Building on an acquisition it made in late winter, Textron [TXT] earlier this month launched a new operating business focused on providing tactical airborne training services to the Navy and Air Force.
Textron Airborne Solutions was borne of the acquisition in March of Airborne Tactical Advantage Company (ATAC), which operates a small fleet of tactical fighter aircraft equipped with electronic warfare packages that are flown in adversary aggressor missions to simulate live combat operations for Navy and Air Force pilots.
Textron didn’t announce the ATAC acquisition formally and Scott Donnelly, the company’s chairman, president and CEO, only mentioned it in passing during the first quarter earnings call in April. Textron Airborne Solutions is led by Russ Bartlett as president and CEO.
ATAC is flying about 6,000 hours’ worth of sorties this year for the Navy, its largest customer by far, and the Air Force combined, Jeffrey “JD” Parker said on Monday on a media call. This industry is “exploding,” he said, adding that currently the Navy is about 13,000 to 14,000 short per year for aggressor solutions and the Air Force about 6,000 sorties below requirements.
Parker said this shortage amounts to thousands of hours of new training requirements that “is something very well fulfilled by an outsourced capacity such as ATAC.”
The Navy and Air Force have initiated fourth generation adversary programs to make up for the fact that they are retiring their legacy adversary fleets without replenishing them, which means more potential business, Bartlett said on the call. He said the new programs mean the size of the adversary aggressor training industry will double in 2018, “and that’s just scratching the surface of what’s our there.”
Bartlett put the rough market size right now for the aggressor adversary market in the hundreds of millions of dollars with potential growth to a multi-billion dollar market in five years.
ATAC does a small amount of pilot training and other training services and sees more room to grow here, both executives said. The Air Force is currently suffering from a pilot shortage so any help it gets from outsourced adversary aggressors frees pilots up for warfighting training and missions, Parker said.
The Navy has said it needs to get away from using its F/A-18 Hornet and Super Hornet aircraft for aggressor training so these assets are available for combat training and missions, which is driving a need for more outsourced training, Parker said.
ATAC’s fleet includes 26 aircraft consisting of 16 British-built Mk-58 Hawker Hunter transonic single seat fighter and ground attack monoplane, six Israeli-made F-21 KFIR fighters, and four Czech-made L-39 Albatros trainer/light attack aircraft.
Parker said that ATAC has about 45,000 hours of aggressor flight experience in its 20-year history with the next closest competitor upwards of 4,000 hours. The barriers to entry in the tactical airborne training market are high, he said.
Other competitors include Florida-based Draken International and Canada’s Discovery Air.
Bartlett said that Textron Airborne Solutions will be looking to grow either through organic gains or acquisitions or both. In addition to the increased opportunities with the Navy and Air Force, he said mature air forces globally need aggressor training at lower costs that they can provide for themselves.
Parker said that just because the aircraft ATAC owns are older doesn’t mean they aren’t relevant for aggressor training for advanced aircraft like the Air Force’s F-22 Raptor and the F-35 Joint Strike Fighter. These aircraft are designed to take on multiple aircraft at once and the adversary resources that ATAC provides coupled with the electronic warfare packages provide the target numbers these next-generation combat need in aggressor training, he said.