The world’s first commercial aviation test flight powered by a sustainable second-generation biofuel this past week in New Zealand.  The Air New Zealand Boeing 747-400 will have one of its four Rolls-Royce RB211 engines powered by a biofuel blend derived from a second-generation biofuel plant - Jatropha Curcas.

The Air New Zealand test flight is a joint initiative with partners Boeing, Rolls-Royce and Honeywell’s UOP in commercial aviation’s drive for more sustainable air travel for future generations. Captain Morgan will detail the various stages of the flight and the tests that will be undertaken to check the performance of the biofuel blend under a variety of operating conditions.

Air New Zealand and its partners have been non-negotiable about the three criteria any environmentally sustainable fuel must meet for the test flight program. These are social, technical and commercial.

GE Aviation has been awarded a $40 million contract from Southwest Airlines to provide the new SDS-6000 large area display suite for Boeing 737 Classic aircraft. First production deliveries will take place in early 2011. The systems will be installed on up to 150 aircraft.

Integrated with the flight management system upgrade awarded to GE by Southwest last year, the combined system will provide the full benefit of flying the most efficient Required Navigation Performance (RNP) operations available. Southwest will be well equipped to lead the way in the expansive use of these approved routes realizing fuel, emission and noise reductions.

Patricia O’Connell, president, Civil Business unit for GE Aviation Systems, said, “Southwest Airlines is the launch customer for this new large area display suite. This integrated display system, coupled with our flight management system, enables operators to fly advanced navigation procedures and reduce operator costs from less fuel, less emissions and less through life costs.”

The GE solution comprises a complete integrated cockpit display solution, including primary flight displays, standby instrument and control panels. The primary flight displays, which have been designed to mimic the appearance of the B737 Next Generation cockpit, feature new 15.4” widescreen displays with innovative dual-channel display architecture, which is patent pending and offers unprecedented levels of display availability. The displays feature integral signal and video processing and graphics generation, eliminating the need for a separate symbol generator. The suite includes GE’s Integrated Standby Instrument System (ISIS), which provides a single box solution for standby instrumentation. Southwest has selected Boeing Commercial Airplanes as the integrator of the system into the fleet of Boeing 737 Classic aircraft.

A LA Court jury awarded ICO Global Communications $236 million in punitive damages in its case against Boeing. This award is in addition to the at least $371 million awarded last week when the jury found Boeing liable for fraud, tortious interference, and breach of contract. In addition, the Court will determine the amount of pre-judgment interest to be added to the award, which ICO expects to be approximately $100 million. The total expected judgment to be entered against Boeing in favor of ICO is approximately $707 million.

“We appreciate the sacrifices made by the jury in performing their civic duty over this lengthy trial,” commented J. Timothy Bryan, chief executive officer for ICO. “ICO’s attention now turns to collecting all of the damages awarded, including all of the substantial post judgment interest which will accrue to ICO from the date of the judgment should Boeing pursue an appeal.”

In case you are unfamiliar with the company, ICO developed and launched the G1 satellite, which is intended to serve as the platform for the “ICO mim” (mobile interactive media) service. This service is planned to include live mobile television, interactive navigation and emergency communications capabilities, and will serve the continental United States, Alaska, Hawaii, Puerto Rico and the US Virgin Islands. Alpha trials of this service will begin in 2008 in Las Vegas, Nevada and Raleigh-Durham, North Carolina. The company is working with Alcatel-Lucent and Hughes Communications on its alpha trials, and has an agreement with Delphi Corporation to develop its mobile video service for the North American automotive market. NBC Universal and Discovery Networks are providing live mobile video content for the trials.

The past two weeks have had both good and bad news for Boeing collectively.  As we reported at the beginning of the week, the machinist union strike ended this past Sunday, November 2nd.

Boeing’s longest labor dispute in the past decade came to a close this past weekend as union machinists returned to work this past Sunday.  The strike cost Boeing an estimated $100 million dollars a day in deferred revenue and further delayed the production of the 787 Dreamliner aircraft.

So what was the final result of the dispute?  J. Lynn Lunsford, of the Wall Street Journal, had this to say about the situation, “Officials with International Association of Machinists and Aerospace Workers said 74% of union members voted Saturday to accept a new contract that includes a 15% increase in wages and improved job security. In a change that will guarantee Boeing a more predictable delivery timeline, the union agreed to extend the contract a year to four years in exchange for increased pay and other concessions.”

Even with the strike ending, Boeing officials predict it will take several weeks for the workforce to get fully up to speed.  Boeing CFO, James Bell, intoned that production would be delayed ‘on a day-for-day’ basis.  Despite the ambiguity, Boeing’s stock share price has climbed dramatically since October 27th, when investors became confident of an impending end to the labor dispute.  Share price has risen from $42.50 to $52.50 since the 27th.

Industry experts estimate that Boeing has missed 70 deliveries due to the 57-day strike.

