L3 may be best known as a defence company, but the $9.7 billion-turnover US corporation is stepping up its focus on the civil market, bundling all its commercial businesses under a new brand.
The new L3 Commercial Aviation, unveiled on the eve of Farnborough, spans onboard avionics, airport security systems, and pilot training, and includes three companies acquired by L3 in the past six years – the full-flight commercial simulator division of Thales, based near London Gatwick airport, a training device manufacturer called Aerosim in Minneapolis, and the Southampton-based flight school and training provider CTC.
Although the three arms of the commercial business might appear to have little in common, Alan Crawford, president of L3’s commercial aviation solutions sector, says their coming together under one customer-facing organisation "means we can have some very interesting conversations with airlines" about their avionics requirements, pilot recruitment and training needs, and even "the customer journey from kerbside to aircraft".
Rather than each entity having its own sales team, key account managers within L3 Commercial Aviation will be the main point of contact with airline and airport customers, bringing in experts from the individual businesses when necessary. "That integrated approach is very unique in the market, but it's what our customers have been asking for, and you will see a lot more coming on that," says Crawford, who is based at L3 Commercial Aviation's headquarters in Crawley, near Gatwick.
L3 was formed just 21 years ago as a vehicle to acquire surplus businesses from Lockheed Martin – the L3 comes from the surnames of its two founders, former Lockheed executives Frank Lanza and Robert LaPenta, together with their backer Lehman Brothers. A series of more than 25 acquisitions over the years has seen it grow to become one of the Pentagon's biggest contractors. It is organised across four divisions – electronic systems, aerospace systems, communication systems, and sensor systems.
Commercial Aviation falls within the electronic systems segment and covers three areas, each contributing roughly one-third of its revenues. The avionics business is made up of the ACSS transponders joint venture with Thales, in which the French company has a 30% stake, together with a business making flight-data recorders and cockpit displays. Airport security includes a number of enterprises acquired over the past 10 years producing the likes of baggage scanners and tracking technologies.
Finally, the training business includes simulator manufacturing, flight academies in Southampton, Bournemouth, Lisbon and New Zealand, and a new simulator training centre being built at Gatwick. Pilot training is one area where L3 has been extremely acquisitive in recent years. After buying the Thales manufacturing operation it has become the number two in full-flight devices after CAE.
The CTC takeover took it into the training services market for the first time – the business has contracts with a number of airlines for the ab initio training of cadet pilots. About 1,600 aspiring pilots begin courses there each year.
The new training centre on Crawley's Manor Royal industrial estate, which opens next year, represents a significant investment for L3. As well as training pilots on eight full-flight simulators, an adjacent manufacturing hall will assemble up to 30 devices a year for its own training business and third-party customers. The site will replace and expand on nearby facilities that L3 has leased on the large Thales campus since taking on the simulator business six years ago.
In May, ACSS won a contract with American Airlines to equip its Airbus A321 fleet with its SafeRoute automatic dependent surveillance – broadcast suite, as part of the carrier's compliance with upcoming Federal Aviation Administration NextGen air traffic management regulations. The package includes equipment to provide information on traffic, visual separation and interval management. "That was a very big deal for us," says Crawford.
Another significant coup in commercial aviation was announced at the Paris air show in 2017, with Airbus entering a partnership with L3 and Leonardo's DRS arm to develop a deployable flight-data recorder, to be introduced on the A350 from next year and eventually across its entire range. A combined voice and data device, and mounted on the vertical fin, the unit is aimed mainly at transoceanic aircraft – Airbus's widebody family and the long-range A321LR. Instead of directly capturing information, the device will receive and store, in a memory module, a transmission of cockpit-voice and flight data.
Deployment of the recorder is triggered by significant structural deformation or impact with water. Because it does not need the same crash-protection structure as a regular flight data recorder, it can be relatively lightweight. If the aircraft comes down in water, sensors would detach it at a depth of 2m and the recorder would float, with an emergency locator transmitter helping emergency services locate the crash site. The technology was developed as a response to the crash of Air France flight 447 in the south Atlantic in 2009, when the flight recorders were not recovered from the sea bed for two years.
Although L3 is a group that has scaled up largely by acquisition, Crawford is keen to point out that "huge organic investments" – such as the deployable flight-data recorders – have also played a significant role in the company's growth, including in the commercial business, which represents about 30% of L3's revenues. At Farnborough, L3 will be "trying to build awareness of the breadth of our commercial offerings", he says, adding “rather than confusing customers with multiple brands, approaching them with a single brand”.
L3 has displayed a certain ruthlessness in the past when it comes to replacing or amending the trading identities of companies it acquires with the L3 branding, and it plans to continue this as it rolls out L3 Commercial Aviation.
Despite some initial scepticism, acceptance among teams is usually positive, maintains Crawford. "We are creating something under L3 Commercial Aviation that's going to be something special in the market," he says. "When you are acquiring for growth rather than cost synergies, that's always an exciting message to give new employees."