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Thread: Finmeccanica To Sell its Stake in Avio

  1. #131

    OPINION: Sales are not the only metric of success

    20 January, 2017 SOURCE: Flight International BY: Flight International

    As Leonardo chief executive Mauro Moretti notes, the bulk of the company’s core defence and helicopter activities are concentrated in its “twin-pillar” domestic markets of Italy and the UK.

    Compare and contrast, then, the recent moves by the two countries’ governments to shore up those pillars.

    On one hand, Rome has awarded the company a €487 million ($515 million) contract to develop a new attack helicopter for its army. The initial deal is for the delivery of just four helicopters, from an eventual 48.

    Meanwhile, the two most recent orders for rotary-wing aircraft from London – for training and attack missions, respectively – went to Leonardo’s rivals, Airbus Helicopters and Boeing.

    The most recent contract awarded to Leonardo’s UK helicopter business (the former AgustaWestland) was a five-year maintenance arrangement worth £271 million ($330 million), covering the AW159 Wildcats flown by the British Army and Royal Navy.

    Of course, sustainment work is a nice little earner for manufacturers and, assuming a constant value, the contract could be worth a total of £1.5 billion over 30 years. However, with Wildcat assembly now winding down, there are serious questions about what Leonardo’s Yeovil plant in Somerset will look like in five years.

    Although it says it supports manufacturing at the site, the UK government has to decide in what form and by how much it wishes to underwrite that.

    They seem so much better at it on the continent, particularly in Italy, where the government is an enthusiastic customer of its own aerospace industry.

    That said, the world does not need another attack helicopter type. Leonardo’s most recent stab at the segment – the AW129 Mangusta – failed to register a single international order. Except, that is, for the sale of the entire programme to Turkish Aerospace Industries, where it morphed into the more capable T129 Atak.

    It is a crowded market, with Airbus Helicopters, Bell Helicopter, Boeing and Russian Helicopters already producing highly capable aircraft. China and India, too, are developing their own platforms.

    To be a commercial success, Leonardo’s new model must win export orders. However, supporting a strategic industry appears to be Italy’s real goal.

  2. #132

    Leonardo CEO Backed by Board After Rail Crash Conviction

    By: Tom Kington, January 31, 2017

    Italian firm Leonardo said its CEO Mauro Moretti will stay on the job, despite being convicted by an Italian court on Tuesday for his alleged role in a train crash in 2009, during his time as head of Italy’s railways.

    Moretti was handed a seven year jail sentence for his responsibility for the crash of a cargo train carrying liquefied gas in the Italian town of Viareggio, which killed 32.

    Under Italy’s complex legal system, the sentence will now be followed by up to two appeal trials, which could take years. During that time, Moretti will not be jailed.

    Furthermore, the conviction may be timed out by the statute of limitations before the final verdict is reached.

    Before he took over Leonardo in 2014, Moretti ran Italy’s Ferrovie dello Stato railway company from September 2006 until April 2014.*Prosecutors at the trial said senior railway management should be held responsible for the chain of errors which had led to the crash and also blamed management for diverting investment in the network from regional lines like the one at Viareggio to high speed main lines.

    In a statement released after the verdict, Leonardo’s board said it continued to have “full trust” in Moretti. The statement noted that Moretti’s sentence was not definitive, given that appeals will follow.

    The statement added that legal experts consulted by the firm had concluded the sentence would not prevent Moretti from representing the firm in overseas bids, nor were the offenses “relevant for the purposes of security clearances.”

  3. #133

    Heli-Expo 2017: Leonardo looks to the future

    14th March 2017 - 16:27

    by Beth Maundrill in Dallas

    While Bell rolled out its stylish new concept helicopter and MD Helicopters unveiled its new 6XX, Leonardo used Heli-Expo to quietly drop hints about a new aircraft design, referred to as the AW209.

    Speaking to journalists during the event, Leonardo Helicopters managing director Daniele Romiti suggested that the AW209 would be a new light twin helicopter, although this could be some way off as he noted that the aircraft was 'not a dimension we are working on at the moment'.

    Additionally, following its development of the AW609 tiltrotor, the company continues to invest research and development funds into a next generation civil tiltrotor. According to Romiti, we could see the aircraft as soon as 2023.

    The new design will be a test bed based on the AW609 equipped with a fly-by-wire system, new avionics and new wings. The company will also explore how to tilt just the gearbox and not the entire engine.

    'It will be a spiral development of these technologies,' said Romiti.

    At Heli-Expo in 2016, the company showcased its revamped SW-4, dubbed the AW009. Leonardo is now considering a new engine for the aircraft, replacing the current Rolls Royce M250-C20R, as well as the option of installing a Genesys avionics suite.

    The company is expecting certification of the aircraft in 2018 and is aiming to fly the first prototype in the second half of 2017. Leonardo is looking to the law enforcement market as one of its potential customers for the AW009 and Romiti said they had done demonstrations of the aircraft to law enforcement.

