The Pentagon budget for FY 2020 would reduce the budget authority for Textron's major defense programs by $1.4B, ~55%, compared to the Congressional appropriation for FY 2019
TXT's largest surprise in the Pentagon's proposed budget is the Navy's decision to zero its planned FY20 procurement of eight Ship-to-Shore Connectors (SSC) worth $505M. The Ship to Shore Connector is the air cushion transport replacement of the Landing Craft Air Cushion (LCAC) used on amphibious ships to ferry Marines and material ashore. The Navy had been complaining for some time that delays caused by technical issues have put deliveries at least one year behind schedule. This program has been a Congressional darling with appropriations for eight additional craft and $495M added to the Navy's requests in both FY18 and FY19. The combination of technical delays and early money created a budget windfall that has allowed the Navy to zero its FY 2020 forecasted buy without breaking the production line. Adding to TXT's woes, the Navy is also stretching the program out so that it will now complete no earlier than 2030 vice 2023.
TXT's Bell's mainstay defense programs are now sundowning.
- The Marines' H-1 program of record of 349 aircraft was completed in FY 2019 with their order of 25 aircraft with the last delivery in January of 2022. Bell still has some potential for Foreign Military Sales (FMS) of perhaps 50 total aircraft to Australia and Japan. Both countries are looking for maritime gunship helos for their amphibious ships.
- The V-22 program of record of 464 tilt rotor aircraft: 360 for the Marines, 56 for SOCOM and 48 for the Navy should complete in FY 2024. After the Navy's planned order of 10 aircraft in FY20, there will only be 34 aircraft left to procure on the third and probably last multi-year contract. the Bell-Boeing Joint Venture is still hopeful for FMS sales of the aircraft to Israel, Japan and Qatar.
- The last major modifications of the RQ-7 Shadow Unmanned Aircraft System worth $172M were ordered in FY 2019. The Army is only planning to spend $9M on the program in FY 2020 as it shifts its focus to the Future Tactical UAS.
TXT is entering an order book trough that is unlikely to begin to recover until the mid-2020s. TXT's best chance to get back into large volume military aircraft production is the Army-led Future Vertical Lift program.
- The Army quadrupled its planned RDT&E spending to $427M in FY 2020 for the development of the Future Attack Reconnaissance Aircraft (FARA) formerly known as Capability Set 1. This summer, the Army intends to select two paper designs for further development from nine submissions. After a flyoff in 2023, one of the two designs will be selected to begin production in late 2024. Lockheed- Sikorsky's proposed S-97 Raider, a coaxial rotor design with pusher propeller, has been flying for years and is considered to be a lock for one of the two design slots.
- The more favorable competition for Bell from a technology point of view is the Future Long Range Assault Aircraft (FLRAA) formerly known as Capability Set 3. This is a medium lift replacement of the ubiquitous H-60 with thousands likely to be procured by the Army, SOCOM and Marine Corps beginning in the late 2020s. Bell has been flying its V-280 "Valor" tilt rotor candidate for well over a year and is now expanding the envelope to speeds of over 250 knots. Bell's main competitor is the "Defiant", a coaxial rotor design with push-prop proposed by a Sikorsky-Boeing joint venture. The Army wants the 10-12 troop capacity aircraft to cost ~$43M each (average unit price) with first flight in late 2024 and the first operational unit in 2030. Criticism has already begun over the Army's intent to develop both the FARA and FLRAA simultaneously.
- TXT was recently downselected along with a Martin UAV/NOC team to compete for the Future Tactical Unmanned Aerial System (FTUAS), the replacement for TXT's RQ-7 Shadow. Downselect and initial procurement is supposed to begin in late 2022.
