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Alenia Aermachhi and Enaer from Chile are in collaboration over production of Alenia's trainers, including the M-346 advanced jet trainer. They are contemplating a number of changes to enhance the capabilities of the M-346 and increase its salability.

Air France-KLM is trying hard to work out a politically correct deal to take over control of the Alitalia Italian airline in order to revive it.

Malaysia plans to replace its ageing fleet of S-61 helicopters with medium utility helicopters which would have to operate under challenging conditions. The plan would cost Malaysia a multi-billion dollar procurement on a long term basis with initial order budgeted at $400 million.

The moderate increases in the Italian defense budget may permit limited acquisitions, upgradations and enhancements of military equipment.

France, Italy and Germany will share data and imaging intelligence with the CosmoSkyMed synthetic aperture imint system operational. It will also enhance space-based intelligence and reconnaissance and civilian applications.

The global demand for unmanned aerial vehicles has increased. Singapore is also looking to overcome international opposition to buy Global Hawks as European countries are also in the line to buy medium-altitude, long endurance (MALE) surveillance systems.

Turkey is looking forward to modernize its military with heavy spending. It is looking not just for technology transfer but also wants the right to re-export these technologies.

The much anticipated go-ahead for the deployment of manned and unmanned aircraft will see the reinforcement of reconnaissance capabilities for the North Atlantic Treaty Organization (NATO) forces in Afghanistan by Germany and Italy. German air force hopes to have six reconnaissance Tornados operational and the Italian air force is to deploy two Predator-A drones.

The Pentagon is looking for ways to reduce the increasing costs of the F-35 Joint Strike Fighter (JSF). It is trying to encourage its international partners to buy some of their aircraft earlier and this shift has made the production slots available for JSF partners, as well as others like Israel and Singapore.

Finmeccanica is preparing to takeover full control of Selex Sensors and Airborne Systems by mid-2007 and is hoping to reduce the costs and improve the financial performance of Selex. Finmeccanica has posted a 14% increase in revenue, to 12.4 billion euros, and 20% increase in earnings before interest and taxes (EBIT), to 878 million euros in 2006.

MBDA has revealed that the Saudi Arabian contracts for upgrading Tornado will boost the overseas order in 2007 and it is also emerging as a key customer in 2008. The increase in the orders from the Middle East has become a key component for MBDA along with its other orders from the domestic markets like Italy, France, Germany and the U.K.

The Italian government relaxed the terms under which it would sell the airline, Alitalia to take a controlling stake in the troubled airline. This response came in an effort to increase investor interest after prospective buyers signaled that initial requirements were too onerous.

Several new avenues, including establishing a low-cost adjunct, are being pursued by Air France-KLM in 2006 while trying to retain the fundamental character of its two airline operations due to changes in Europe's air transport market. A slight change in the airline group's attitude to a potential tie-up with neighboring carrier Alitalia is dominating such efforts.

NATO members are expected to face critical equipment decisions after the Riga summit had failed to resolve several key operational and modernization questions. Lack of member nation support to the alliance's International Security Assistance Force (ISAF) is among the critical issues that have top priorities.

Italy and the US are planning to commit $1 billion to the US Joint Strike Fighter (JSF), without the purchase of a single airframe, and Turkey might also receive a similar bill. The three countries will invest around $1 billion over the 40-year Production Sustainment and Follow-on Development (PSFD) period, where the signature of the PSFD memorandum of understanding (MoU) incurs annual costs associated with setting up production of the Lockheed Martin F-35 Joint Strike Fighter, along with funding for further development of the aircraft.

MBDA completed qualification test-firings of the Mk. 2/S helicopter-launched version of its Marte antiship missile for the Italian Navy in October 2006. The company is also considering potential upgrades to the missile with the inclusion of GPS/INS navigation, thus enabling the possible introduction of a dual-mode electro-optical seeker, satellite navigation and a two-way data link for man-in-the-loop engagements.

The South African funding will prioritize the purchases of defense equipments such as surveillance aircrafts, communication networks and helicopters to help support security of the 2010 Soccer World Cup. The military is planning to highlight the short falls of current modernizations as some new purchases that are not directly linked to the sporting event are gaining momentum.

The Iranian air force inventory is a mix of Western, Russian and Chinese combat aircraft, most of them obsolescent. Any spares will have to be bought surreptitiously or be work-arounds and spares support is also problematic with the Russian aircraft. But these issues do not necessarily indicate that the air force is tactless since it exercises regularly with units of F-14 Tomcat, Mig-29 Fulcrum, F-4 Phantom, F-5, and Mirage F1aircraft and also operates a network of air defense radars.

The Italian aerospace giant Finmeccanica is deciding whether to cut its stake in Italy's Avio engine and space company as part of the majority ownership transfer to private equity firm Cinven from the US Carlyle Group. It is to be seen whether Finmeccanica would keep a minimum stake in Avio and use the financial resources generated by the deal to support acquisitions in core areas, or retain a larger role in the national company.

