tv Defense News with Vago Muradian ABC June 28, 2015 11:00am-11:31am EDT
[c[captiing performed byhe national captioning institute, which is responsible for its captioion content and accuracy. visit ncicap.org] vago: welcome to "defense news. i am vago muradian. how w they plan to grohe commercial business in the united states. eueurop's airbus group is a giant, aeading maker of mmercial jets, fighter helicopters, and communications and space systems. like its u.s. r rival, it facaces hnson -- challenges at a time when it isuggeststed the air business may have peaked. airbus wand to merge w with the british giant twowo yearsrs ago but the german govovernmt blocked the deal. that drove the chief execuve tolimite the french and germanan government't's role in
managing the company and c changed his ne after its most successful division. a major contract to build 900 330 pound satellites for one web that aimto create a global network. i asked what the deal means for airbus. guest: i hate the wo transformational but here i think it is the right word to describe the deal because this is a big deal for our satellite guys. we are talking about at least 900 satellites. the company that has produced 15 satellites a year is now going to produce 300 or 400 a year at a cost that is far lower than the usual satellite. all that together makes it exiling -- exciting. the business is exciting to provide internet access around
the globe. i am very happy with my guys. they approved to be competitive enough on the project and are the winners. vago: what was the discriminator from a technological standpoint? what are the investments that help you land the deal? guest: i think what was important is we are not a known name when it comes to satellites and manufacturing. we were able to prove, which is important, that we can manufacture 300 or 400 a year. some of that comes from the airbus commercial business. the experience we have in airbus we have people from the 350 program deployed on this project to hp their colleagues see how to procure and for management. to meet the cost threshold is very important. vago: i want to take you to the signature product that suffered
a crash before the airshow. some said there was a process control problem in spain that would have been the source of the accident. ha you gotten to the bottom of what happened? is that going to be a costly fix to make sure it does not happen again? guest: i think we very well understand the cause of the crash, which was very unfortunate. at this point, i am convinced it is not going to be a costly fix we need to apply. we understand it. it is not like rewriting the entire software. the problem was very specific to the aircraft. we have checked all other aircraft. there was nothing with it. it is the same program as ever. the pilots are very confident. the french airport has never stopped flying because they have full confidence in the aircraft. we are grateful for that. i'm very optimistic we will soon
turn out additional ones as we have promised our customers. vago: you are very bullish it will end up in u.s. air force service. why are you so confident? guest: as you say, does the signature aircraft. it is a great aircraft. is the most modern military aircraft there is. to the best of my knowledge there is no large u.s. transport program on the way. vago: not in that size class. guest: i think it will fit u.s. requirements well. we will manufacture in the u.s. as we are ramping up our facility. that was meant to start with the tanker program. if you put all this together, i am not saying it will happen tomorrow. i'm not saying it will happen in the next five years. but i am confident we can bring that aircraft to the larger
military works. vago: i want to get to the defense side. i want to talk about europe. spending has been declining for many years. there is a slight upturn even though the u.k. did make another budget cut. more cuts are expected. talk about the regional budget and whether there is going to have to be more consolidation along the lines of what you proposed two years ago, which was a merger. guest: first of all, i think it is good news for the industry. the budgets seem to not have further declined. recently, some big deals and prrams. think about poland with the air defense system and helicopters deals. think about the announcement by the german defense minister for the air defense systems. vago: we have been talking about this for 20 years. guest: absolutely.
we have done that with great partners. lockheed martin and our friends from italy. i think it is the best air defense program in the world with the 360-degree coverage. there are signs the market is recovering in some areas. consolidation? i think consolidation is needed in some of the non-aerospace areas. think about the project between the french and the germans the tank builders. i think that gives you a feel of consolidation to come. hopefully, this will not be a singular isolated move. i think there is more need in the industry. i would say particularly in the non-aerospace industry, maritime systems, etc. vago: we still face a challenge
trying to grow your defense business. you have become a key space systems provider to the u.s. government. you're sitting on a pile of cash. talk about your global defense growth strategy, where you will be investing. are you going to be investing and buying businesses in the united states to increase the industrial footprint as you have done in military space services? guest: it depends on space. we are 20% in defense revenues. we are currently having an exercise with the space folks to look at the strategy. we know what we want to provide best -- divest. what we need to invest on, i would think one area we would focus on is unmanned aircraft systems etc. as far as the u.s. is concerned we have been successful in the past bringing superior products.
look at the helicopters. i think we have a superior product. vago: you built a good amount of goodwill in the press of doing that. guest: we do not exclude to do things in the u.s. in a very big cents for sure. vago: do you think you would be able to do a major deal and successfully concluded? have you built enough trust in the pentagon? guest: i think that question should be pursued with a concrete case. i don't think in general terms you could or could not do it, to say that would be appropriate. i hear what you say. i hear similar voices out of washington. that is promising because it hopefully indicates people understand this company is s no longer the company it s five years ago. vago: coming up, more with t airbus chief executive. you are i stood outside, assessing the situation.