    While the oil and gas situation has clearly hit every rotorcraft OEM, Romiti said that Leonardo has been able to compliment its market share with increased sales in other sectors such as EMS, which he highlighted had allowed the company to sell 20-25 AW119 Koalas to China for EMS operations.

    The company is also growing in the US with an increased ability to maintain its fleet at its Philadelphia site with its maintenance outlet, which now can support all of Leonardo's aircraft at component level.

    Romiti said the manufacturer was continuing to work on its flagship family of aircraft, the AW139, AW169 and AW189, and was planning on entering the AW139 into new markets as its conducts high altitude capability demonstrations.

    The Elbit Systems Heli-ClearVision enhanced flight vision system (EFVS) will also be equipped on the aircraft family, beginning with the AW139.

  4. #134

    Leonardo CEO defiant on his role in company turnaround

    By: Tom Kington, March 15, 2017

    MILAN, Italy — As he waits to hear if his mandate will be renewed by the Italian government, Leonardo CEO Mauro Moretti has announced year-end profits of €507 million (U.S. $534 million), and claimed during a tough news conference Wednesday that he saved the company from disaster.

    With a decision on his fate at the state-controlled firm expected Friday or Monday, Moretti proudly noted that Leonardo’s share price and ratings were up since he was appointed in 2014 following a career at the helm of Italy’s railway network.

    Results for 2016, released Wednesday, showed new orders were up 61 percent to €20 billion thanks to the order for Kuwait for 28 Eurofighters, a program in which Leonardo is a significant partner. Debt was down 13.2 percent to €2.8 billion.

    A dividend was paid out for the first time in six years.

    On the flipside, turnover was down almost €1 billion to €12 billion, part of a slide from €16 billion in 2013. Moretti said the year-on-year fall was due to a drop off in helicopter sales, including Leonardo’s big selling AW139 helicopter, thanks to the slow down in demand for offshore helicopters for the oil and gas sector.

    The longer-term decline since 2013 was due to the sell off of non-core transport activity and the deconsolidation of joint venture activity from the results due to new accounting rules, he said.

    Moretti was aggressively critical of the financial state in which he found the company in 2014, when it was known as Finmeccanica and operated as a group structure, overseeing a galaxy of small companies.

    Some of those companies were “useless" and run by “little bosses,” he said. “I was amazed to find external contractors were doing final quality control,” he added. Accepting loss-making “toxic” orders was par for the course, and the company was underpinned by a “shaky ethical base,” he claimed.

    DRS, the U.S. electronics company purchased in 2008, was bought at “double” the price it was worth, he said.

    Looking ahead, Moretti said Leonardo was pushing to develop a new 100-seater version of the ATR aircraft it builds with Airbus, which could be sold in passenger, cargo or military transport configuration, the latter acting as replacement for the C-27J tactical transport aircraft the company currently sells.

    “To develop the new aircraft we will need €1.7 to 1.8 billion over eight years,” he said, adding that Leonardo still nursed ambitions to take a majority stake in the ATR partnership in which it is currently a 50-50 partner with Airbus. “We could also bring in new partners."

    Moretti added the firm needed to bulk up its electronics and cyber activity through acquisitions in view of potential European consolidation in the sectors.

    Whether he will be around to make those decisions will be decided within days, with Italian media speculating he will be replaced at the helm by Leonardo’s electronics sector head Fabrizio Giulianini.

    Moretti’s chances of being reconfirmed have been damaged by his conviction in January for his alleged role in a train crash that resulted in 32 deaths in 2009, during his time as head of Italy’s railways.

    His seven-year sentence is suspended as the case heads for an appeal hearing and then a likely second appeal before Italy’s supreme court, and the case may be timed out by Italy’s statute of limitations. After the sentence, the Leonardo board gave Moretti its “full trust."

    Asked on Wednesday if the conviction might be the reason the government drops him, Moretti replied: “If I am not reconfirmed because of the firm’s results, I would be shocked.”

    Moretti has earned plaudits for creating a divisional structure at Leonardo by amalgamating its overlapping firms, which each had their own board of directors and often had close ties with local politicians and unions.

    His abrasive style and lack of knowledge of the defense industry, however, earned him foes, who claimed he lost export competitions because of it.

    Determined to slim down the management structure, he released tens of veteran managers who took valuable industry knowledge with them and promptly joined competitors.

    On his watch, the firm was beaten by Airbus in a bid to supply search and rescue aircraft to Canada, and could not convince the British government to let Leonardo assemble new Apache helicopters in the U.K. Most recently, his bid to sell the M-346 jet trainer to the U.S. has been weakened by Leonardo’s divorce with its U.S. prime partner on the program, Raytheon.

    Big wins included the Eurofighter sale to Kuwait and the acquisition of Italian Navy vessels by Qatar, which will be kitted out with Leonardo electronics. Both contracts however, came thanks to a serious sales effort by the Italian government, teamed with senior Italian military officials.

