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Often turbulent and rarely smooth, transatlantic defense-industrial relations are headed for rough weather, with problems building on several fronts. At the eve of the brewing storm is the thorny issue of technology access and sharing between Washington and its European partners. Concerns in this area already are emerging on the recently selected $6-billion-plus North Atlantic Treaty Organization Alliance Ground Surveillance program. At the same time, Great Britain's long-running efforts to negotiate a waiver that would ease industrial collaboration appears to have stalled, while technology access issues also are proving knotty on the F-35 Joint Strike Fighter program.

The article discusses flight trials of prototypes of the Airbus Military A400M aircraft under Europe's military airlifter program. The schedule for testing protoypes of the A400M aircraft referred to as the MSN3 and MSN4 is noted. Airbus Military Chief Executive Domingo Urena-Raso is cited regarding progress being made with the airlifter program through flight testing of the prototypes.

The article looks at the budget cuts for defense spending in Europe in light of the global financial crisis. The author comments on how defense cuts have mostly effected countries with severely damaged economies such as Lithuania and Estonia. The effects of debt on the development and sale of jet fighter planes in Europe are discussed.

The article reports on the strong performance of major European space contractors in the aerospace industry as they focus increasingly on services. The major contracts include Astrium and the Thales/Finmeccanica Space Alliance, which won seven telecommunications satellite orders in 2009. An 11 percent increase in revenue was posted by Astrium to 4.8 billion euros in 2009.

The article reports that Italy, France and Germany are starting work on the radar and optical components of Europe's next-generation satellite surveillance system, which is expected to enter service toward the middle of the next decade. The system, called the Multinational Space-based Imaging System (Musis), will replace a heterogenous mixture of national systems on which European forces currently depend, according to the authors.

The article reports that France, Italy, the Netherlands and Norway are hustling to assess the impact of a revised production schedule for NH90 naval frigate helicopters. The latest delays mean the militaries will not receive their first NFH90s until well into 2009. The revised schedule was presented last month by NH90 prime contractor NH Industries at the NH90 Steering Committee meeting, which was chaired by the Netherlands.

This article focuses on the upgradation of the Eurofighter Typhoon fighter aircraft in Europe. The Eurofighter Typhoon program is nearing some long-delayed development milestones that would clear the way to upgrade the aircraft's basic combat capability. Teething problems also continue to affect the aircraft. Customers have stopped taking delivery of Typhoon while industry fixes flaws that have crept in as part of the latest software update. Meanwhile, developers later this year hope to fly an active electronically scanned array (AESA) radar on Typhoon for the first time. The system, developed by the Euroradar consortium of EADS, Selex, Galileo Avionics and Indra, this year underwent flight testing on a BAC1-11 and completed seven flights in Great Britain. In addition to the Euroradar system, Selex has been working on a Great Britain-focused AESA, so the industrial competition would have to be resolved. The near-term focus for Typhoon's manager is on upgrades to the Tranche I and Tranche II aircraft. The Future Capabilities Program will introduce upgrades gradually. The first round, to be fielded around 2010, would add laser-designator pod capability in a more integrated fashion than the austere effort.

The article reports that several European carriers this month reported severe declines in their operating results and cited high fuel costs as the main reason. Traffic, by contrast, continued to be strong, as many European economies experience more significant growth rates than in the past few years. Austrian Airlines appears to be hardest hit in its ambitious "Focus East" expansion strategy. The airline suffered a huge deterioration in its financial performance, posting an operating loss of 100 million euros ($119 millon) for 2005--compared to an operating profit of 74 million euros a year earlier.

This article focuses on how European countries are trying to plug airlift gaps that have long been identified as one of the critical chokepoints for their militaries. Measures now being taken also could help overcome shortcomings until the Airbus Military A400M transport being bought by several European states is fielded, and could act as an insurance policy should the program encounter delays. Even without the holdups typical of most military development projects, European militaries anticipate they will have to wait until at least 2012 to field A400Ms in adequate numbers and with the crew training necessary for the system to be considered operational.