EADS North America have won as prime contractors for the Pentagon, which says volumes about their credibility in the U.S. as well as bolstering its future bid to wrest some of Boeing's business building refueling tankers for the United States Air Force.

Boeing is ready to deliver its first lot of C-17s to the US and UK and is keeping its production going by building almost 2 dozens of C-17 transports more than its confirmed orders and is looking for domestic as well as international customers. The company has offered a deal for $220-million unit flyaway price till end of June and many countries like Italy, Netherlands, and Sweden have shown interest while Canada is expected to confirm its commitment for the buy of four C-17s.

The improvements are being carried out by US Navy in the new group of F/A-18E/F Super Hornets to make sure that the multirole fighter will be combat-compatible in future. The aircraft's stealth performance is being enhanced and enhanced EA-18G Growler is being introduced and also Raytheon APG-79 active electronically scanned array radar will be retrofitted in the aircrafts and efforts are in progress to improve on the drawing board which would allow the aircrafts to gather its own images.

The customers are becoming discontented as the continuing out-of-sequence work on wire bundles has forced the Airbus to delay its delivery of A380. The production line is aimed at 4-4.5 aircraft per month and the extra costs associated with the delay have put Airbus even further from breaking even on the A380.

A promising radar replacement effort remains out of reach, as there are teething problems affecting the aircraft even as the Eurofighter Typhoon program is nearing development milestones clearing the way to upgrade the aircraft's basic combat capability. Meanwhile, developers are hoping to fly an active electronically scanned array AESA radar on Typhoon for the first time and radar officials are hopeful that the system will become part of Tranche III Eurofighter.

European aerospace giant EADS has strong expansion plans despite a wholesale housecleaning at its Sogerma MRO affiliate. However, internal friction over how to get Airbus back on solid footing and a French government scandal involving a high-level company employees is posing questions about the sustainability of the current growth surge.

The Spanish air force in 2006 expects to overhaul its air combat tactics as it realize what new capabilities it could bring to the battlefield with the Eurofighter Typhoon, but first military and industry technicians need to work through problems presented by the aircraft. The Spanish air force expects to start using Eurofighter Typhoons, designated C.16, for quick-reaction alerts at Moron AB, near Seville, starting 2007.

Operating results of European legacy carrier smaller than the big three, British Airways, Air FranceKLM and Lufthansa are coming under increasing pressure, as fuel hedging contracts are beginning to expire and record fuel prices are taking toll in March 2006. Traffic, by contrast, continued to be strong, as many European economies experience more significant growth rates than in the past few years.

Co-CEO of EAD's Sogerma MRO unit, Noel Forgeard stated in 2006 that initial restructuring undertaken in 2005 to turn around the maintenance, repair, and overhaul division had proven insufficient and a much more radical plan is anticipated. A 10-million-euro Sogerma loss in 2004 widened by 198 million euros in 2005 under pressure from lower cost suppliers in Eastern and Southern Europe and growing independents such as SR Technics.

The EADS/Finmeccanica joint venture, ATR, contemplates major product enhancements to its ATR 42 and 72 in response to increased orders as high fuel prices drive its regional jet rivals out of the 50-seat market. One possible change is the development of a glass cockpit for its turboprops that could solve avionics obsolescence concerns of the present product, enhance operations and lead to lower maintenance requirements.

The Italian navy's plan to acquire three ATR 42s to temporarily support the country's aging Atlantic patrol aircraft could prove to be a setback for the US Navy and the Boeing Company who had hoped to include Italy in the 737-based P-8A Multimission Maritime Aircraft project. The move on Italy's part would greatly benefit the low-cost surveillance platform.

Germany and France are looking to kick off a new heavy-lift transport program to replace the aging Sikorsky German CH-53s operating in Afghanistan out of neighboring Uzbekistan. Eurocopter expects to receive type-certification for the helicopter, designated the EC175, from the European Aviation Safety Agency in 2010, followed by China's approval in 2011, the expected service-entrance date and the first flight would take place in 2009.

The Italian government would sign up for the US Navy's P-8A Multimission Maritime Aircraft (MMA) by the end of 2005, and with it, could commit the country to buying new airborne early warning aircraft. The commitment would make Italy, the Pentagon's last prospect of bringing in a foreign partner for the MMA's system design and development phase since Australia and Canada, which had contemplated partner status, but withdrew owing to budget problems.

The direct outcome of a recent meeting between Russian President Vladimir Putin and Italian Prime Minister Silvio Berlusconi could possibly remove the barriers to industrial cooperation between Italian and Russian aerospace companies. The delegate from both sides who took part in the meeting devised several agreements targeting cooperation on everything from commercial aerospace to military manned and unmanned aircraft to space.

