Raytheon and Leonardo Withdraw from T-X

Companies “Unable to Reach a Business Agreement”

On 25 January Raytheon and Leonardo announced that they have decided not to jointly pursue the US Air Force’s Advanced Pilot Training programme, better known as T-X. The team had been pushing the T-100, based on the Leonardo M-346 advanced trainer but said they were, “unable to reach a business agreement that is in the best interest of the US Air Force.”

This will leave three main contenders in the running for the T-X competition, for which final proposals are believed to be due in March: a T-50 proposal led by Lockheed Martin and ‘clean sheet designs’ from Boeing and Northrop Grumman.

It also leaves parts of the supply chain in disarray. CAE, for example, had hooked its T-X flag very firmly to the T-100 mast, having already delivered ground based training systems for the type. ACAE spokesman told Mönch the company is, “disappointed the Raytheon-Leonardo team will not compete to offer the T-100 integrated training system here in the United States. We wish the US Air Force well in acquiring an overall training solution that best meets the needs of future pilots, and we would welcome supporting the eventual T-X winner with our advanced simulation technologies and training support capabilities.

 

Mönch Comment

The announcement came as something of a surprise to the training community but Mönch understands there have been signs of discord in the Raytheon-Leonardo team for some time and that an earlier breach nearly came about in October last year. Fundamentally, it appears, the issues have centred on control – who does what and where?

The T-100 design is borderline in meeting some aspects of the requirements envelope. Given that, some flexibility in price might have been a powerful persuader in keeping the aircraft in the running. Mönch understands, however, that Leonardo would not move on price and was also resistant to suggestions aimed at partial outsourcing, both of which could have been serious discriminators. The ‘list price’ of the M-346 is thought to be somewhere in the region of $25 million: given the numbers involved in T-X, perhaps some flexibility in bringing this figures down would not have been counter-productive.

T-X is the largest training aircraft programme on the horizon. With 350 aircraft in prospect initially – and follow-on, peripheral and potential international sales that could conceivably double that number – it is the biggest game in town. Leonardo’s 25 January statements states it is, “evaluating how to leverage on the strong capabilities and potential of the T-100, in the best interest of the US Air Force.” Without a strong and cooperative US partner, though, and with only two months before detailed proposals are to be submitted, how realistic is the prospect of being able to mount a compelling bid?

Leonardo has a mixed record when it comes to partnerships. “They make very good products, but they are not the easiest company to partner with,” one observer with personal experience told Mönch. Every company has the right – indeed, has the duty – to negotiate in the best interests of its shareholders and employees. But the secret to sustaining market share and growth over time – particularly in fiercely contested or fiscally constrained markets – is flexibility. Failure to reach a working agreement could cost Leonardo and Raytheon a chance at the biggest prize in this specific domain for the next four decades.

 

Publish date

01/28/2017

Sign up to our newsletter and stay up to date.

News

Air

C4ISR

Components / Systems

Cyber

Defence Business

Homeland Security

International Security

Land

Latin America (Spanish)

Logistics

Naval

Training & Simulation

Space

Special Forces

Unmanned

Publications

Contact Us

Contact Info

Mönch Verlagsgesellschaft mbH
Christine-Demmer-Straße 7
53474 Bad Neuenahr – Ahrweiler

+49 2641 3703 – 0

+49 2641 3703 – 199

Follow On

X