The article reports that discussions are underway to demonstrate an extended anti-theater ballistic missile (ATBM) defense capability for Europe that would offer an engagement envelope at least twice that of an initial Aster SAMP/T Block 1 system ordered last week. On November 12, 2003, European procurement agency Occar awarded Eurosam, a joint venture of MBDA and Thales, a 3-billion euro Phase 3 contract for full-scale development and production of SAMP/T Block 1, after three years of negotiation. Funded by France and Italy, Block 1 is billed as the first operational ATBM defense system designed for both land-and sea-based operation, filling a strategic gap in Europe's forward-projection capability.

Lofty equipment aspirations and base financial reality will confront some of Europe's main defense players with critical choices over the coming months. Following in the wake of Germany's budgetary woes, Great Britain and Italy are now struggling with defense-expenditure dilemmas. Rome is being forced to curtail and delay acquisition programs, while in London, England, the ministry is grappling with both short-and long-term financial difficulties. In Great Britain, the government is trying to paper over a short-term defense funding problem, while the Defense Ministry faces considerable difficulty resolving a mismatch between available resources and requirements in its medium-to-long-term equipment program.

Propelled by encroaching market realities and fear of overseas takeovers, the fragmented European naval systems sector appears set for the kind of restructuring that has seen control of U.S. shipbuilders shift to aerospace heavyweights. Interoperability concerns and the nature of emerging threats dictate in favor of global solutions that naval forces are uniquely able to provide, said Dennis Ranque, chairman/CEO of European naval systems provider Thales SA. Now, with consolidation in aerospace basically complete, the time appears ripe for the same process to sweep through Continental Europe, Ranque said, noting that the naval arena is the only area — along with land-based systems — still offering substantial merger opportunities.

Focuses on the efforts of European countries to develop their defense against ballistic missile threats posed by some states. Approval of a study by North Atlantic Treaty Organization to investigate the system's capability for its defense from missile attacks; Launch of a program by France to demonstrate an early warning satellite capability; Plan of Germany and Italy to develop the Medium Extended Air Defense System.

This article discusses Russia's acquisition of Western defense technology from Italy and other European nations to fill holes in its defense program. Topics include Russia's purchase of French Mistral helicopter carriers, the country's search for Western armored fighting vehicles (AFVs) such as the Italian Freccia Veicolo Blindato Medio (VBM), and Russia's desire to customize the acquired foreign systems to allow its own AFV industry to acquire additional skills.

The article reports that stagnation demand in the European aerospace and defense industry is forcing companies to peruse core needs and adjust their product portfolios accordingly. It is said that the industry is preparing itself for a leaner spending era and big transactions are now off the table. John Dowdy, the head of defense and security for the McKinsey & Co. consultancy, says that the industry should focus on both portfolio and facility rationalization.

The article discusses use of drone aircraft based on ships by navies in Europe. An increased interest in the use of such aircraft by those navies due to operations such as anti-piracy missions is considered. The effects of budget cuts in military spending in many European countries on drone aircraft procurement is examined.

The article discusses the earnings-performance of European defense contractors. According to the authors, defense contractors are preparing for decreased government spending by implementing cost-cutting measures and restructuring plans despite strong financial returns. Topics include an overview of how uncertainty has impacted the growth strategy of several European companies, including BAE Systems, Finmeccanica, and Thanes.

The article offers information on the European Airport Movement Management (EMMA) research project. The project's primary goal is to streamline aircraft ground movements and increase the safety of airport operations. It aims to develop Advanced Service movement guidance and Control System (A-SMGCS) tools and procedures which can potentially improve safety, and simply pilot and air traffic controller workload.

The article reports that Europe's aerospace and defense industry officials are calling on their respective governments to be more proactive in supporting industry through a variety of measures, including shoring up vital research and development accounts and providing loans to ailing small and medium-size suppliers. They worry that small suppliers may be forced out of business owing to the global economic crisis.

The article reports on the helicopter industry in Europe. The actions by AgustaWestland, Eurocopter and turboshaft engine-maker Turbomeca mirror changes underway at parent companies Finmeccanica, EADS and Safran, which are rapidly moving production into dollar-zone countries to reduce their exposure to the rising euro. It states that expansion is so strong that manufacturers are hiring in Europe even as they move production abroad.