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vagogo: we are continuing our conversation with the e airbus chief executive. we recently met at the e paris air show. i asked whether his company needs to acquire e the helicoptpter maker bebeing didivesteded by united technologies. gues we are e of the emierr helipter manufacturers in the world. so quite obviously, we have a keen interest in wh is ppening with it. one way or the other, it will influence the industry. vago: are you in talks already with anybody to be your amererican partneon that program? say lucky -- say lockheed? i remember 15 yess ago t them talking about why it would make sense for lockheed to getet involved with the european playayer. guest: youave a great memory. vago: i can''t do his accent. [laughter] guest: this is sething we are
approachching. whether r or n we need ptner which parers, i think we will have time to sort that out.. vago: wt other paeuropean programs do you think are necessary now? is it ththe medidium altitude longg durance vehicle? there was a a deal on european countries struckck. is that the kind of deal we need? do we need somethindiffererent? guest: this compmpany hahas been enengaged in my european programs. some scessl, some less successful. bebelieve me, we are takingg lessons away from that as w well, how to conduct these programs more successfully in the futurure. it is obvious inurope e with the fragmentation,e shld go o for re mododernizazation of programs.s.
ncretely, t that is an ea wee would think about with surveillllance drones. we would also think about combat drdrones. in space, we are engaged a new w round of developing the next generation launcher. very important commemercialllly butt also important on the e defense side if yoyou think about the french capabilits,efense capabilitieses particularly. from my popoint ofof view, tho are the major areas. we h have very modern transport aircraftft just t starting to be dede we have typhoon combmbat aircft which is quite successful. people tend to overlook that. itas done the deals in a row.w. in terms of export orders, they are at a level your fighter your is at. vago: you're happy thehey won the deals beuse your stock is wortmore money. gues that is unfnfair. i would still rather have the
deal than the consequenence of that i in thstock price. but i hahave t complement them. they have done a goodob. the e french government has stroronglynd effectively supportedd it. vago: how much longer can y you keep that line g going? the work youou have, is there a coern that without more workk coming in and d more orders it will be hard to sustain that design production expertise you have on the program? guest: it is the same on every prograram. you can't ke assbly nes running forevever. even iyou stop fivive assembly lines, you still have good busine forany years to come. otr lis can be morore profofitab than the original manufacturg business. i am confident we will be able to craft more busineslater this year perhaps some more export orders. vago any particular r candidate?
guest: lookk arounund. it should prprobably happen in the middle et. i think we can extend the assembly line for a couple of years. we will wrap it down ordererly. we still have for many years to come because these aircraft will be flying for 30 or 40 years with numerous upgrades, etc. that should be good business. most of thee capabilitities for the mimilitary aircraft business, we will be able to keep up th thatat. others will be kept with u.a.v. develment. vago: for more of our interview, please go to tv.defensenews.m.
military ectronics. the company has a significant commercial andefense presence inin thenited states which the new chchief executive wants to grow. wewe met recently at the paparis air show. i asked him to explainin his strategy to grgrow in n the united states. guest: the u.s. market i is an important one for u us for defense but also comrciall activity. ththe united states is crititical fofor uin thehe radio connenection field. weould l like to pick up ts businessss in ththe u.s. with the d.o.d. and also international custers. yeyes, t u.s. market is very important for us. vago:ou arere starting innovation center in the united states. the penentagon has bebeen calalling for more interervention -- innonovation. what is s the work you will be doining on innovation? guest: first, we t try to increase
our intnteractition. we work closely with h the environment where we enr unersies to make sure we capture as much innovation as possible. in pararticular, on n the west coast which is very active in terms of innovation. that is why thisis is very close to our business. we need to injecmore innovation.. it is cruciaial to the business. we n need toto eertain passenger with the latest appcationons in the futur vavago: as you look globally att the global market,t, h how does the u.s. p play into that global growth strtrategy? what are the parculamarket area you feel you have to invest in to further expand?d? guest:t: we hahave target m more innovation marketsts.
ere are many difffferent markets. inhese growing markets the u.s.s. is for surere a growing ininnovation market. the u.s. plays key r role in the growth strategy. besides the u.s., we do focus to be me prevalent the emerging markehe where t these coununtries s and gogovernments ininvest massively in all our world business segments including secucurity aerospace, and spspace. vago: which ones do u think, gin the e changed security dynamic c in europe, which onene of your products to you think will be most attrtractive in europe and in i its peripheries? guest: in eope, we haveve an attractive mket in terms of [indisiscernible] all ofl infrastructure isis there.
