Alan Dron  

The wave of consolidation that has swept the upper echelons of the US aviation industry will be repeated among second-tier and smaller, specialist, companies over the next few years, believes Frank Lanza, chairman and chief executive officer of L-3 Communications.

New to Farnborough,L-3 Communications was formed after the merger of Lockheed Martin and Loral resulted in divisions that did not 'fit' the new organisation.

These were spin off as L-3. Lanza, former president of Loral and executive vice-president at Lockheed Martin, decided to branch off on his own.

"I did not want to stay with a large company; I'd been there already," he says.

L-3 was created as a 'merchant provider' to governments and prime contractors of secure and specialised communications systems, avionics and instrumentation - to mention just some of its interests. This has led L-3 to be in a happy position on one impending order, the UK Royal Air Force's purchase of an Airborne Stand Off Radar (ASTOR) system. L-3 has been contracted by all three competing teams to supply their entries' secure ommunications systems.

In such situations, prime contractors usually want to fine-tune products from suppliers, and L-3 erects internal company 'firewalls' to keep these tweaks secure.

With the consolidation of the US aviation industry having reduced its top tier of companies to what Lanza describes as "three-and-a-half gorillas" - Boeing, Lockheed Martin and Raytheon, with Northrop Grumman the 'half' - Lanza sees rationalisation now looming for the dozen or so 'mid-tier' companies such as Litton, Alliant and L-3 with turnovers in the $1 billion to $5 billion category.

A similar process awaits many smaller, specialised companies, he believes.

Source: Flight Daily News