The article reports on the strong demand for NH90 and commercial rotorcraft which is said to be pushing Eurocopter and AugustaWestland toward another year. Germany decided to purchase 42 more NH90s in a tactical configuration, while Belgium signed for eight machines to be split between the army and air force, plus two options. Eurocopter CEO Lutz Bertling predicts sales of 700 units by year's end--almost double the 386 units ordered in 2006.

The article informs that according to industry sources, problems with qualification of Europe's NH90 frigate/ transport helicopter will impact deliveries in the medium term. In mid-December, Belgium decided to purchase 10 NH90s, becoming the 14th country to acquire the rotorcraft, and the sixth to procure it through the NATO Helicopter Management Agency responsible for design and development. The rapid influx of export orders, combined with delays in qualifying the helicopter and mission systems, have prompted questions about the ability of the program to meet delivery commitments.

This article reports that the European aerospace and defense giants EADS and Finmeccanica are seeing strong growth, but some trouble spots blur the outlook. During the first nine months of the fiscal year 2005, EADS has enjoyed overall positive indicators, with net cash topping 4.7 billion euros, revenue up 9% year-on-year to 23.5 billion euros, and new orders for the period up 88% to 38.8 billion. EADS competitor Finmeccanica also is benefiting from a strong market. For the year 2005, it expects a 20% increase on last year's 9.3-billion-euro revenue and anticipates further growth to meet its 12.2-billion-euro target for next year.

The article reports that the European Commission this month authorized a slate of measures to determine new technologies capable of thwarting terrorism. Approved under a preliminary security research action plan approved last year, following a deadly train bombing in Madrid, the measures are intended to unite Europe's various national anti-terrorist initiatives and determine which technologies should be given fast-track treatment. The 13 measures, eight technology efforts and five supporting activities, were picked from 156 proposals submitted under the three-year, 45-million-euro preliminary plan, which is supposed to lead to a full-scale research effort starting in 2007.

This article reports that an expected denouement to the ugly management dispute that has plagued EADS for months, combined with a move by Dassault Aviation SA to sell its holdings in Thales, may be the spark needed to kick off the next phase of European defense and aerospace consolidation. A recent AT Kearney assessment of aerospace industry competitiveness suggests Europe needs to consolidate to boost growth and keep pace with the U.S. Thales Chairman/CEO Denis Ranque notes that with BAE Systems now out of the picture and land and naval defense systems markets still fragmented, a new round of consolidation may be around the corner.

The sale of 10 aircraft to European charter carriers furthers the Boeing 7E7 sales team's drive to identify the medium-sized long-haul aircraft as a choice for those seeking low operating costs. Boeing said orders by Italy's Blue Panorama and Great Britain's First Choice Airways for four and six aircraft, respectively, carry a combined list price value of $1.2 billion and raise the aircraft's order total to 62. Boeing expects to bolster that number with major orders from Europe's better known brands, such as Lufthansa German Airlines AG and Aer Lingus. But these orders underscore the value of new engines and a lighter airframe that Boeing's sales pitch emphasizes when the 7E7 is compared to current-generation competitors, including its own 757/767 models and the Airbus A330-200.

The British Defense Ministry is set to decline any French overture to collaborate on a Unmanned Combat Aerial Vehicle(UCAV), a move that may mark a watershed in Europe's development of next-generation combat platforms. France is looking to place an unmanned combat air vehicle at the very heart of a multinational military air combat systems effort, the European Technology Acquisition Program (ETAP). The remaining ETAP partners, France, Germany, Italy, Spain and Sweden, are highly unlikely to be given similar access to the U.S. technology, with political and industrial imperatives propelling the development of a European UCAV, but without British participation at the national level.

Political and contractor maneuvering to determine the extent of European industrial participation in, and technology access to, F-35 Joint Strike Fighter(JSF) will be evident during the second half of 2003 as partner nations move to negotiate deals. Industrial maneuvering is already apparent in Italy and Great Britain, both of which have ambitions for final assembly lines. Concern is also evident in Great Britain as to technology access and the ability to independently support and possibly modify the aircraft. Alenia Aeronautica chairman Giorgio Zappa has addressed his aspirations concerning JSF, in particular, planting a claim for a final assembly line in Italy.