Forget Bellingham to Real Madrid or Arsenal’s capture of Declan Rice; the $1.1 billion that Thales is paying for Cobham Aerospace Communications (“AeroComms”) is by far the biggest British move of this summer’s transfer window. But what’s behind the deal? Read on for our take.
A More Complete Cockpit Offering
Thales is positioning it as a move to bolster its avionics portfolio and plans to integrate AeroComms’ line of cockpit safety communications systems into its own, thus seizing the opportunity afforded by the gathering shift towards connected cockpits.
Thales is one of the leading providers of avionics to all major global airframers and along with Honeywell and Collins Aerospace, has a strong position in the L-band SATCOM market. But the addition of AeroComms brings with it a range of complementary products. This consists of antennas that support Inmarsat’s various L-band services, including SwiftBroadband-Safety (SB-S), along with technology and built-in procedures to ensure cyber security to the latest industry requirements. A number of these antennas are standard across the range of Airbus and Boeing platforms.
AeroComms, too, is a strong contender in the L-band SATCOM market and the AVIATOR S series has been selected by several major carriers. United installed the AVIATOR 300D variant on both its B767 and B737NG aircraft to benefit from the operational efficiencies of SB-S, while Hawaiian Airlines chose the AVIATOR 350D product and SB-S for its Airbus A321neo fleet. More recently, the AVIATOR 200S product was certified on the B737 MAX by the FAA. This same product was also selected by Vistara for its A321LR aircraft in 2022.
The Curious Case of Cabin Connectivity
Interestingly, AeroComms has played a role in the provision of cabin connectivity, too. In 2015, it was tapped to supply the AVIATOR 1200SP SBB terminal to AirAsia as part of the roKKi Avionics in-flight connectivity (IFC) solution, while its blade antennas were a key component in the original Gogo Air-To-Ground (ATG) system. And, for a while, the company provided Gogo with radomes for its 2Ku offering – a contract that transferred to Meggitt after it bought Cobham’s composite business. That same year saw Cobham ink a deal to develop the S-band terminal for Inmarsat’s European Aviation Network (EAN) and gave it a taste of working with Thales first hand. As readers may know, Thales is also a key partner in the programme, providing the Complementary Ground Component (CGC) terminal used to facilitate communications between equipped aircraft and cell towers on the ground.
Given most of these deals hark back to an earlier age of IFC, one might assume that AeroComms’ expertise in cabin connectivity played no role in Thales’ decision to buy it. But we suspect that this is not necessarily the case. Whilst the press release announcing the deal focusses solely on the cockpit, Thales shows no signs of following SITA out of the cabin connectivity game. Indeed, the company has invested heavily in leasing the Ka-band satellite capacity from SES and Hughes Network Systems that underpins its FlytLIVE solution. And key customer, Spirit Airlines, only last year achieved fleetwide equipage of FlytLIVE despite signing up to partner with Thales back in 2018. We’re sure too that Thales is not going to just write off the $400 million it paid to secure LiveTV’s IFEC business almost a decade ago.
Moreover, Thales is keen to ensure it remains a key player in the resurgent seatback in-flight entertainment (IFE) market (see our Q1 2023 IFEC tracker release for further details), especially as its new line of Optiq 4K displays are due to start flying with American Airlines in the near future. This is important because having a connectivity component to IFE is, in our view, critical to continued success in IFE as airlines often make decisions about which IFC solution to install based on the line-fit offerability of various IFE systems.
From Nose to Tail and Beyond
As such, AeroComms’ non-cockpit communications know-how is likely a somewhat understated part of the Thales mission to offer truly nose-to-tail connectivity solutions. In fact, the firm is positioning itself as an entity that has touchpoints with the passenger throughout the entirety of their journey. Its end-to-end self-service experience for travellers, “Fly to Gate”, leverages biometric and digital identity technologies across the check-in, bag drop, pre-security, border control and boarding processes and is gaining traction in the fast-moving market for seamless passenger journeys. And lest we forget that Thales produces passports for many countries across the globe, whilst also being poised to play an important role in the issuance of new Digital Travel Credentials (DTCs).
What’s certain, though, is that Thales is not pursuing the deal to bolster its presence in maritime connectivity. Whilst losing the AVIATOR line, Cobham is retaining control of the EXPLORER, SAILOR and Sea Tel brands that have become household names to seafarers throughout the world. It could even be argued that by jettisoning AeroComms, Cobham will now be able to set its sights on wrestling top dog status back from rival, Intellian, to whom it ceded its hardware crown in 2022.
With more UK companies expected to draw interest from overseas, we’ll leave what all this means for the UK’s aerospace and defence industry to another article. Stay tuned…