved a potential Foreign Military Sale to Egypt of 67 AN/AAR-57 common missile warning systems valued at USD $81.4M. If the sale goes through, the warning systems will likely be installed on AH-64E Apache, UH-60 Blackhawk, and CH-47 Chinook helicopters, helping Egyptian rotorcraft become more resistant to missile attacks. Avascent Analytics predicts that the average annual size of the missile warning receiver market in Egypt will be approximately USD $10.3M from 2016-2021, growing by 7.1% over the same period. However, at this time only 12% of that market remains unawarded.
Tensions continue to rise after Poland ended negotiations with Airbus over a $3.5 billion deal for some 50 Caracal helicopters to replace its fleet of Mi-8, Mi-14 and Mi-17s. The Polish government announced last week that the negotiations, begun in April 2015 by the previous government, had ended due to irreconcilable differences on the level of industrial offsets proposed by Airbus. Instead, Poland will buy at least 21 Black Hawk helicopters manufactured by Sikorsky’s local subsidiary in Poland, PZL Mielec. France, which partly owns Airbus Group, reacted angrily, postponing President Francois Hollande’s upcoming visit to Warsaw and warning that it would review other defense cooperation between the two countries. Simultaneously, Airbus CEO Tom Enders has stated that his company will seek compensation over the failed deal. Polish Defense Minister Antoni Macierewicz revealed that Poland would buy Black Hawk helicopters from U.S. defense giant Lockheed Martin and that Leonardo-Finmeccanica SpA of Italy could also expect orders. Both firms are major Airbus Helicopters rivals.
The Norwegian Government’s “Long Term Defence Plan” of June 2016 proposed to significantly increase the defense budget over the next two decades, allowing the government to authorize the purchase of another twelve F-35 combat aircraft in the near term. This increases the number of authorized purchases of the combat aircraft to 40. If the authorization is approved, Norway would be one step closer to fulfilling their commitment to purchase 52 F-35s. The anticipated delivery date of the twelve combat aircraft would be in 2021 and 2022. The government’s Long Term Defense Plan presented earlier this year would add an additional NOK 165 billion to the Norwegian Armed Forces over the next 20 years, focusing on maintenance, combat readiness, and investment in future capabilities. In addition to acquiring 52 F-35s, the defense plan also recommends the procurement of four new submarines, investing in modern defense air systems, and replacing the country’s maritime patrol aircraft.
According to Indian Defense Minister Manohar Parrikar, another $7.5-8.9 billion worth of defense contracts could be signed in the remaining days of the financial year, which concludes in February 2017. A large portion of this can be attributed to two large potential contracts with Russia coming up. First, a nearly $1 billion agreement may be signed on the sidelines of the 2016 BRICS conference for the export and production of up to 200 Ka-226T helicopters for India, sixty of which will be built in Russia, forty of which will be assembled in India and one hundred of which will be fully built in India. India’s Prime Minister Narendra Modi and his counter-part Vladimir Putin first signed an inter-governmental agreement to negotiate the 200 helicopter-deal on 23 December 2015. Second, India and Russia are expected to sign an estimated $5.8 billion deal for the export of the S-400 air defense system to India. This sale, believed to have been in negotiation as early as September 2015, would make India the second export customer of the S-400, after China acquired six batteries for $3 billion last year.
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