    On Wednesday, Moretti claimed his results at Leonardo would have been much better if he had had more government backing on export campaigns.

    “We don’t have a structured government-to-government organisation like the U.K., France or the U.S.,” he said. “We don’t ask for more money from the government, just the ability to compete.”

  5. #135

    Leonardo CEO: Raytheon-Honeywell impasse to blame for T-X breakup

    By: Tom Kington, March 15, 2017 (Photo Credit: Leonardo-Finmeccanica)

    MILAN – The CEO of Italy’s Leonardo has denied reports that the firm’s M-346 jet is too pricey to compete in the U.S. T-X trainer contest, pointing fingers at another supplier for driving up the cost.

    Leonardo’s partnership with Raytheon to pitch the Italian trainer in the T-X context broke up last month amid reports that Leonardo refused requests from the US firm to lower the aircraft’s price. Leonardo has since replaced Raytheon with its US electronics subsidiary DRS as prime contractor on the bid.

    Asked about the split with Raytheon at a press conference in Milan on Wednesday, Leonardo CEO Mauro Moretti said, “The problem with Raytheon was not (our) price, because Raytheon checked it against a U.S. benchmark and our prices were lower.”

    Moretti suggested Raytheon did have a problem with conditions set down by Honeywell, which provides propulsion for the jet, which was renamed the T-100 for the bid.

    “Raytheon could not get what they wanted with Honeywell on the engines,” he said.

    The DRS-led T-X team will be supported by CAE USA in the design and development of the T-100 ground-based training system (GBTS) and Honeywell will continue to provide twin F124 turbofan propulsion engines.

    Moretti was bullish about the aircraft’s prospects, despite losing Raytheon as partner, claiming “There is no other competitor.”

    The T-50 trainer proposed by Lockheed Martin was “not competitive,” he said, while the clean-sheet design pitched by Boeing and Saab would not be ready until 2024, by which time the USAF’s current generation of trainers “will be falling apart,” he said.

    “The only mature system with maximum performace is ours,” he said, adding, “We are not going to lose this because we are lacking Raytheon.”

    Moretti said that it was time Italy sold a defense product in the U.S., given Italy’s long history of buying U.S. products, from the AV8 jump jet up to the F-35. “We can not only buy U.S. products and not be able to sell a single product,” he said.

    The Air Force is expected to buy 350 T-X aircraft and plans to down-select to a single vendor this year.

    Speaking on Wednesday, Moretti also attacked the Canadian government’s decision to buy 16 C295W aircraft from Airbus for search and rescue missions, calling it “astonishing.”

    Leonardo has challenged the award in Canadian federal court, arguing its losing contender, the C-27J, cost less and was better suited to the mission.

    Moretti claimed Airbus had unjustifiably been deemed the winner thanks to “added services that were not part of the bid.”

  6. #136

    Leonardo CEO Moretti out, replaced by Italian banking exec

    By: Tom Kington, March 18, 2017

    Not a surprise...........!

    The Italian government on Saturday named a veteran Italian banker, Alessandro Profumo, to run state controlled defense group Leonardo, replacing CEO Mauro Moretti who had finished his three year mandate.

    Genoa-born Profumo, 60, took the helm at Italian banking giant Unicredit in 1998, steering it to international growth through acquisitions and oversaw a leap in staff numbers from 15,000 to over 162,000 in over 20 countries before leaving in 2010.

    Despite his business credentials, the appointment of a financial manager with no defense experience provoked rumors in Italy on Saturday that the government had handpicked Profumo to handle the sell off of the firm, but a government spokesman told Defense News the reports were “totally false.”

    “Profumo has international experience and a global culture and Leonardo needs to be international,” said the spokesman, who declined to be named.*“With Profumo we will reinforce the international business development of Leonardo."

    After three years at the helm of the firm, Mauro Moretti switched the name of the firm from Finmeccanica to Leonardo and improved efficiencies by bringing the group’s semi-autonomous units under one divisional roof.

    But he was criticized for lacking experience of global markets and not winning enough orders. He denied the charge, claiming he had stopped taking on insufficiently profitable work.

    Moretti’s determination to see his mandate renewed was weakened by a recent conviction over a 2009 rail crash when he was head of Italy’s railway network.

    “Moretti did an excellent job increasing efficiencies but a manager with international experience is now needed to build global business,” said the spokesman at the Italian finance ministry, which holds the controlling share in Leonardo.*“It’s true Profumo’s experience is mainly financial but he did lead Unicredit to becoming one of the few really international banks in Europe."

    The appointment however drew criticism from one Italian analyst, who pointed out that Profumo’s global business experience was not matched any experience in the defense sector.

    “After three years of Moretti, who had no experience, putting Profumo in is inexplicable,” said the analyst, who declined to be named.

    “The Ministry of Defense was not consulted on this appointment. There is concern in the sector and doubts that Profumo can revive Leonardo’s international order book,” he added.

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