what we neeeed is to optimize infrfrastructure thanks to the clevever signaling systemem for t the traffic, we have optimized infraststructurure brbringing safety ansecurity to partrtners vagogo: what about on air d defense? you are a big radar comny the leading radar company in europe. do you see -- what dodo you see the air defenspicture looking ke? guguest: ir dedefense e is interesting. in holland, for instance. vago:: maybebe not in the direction you originally hop guest: it is improving in fran and italy. wwe are going to continue witith th behind me.. it crereatespportunities outside europe because countries like turkey, we look clososely at what
we do and how use ththe infrastructure t to dealal with ballistic missi strikes. vago: there was a seseriesf bigg wins. in india, there are negogotiations ongogoing. you guys are the radaand stems provider on the airplane. talk about when you think these dealwill beoncluded and whe you will statart rpingp producti. what does mean for you on a financial basis to get these deals through?h? gues it has been fantastic news f for allll ofs. i mean our cololleagues. we representnt 25%5%. that is very importantnt. in terms ofof business, it is an importantt amount. egypypt and qatarar have been very impoportant. th additional dealsn india
withth india i am confident. we havave a lolong relationship with india. things are going well. i'm very confident. there are otr importantt deals as y you may kno vago: you will not discuss until they are announced. guest: never, evever. vago: the original indian deal was for 126 jets ininsteaof 36. 36 is the orr. do youou think you will get to 126 and d beyond? the inindians have said the airplane is to expensive. guest: let's go step-by-step. firs let''s s secure the first batch. thatat is already y a good achievement for us. then we will see now its up to u us to be e smart or clever e enough to give the indian air f force confidencnce to go further. stepy-step. vago: let's ta aboutut theamp up in production.n.
some of these orders are very ambitious with deliveries in two years. becae of the fririends to maech budget system, y hav been on a low proroduction -- becae of the french b budge you have been on a low prproductition hedulele. the chf ofhe french air force willll have e to loan some airplanes. what a are youoing t to get there and delivered to the customer fasterer? guesest: ware ry well a align in termsf the ramp up forecacast. weave gathered our supply chaiain partnerto me sure we understand what spe weant to ramp up prodducti. i'very confident it isis manageable. hope we would have many more on this side. vago: i tnk a lot of peoplele ale this show are counting on that happening. guest: iike your queuestions. vago: let me ke you to the
u. again. you have grownn the u.s. with a lot of merger and acquisitn acvity. e you gointo be active playerers withth mergers and acquisitions? what are t the parts of your bubusiness you want beef up by acquiring capability i in the united stas? guest: it will be important in civil and defense. we havave do some in the u.s. with the d.o.d.. peaps also more importantly civiliagrows fast. ase did last year,r, a vy go illustration of f the activity. we have a a sound balance sheet with good ingredients to drive in t day- m&a&a activity. have e a biof cash. vago: not a bad combination. i'm sure a lotot of bankers are spending time withou. i want to ask you on eistral
deal president hollllandeas put a hold on that given russia's behavior. you ara 35% owner in the shipyard buildg that. is there a financial impact on you ifhe deal is canceled? guest: excellent queststion. we a are suppliers. as a supplier, there is no impact. asas a sreholder, there is no concern. in any case, it wiwill notot be hurt byov government t to governmt deal whatetever it is. no impact on us. vago:: what happens to the ships? would you play a role in that if the ships are not transferred? guest: we will see. vago:: for more of our interview go to defensenews.com. this week, the personal finance
expert on how militaryry members can n findhe rigight mortgage. >> i'm here witith the e vice president of mortgage lenendingt navy federal credit ununion. katitie will be arinadvicece for milita membebers trying toto findd the ght mortgagege. welcome. what are some of t the bt mortrtgage options for someone in the military >> if they still have their v.a. eligibity,he v.a. loan is the best option. lolow rate, 30-yeaear fixed ratete and 100% financing which means nono down n paymt required. >> what t if you have used up youour eligibily? >> 100% finanng non-v.a. mortgas are an option. i would lo foone wiwithout private mogage insurance to save thousands. >> for someone retiring g or bung a second d home, what can you recommend? >> it dedepends on t location d how w long they ll have the mortgagage. arms or jumbo rtgages are e a good o optio also, 100%0% fincing, watch out for private mortgage insurance. >> g great, thank k you.
vago: thanks veryry much.h. we will see you next weekek. you havfinancial question vago: washington's decision to sendnd 250 tan and personanal carriers to europe is a welcome message r nato allies worried about russia. u.u.s. troop levels will nt increase. american soldiers will be rotated througeupe for aining. the message would have been more
powerful if washshington stopppped withdrawing u.s. forces from europe and start increasing levels there and in n asia. the reeality is statabity worldwide often dedependnds on the presence of u.s. forces. korea and japan just cebrated 50 years of normalized relations that fostered d unprecedented economic growthadpossible b the presence of u.s. forces in bothountri. on the other side of the world ameran troops and diplomats were equally keyey in the fofostering and forging a prosperous eope. while nato's heightened actity in the wakake of f the russia campgn has been criticized by somes an efftive even president vladimir putin has said hwould be crazy to attack a nato country and trigger a wider war. moscow c connues to raise tensioionshreatening nato and european nations with nuclearar weapons and vioting the ukraine cease-fire even as a new truce is b being negotiated. nato's russia's strategy must be smart and long-term. that includes more training, mo equipment, and more troops. thanks for watching. i am vago murian. visit us at defensenews.com for
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