Moody’s: Watch for Lockheed and Boeing to get more aggressive with fighter jets sales to India

Washington Business Journal ^ | Sep 29, 2016 | James Bach

[sukhoi-30mki]

While India may have signed a deal Friday with French aircraft manufacturer Dassault Aviation SA for the purchase of 36 Rafale fighter jets, credit analyst firm Moody’s Investors Service expects U.S. fighter jet makers like The Boeing Co. (NYSE: BA) and Lockheed Martin Corp. (NYSE: LMT) to begin more aggressively pursuing India as a sales opportunity.

As Moody’s aerospace and defense analyst Russell Solomon told me Wednesday, India likely isn’t done buying fighters. Even if India decides to exercise an option against the Rafale contract for 18 more, in the next five to 10 years Solomon said, “Somewhere between another 100 to 200 fighters is not out of the realm of possibilities in terms of the needs that we see for India.”

“This is a nice win for the French,” Solomon said. But, he added that “even though they're the incumbent now, it’s far from a sure thing that they’re going to win the next lot of business that comes up for bid and we’re definitely seeing signs that Lockheed and Boeing are being increasingly aggressive.”

The U.S. is currently working to deepen military ties with India, as evidenced by a military logistics agreement signed by the two nations in August. To this point, U.S. international sales to India have been hamstrung by concerns over technology transfers and production sharing.

“The regulatory restrictions being eased is having some influence and that will make the U.S. companies more competitive when [India comes] with the next round of bids,” Solomon told me.

This is good news for Bethesda-based Lockheed's F-16 and Chicago-based Boeing — which has 2,700 employees in Greater Washington — and its F-18.

This easing of restrictions with regards to India comes at a time when several U.S. defense giants are looking overseas for new business. Lockheed has stated in the past that it’s aiming to bring its overseas business from 21 percent of overall revenue to 25 percent, for example. The move is in part to counter what have been flat to declining U.S. defense budgets over the last few years.

“For the last several years as the Department of Defense business has been winding down with the retrenchment from the Middle East … everybody is looking for a bigger share of a shrinking pie, effectively, in terms of global military spending,” Solomon said.

At the same time, “India has been for some time very much in need of beefing up its own security and defense platforms.”

[dp0622]

So that makes 3 trillion jets on the planet instead of 2 trillion!!

Seriously, I asked this in another thread and obviously it can’t be answered.

But how many fighter jets that are capable right now are there??!!

Seems like a YUGE buildup the past few years.

[IndianChief]

The circus re-starts - but this time with Modi and Parrikar as rather tough ring-masters, who are not concerned with their own kickbacks

http://www.business-standard.com/article/current-affairs/iaf-kicks-off-contest-to-make-single-engine-fighters-116100800638_1.html

[sukhoi-30mki]

Circus or not, I don’t know. Buying another “new” platform isn’t going to help the IAF in the long run in terms of logistics and efficiency. Modi may have his heart in the right place as far as defense goes, but I’m not sure if buying two sets of foreign fighters is the way to go (make that three, counting the Russian T-50).