L-3 Communications announced this week that its Vertex subsidiary has been awarded an indefinite-delivery contract valued at $569 million by the U.S. Navy. Vertex, which has teamed with The Boeing Company for this project, will provide logistics services and maintenance materials in support of T-45A and T-45C trainer aircraft.

Work under this contract is now underway and includes four option years, extending its period of performance through September 2013. Vertex has been providing T-45 logistics support to the Navy for the past five years.

“We are proud our team has been selected to continue this mission-critical work, and we remain committed to delivering the highest level of quality and performance excellence”, said Ed Boyington, L-3 Vertex president.

Mr. Boyington added that under this contract, Vertex will service 71 T-45A and 108 T-45C aircraft based at Naval Air Stations in Meridian, Miss., Kingville, Texas, and Pensacola, Fla.

Boeing will manage the supply chain in support of the contract. “We are pleased to be working with L-3 to provide support for this important training aircraft,” said Jim O’Neill, Boeing Integrated Defense Systems vice president and general manager of Integrated Logistics. “This team will provide maximum readiness at an affordable cost for the U.S. Navy on the T-45.”

L-3 Vertex Aerospace, a subsidiary of the L-3 Integrated Systems Group, provides aviation, aerospace technical services and ground systems primarily to government customers. The company has over 11,000 employees working from 300 locations worldwide.

Image Courtesy of Volvo Aero Services

Volvo Aero Services and Boeing have extended a marketing and distribution partnership agreement, originally established in 1999, for an additional 10 years. Within the agreement, Volvo Aero Services will continue to provide multiple asset management services to support the distribution of quality aircraft parts for a wide range of Boeing aircraft models. In addition, Volvo Aero Services has been awarded the rights to manufacture and distribute Boeing proprietary parts.

The program, managed from the jointly established facility in Kent, Washington, covers the distribution of excess parts for in production and out of production Boeing and legacy McDonald Douglas aircraft.

“The extension of our contractual relationship with Volvo Aero further ensures that our customers will continue to receive the best, long-term parts support for their Boeing fleet,” said Dale Wikinson, vice president of Material Management. “They have proven to be an effective business partner that provides quality support.”

“The extension of our contract with Boeing is a testament to the success of our existing relationship”, says Claes Malmros, President and CEO of Volvo Aero Services. “We are extremely proud of our relationship and what has been created with Boeing over the last 10 years. We are looking forward to the continued success of our partnership.”

Volvo Aero Services Corporation, a subsidiary of Volvo Aero Corporation, is a leading provider of aftermarket services in the aviation industry. As the wholly-owned subsidiary of AB Volvo, Volvo Aero Corporation had 2007 revenues of $1.2 billion and employs over 3,200 people worldwide. Volvo Aero Services Corporation has a wide range of services based on its competence in asset management, logistics and leasing of aircraft engines as well as engine and aircraft components. The company is also the exclusive distributor of select material for Hamilton Sundstrand, Honeywell and The Boeing Company.

In the highly competitive landscape of large-scale defense contracts, one of the keys to continued innovation and technology growth are healthy bidding wars.  However, once a bidding battle has been completed, it should not have to be performed once again due to one company’s dissatisfaction with their loss.  Although it appears to be the what is occurring in the current Pentagon Tanker Competition.

Photo Courtesy of WSJ

The Wall Street Journal reported that the bidding war, for the pentagon’s highly sought after $40 billion dollar tanker contract, has been temporarily called off due to the political entanglements involved in the situation.  This is despite the fact that Northrop Grumman Corp. had already been declared the winner over Boeing this past February.  Boeing’s domestic domination has caused a slowdown in the competitive marketplace and it is clear that the next US Presidential regime will not be forced to make the decision between the two companies.

So does this decision give Boeing a legitimate chance at winning back this contract?  Most likely not.  And there are two main reasons:

1. Boeing currently does not have a plane large enough to fulfill the Air Force’s request.  And with the current Boeing labor dispute (coverage), the company will certainly be meeting with delays for all new projects, especially its new 787.  Conversely, Northrop Grumman has already satisfied the Pentagon’s demand due to the fact that they won the original contract at the end of this past Winter.
2. If the new President is Sen. John McCain, Boeing will find itself on an uphill slope considering that McCain has previously blocked contracts from the aerospace firm that he believed were won ‘too easily’.

Austin Cole from the WSJ says this about the situation,

“Although the decision gives Boeing a chance at a fresh start, the company will face the prospect that one of its key critics, Sen. John McCain, could potentially be the next president when the matter is decided. Five years ago, the Republican senator helped scuttle an original plan to lease a fleet of tankers from Boeing because the contract was not competitively bid. His office played a key role in opening up the competition to Northrop Grumman and its partner, European Aeronautic Defence & Space Co.”

So despite the fact that Boeing has been given a second chance to win this contract, Northrop Grumman still appears to be the most likely company to win this bidding war, and rightfully so.