The Russian government is planning to allocate $300 million to help finance development of Sukhoi's regional jet program. The RRJ, the Tupolev Tu-334 and the Russian-Ukrainian Antonov An-148 are the three major regional jet contenders in Russia that are undergoing major restructuring with the help of government and private finance companies.

Measures are being undertaken by the European nations to overcome shortcomings until the Airbus Military A400M transport bought by them is fielded and could act, as an insurance policy should the program encounter delays. Italy is considering lease of Boeing C-17s similar to the UK arrangement while France is considering fielding new tactical transports.

Measures are being undertaken by various European nations to overcome obstacles until the Airbus Military A400M transport is available. Italy is considering leasing Boeing C-17s. The UK is contemplating similar arrangements. France is considering fielding new tactical transports.

The Spanish government's announcement on May 20, 2005 to acquire the NH-90 helicopter is likely to give a further boost to the transport/frigate helicopter program, say observers. However, negotiations are still under way and are expected to hinge on industrial issues, in particular how to organize local participation in production and assembly.

The in-service date of the Tranche 3 Eurofighter Typhoon has been pushed back, with aircraft unlikely to be on the flight line earlier than 2015-2016. Political issues in the partner nations, Britain, Germany, Italy and Spain, are impacting the timing of the production run, which some previous plans had envisaged finishing by 2014.

Increased cooperation both within and outside Europe, has enabled the continent to launch initiatives in unmanned combat air vehicles (UCAVs) and medium-altitude, long-endurance (Male) surveillance. French defense research agency Onera is said to be in discussion with Singapore about cooperation in several areas, including radars and antennas.

The first Boeing KC-767A tanker, manufactured for the Italian air force, made its initial flight May 25, 2005 as a fully equipped aerial refueler, in preparation for its first transatlantic trip for display at the Paris air show the following month. Boeing is scheduled to deliver the first tanker in spring 2006, after a year of flight trials, after certification and completion of a 900-hour flight testing program.

EADS is predicting profitability in all of its divisions in 2005, following a better than expected improvement in its financial performance in 2004 but more restructuring is required, particularly in repair and overhaul. The dollar remains an important preoccupation for the future, particularly with regard to Airbus and hence restructuring at the subordinate level and further cost cutting may be necessary to reduce the dollar's impact.

The Pentagon's decision in favor of the Lockheed Martin led US101 team to develop the US presidential helicopter that is looked at as a watershed event, even though experts are divided over the larger ramifications of the $6.1 billion deal. The presidential helicopter (VXX) decision shows that it is the second time the Pentagon has opted for a Lockheed Martin-led team, as it meets the government requirements on schedule, with lesser risk and at lower cost.

Alenia Aeronautica's ATR 72 is Turkey's aircraft of choice to meet the demands of its maritime patrol and anti-submarine warfare (ASW), heading off competition from EADS and Bombardier. The Amascos mission system suite from Thales will be incorporated into the aircraft along the weapons system including torpedoes and anti-ship missiles.

A shortfall in Italy's defense budget procurement, a result of the government's freeing funds for tax reduction, is pushing the country's defense ministry into selling its real estate assets. Ministry and industry are exploring the possibility whether private finance initiatives could be more effective for long-term benefit.

A joint venture between Augusta Westland and Changh' Aviation Industries will produce the former's A109' twin-engine helicopter. Other European and U.S. helicopter manufacturers are eyeing Chinese market as the first series production EC-120, a joint development of Eurocopter and Harbin Aircraft Industry, should roll off the Chinese line by end of 2005.

Italian aviation officials are asking foreign carriers to stop undercutting Alitalia's intercontinental fares. Ente Nazionale Aviazione Civile (ENAC) has requested nearly 40 airlines to abandon their predatory fares and align with Alitalia's prices, as their primary goal is to ban the so-called sixth freedom low fares.

Finmeccanica officials are planning to merge with aeronautic business of Spain's Gamesa. Both the countries are seeking to expand and remodel their aeronautics businesses so that they could compete more effectively in the competitive market.

The Italian air force is nixing the idea of leasing a further batch of F-16s in favor of a life-extension program and capability improvements for its AMX and Tornado strike aircraft. Military officials say the air force is considering early retirement of its AMX light strike aircraft, and initially replacing them with additional F-16s until the Lockheed Martin F-35 Joint Strike Fighter is available.

The Italian government is urging private investors to save Alitalia from bankruptcy and the risk of ceasing operations since factors such as AlitaliaEs ill-fated turnaround strategy, lack of efficiency and weak management are raising concerns regarding its survivability. The plans of Alitalia that is expected to revise its fleet plan to reduce the number of aircraft types, and reviewing plan for forming a holding company owning separate operational entities to allow more flexibility, are highlighted.

BAE System and Finmeccanica have decided that 'Eurosystems' joint venture would focus on a systems integration unit and an avionics business. This 3.7-billion-euro ($4.5-billion) deal is important to both management boards as they look to consolidate their respective defence electronics interest.