Finmeccanica has been working to increase its international presence and benefit from contracts outside its domestic market. Chief operating officer Giorgio Zappa gives us an update on how this strategy is progressing
How has Finmeccanica fared during the global economic downturn and what actions have you had to take to remain on track to hit your financial targets?
We have been hit hard on the civilian side, particularly in the rotary-wings sector, although there are small signs of improvement. The commercial aerospace sector is already recovering, but not at the levels forecast in 2008. The downturn has also hit the defence sector, with announced cuts for the ministries of defence and homeland security agencies of European countries such as France, Germany, the UK and Italy, as well as across the Atlantic in the USA. We are paying close attention to the main existing and future procurement programmes in these nations.
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We are also preparing to take advantage of any opportunities that arise in countries which demonstrate positive investment trends in the defence sector, including Brazil and other South American countries. Other geographical areas of interest are the Middle East, particularly the United Arab Emirates and Saudi Arabia, and the Indian subcontinent, especially India where we are participating in various important tenders and programmes. That is not to say we have forgotten the countries that form the Mediterranean basin, from Turkey to Algeria, where we also see opportunities for technological investment.
Following Finmeccanica's acquisition of DRS Technologies and the creation of other units to work with the Pentagon, what is your overall group strategy for dealing with the US defence market, and how do you plan to promote the Alenia Aermacchi M-346 and the AgustaWestland AW101?
In the past two years, the growth of DRS Technologies has surpassed the figures we forecast ahead of the acquisition. A significant amount of this growth is due to the large volume of contracts related to supporting the deployed US troops. Our integration strategy is developing in two directions.
Firstly, we believe DRS Technologies can provide an important contribution towards equipping the Alenia Aeronautica and AgustaWestland platforms.
Secondly, a number of DRS Technologies' products can significantly help Finmeccanica to ensure its proposals to the international market fall within the restrictions of US export law. Regarding new partnerships in the US market, the relaunch of the Presidential helicopter programme, based on new requirements, led us to enter into a new partnership with Boeing, which I believe will significantly improve our proposal. Boeing will be the prime contractor and we will contribute our rotary-wing expertise.
The Boeing partnership could evolve to include the new-generation advanced trainer US programme, for which we are promoting the M-346. In the meantime, we are exploring the possibility of joining up with other US partners for the same programme. On the C-27J platform we maintain a strong partnership with L-3 Communications in the USA, where the procurement programme is advancing according to recently established plans. The C-27J procurement for the US National Guard remains our target not only for the US Army but also for the US Air Force National Guard.
Finmeccanica has been working to increase its European presence outside Italy and the UK, and you recently entered into an operational agreement to propose the M-346 for the Eurotraining programme. Are there any other agreements on the horizon with rival companies in the field of unmanned air vehicles or air traffic management, for example?
While important initiatives in the UAS sector are being carried out separately by the UK, Italy, France, Germany and Spain, the recent budget reductions are expected to force greater integration and participation on joint European programmes, which I believe will receive a boost in the coming years. In addition to the Neuron UCAV programme, we are working with BAE Systems on a pre-feasibility study on a possible common requirement for a MALE UAS with funding provided by the UK and Italian ministries of defence.
This is a starting point and we will see if it leads to a bilateral or wider co-operation agreement. Regarding air traffic management, at the European Union level we are involved in the SESAR (single European sky ATM research), Swim-Suit (system wide information management supported by innovative technologies), Coflight and Midcas (mid-air collision avoidance system) programmes, which will open the way to new joint European programmes, as well as further integration of EU technological investments management.
Finmeccanica recently revealed plans to reorganise the Selex companies that are involved in the defence, security and space sectors. How will this develop and what benefits do you expect from this realignment?
The benefits we are expecting in the coming years relate to cost reductions in investments and better management of the costs connected to some technological activities. Thanks to this organisational rationalisation, the group will take advantage of the complementary technology within its structure and define clear responsibilities to end customers. Selex Sistemi Integrati will consolidate its role as a large system integrator at group level, as well as within the field of air traffic control and surface radars, naval command and control and vessel traffic management.
Selex Galileo will lead the avionics and ISR (intelligence, surveillance and reconnaissance) mission systems, electro-optics, electronic warfare and airborne radars. Elsag Datamat will become a centre of excellence for ICT (information and communication technology), security, automation and SAP, while Telespazio will manage space services and applications. This reorganisation will have additional phases but it's too early to discuss them.
In the aerospace sector, Finmeccanica is promoting to the international market its fixed and rotary-wing unmanned air vehicle products as well as aerostructure expertise, as demonstrated by the package of products offered to the UAE. What is the current status of this proposal?
For the UAE we have been offering unmanned air vehicles, composite aerostructures manufacturing and the new-generation M-346 advanced trainer. The Alenia Aermacchi aircraft has been selected in a challenging competition as the preferred bidder by the UAE and contractual negotiations are ongoing. We have still to define certain contractual issues, but we don't anticipate many difficulties.
What are the main regional markets you are pursuing and what strategy are you following to capture them?
Finmeccanica is turning its attention towards those countries showing a positive trend in investments, especially in the defence sector. In Brazil, the local and Italian governments recently signed an investment agreement in the naval sector, including co-operation with local industries. This has created procurement prospects for Fincantieri and Finmeccanica. In India we are pursuing different opportunities in the helicopters and airlift sectors, while we are supporting the Eurofighter consortium.
In Russia, we have recently begun to work on an AgustaWestland AW139 helicopter assembly line, as well as on communications security and main events protection, together with railway transport and related safety. We are opening representative offices in different continents in order to support our group activities. These are supported in some countries by local and Italian government direct agreements which facilitate our penetration into the defence and security sectors.
While in countries like Turkey we need to consolidate technological co-operation, such as the case of AgustaWestland with TAI (Turkish Aerospace Industries) for the attack helicopter, in others like Algeria and Libya we are pursuing direct sales and co-operation activities. The homeland security and infrastructures sectors in Libya are being strongly supported by the Italian government. In Algeria there are prospects in the naval, helicopter and security sectors which are under evaluation by the local government under longer-term programmes. In the Far East, we are already present in Japan with AgustaWestland and we are supporting the Eurofighter consortium.
Source: Flight Daily News
