Industrials

<h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p class="MsoNormal" style="text-align: justify;">Having more than 20 years in the industry, most of my experience has come from communication with customers. Main industry leaders were always interested in the sales strategy of the companies I worked for. Early experience with global players like Eurocopter (Airbus Helicopter), DAHER and Hamilton Sundstrand (Collins Aerospace) helped me to understand what the most important drivers for the aerospace are and how to be attractive for new opportunities. Later, as a programme manager of main programs for Airbus, Premium Aerotec, Safran Landing Systems, Bombardier (and later Spirit Aerospace), I used this experience to successfully manage the programs. A basic overview of the market during my career was the foundation of successful communication and prediction.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q2. Who are the key players, and what are their technological advancements in Urban Air Mobility and eVTOL</span><strong>?</strong></h2><p class="MsoNormal" style="text-align: justify;">Urban Air mobility (UAM) and electric vertical take-off and landing (eVTOL) aircraft represent the next frontier in the aerospace industry, driven by the need for sustainable and efficient urban transportation solutions.</p><p class="MsoNormal" style="text-align: justify;">Key players in this sector include companies like:</p><ul style="margin-top: 0cm; text-align: justify;" type="disc"><li class="MsoNormal" style="mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Joby Aviation</li><li class="MsoNormal" style="mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Lilium</li><li class="MsoNormal" style="mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Volocopter</li><li class="MsoNormal" style="mso-list: l0 level1 lfo1; tab-stops: list 36.0pt;">Archer Aviation</li></ul><p class="MsoNormal" style="text-align: justify;">Joby Aviation, a leading name in the eVTOL market, has made significant advancements with its all-electric aircraft, which can fly 150 miles on a single charge at speeds of up to 200 mph.</p><p class="MsoNormal" style="text-align: justify;">Lilium, another prominent player, is developing a jet-powered eVTOL aircraft with a range of 155 miles, aiming to offer fast, regional air mobility.</p><p class="MsoNormal" style="text-align: justify;">Volocopter, based in Germany, focuses on short-range urban flights with its Volocity aircraft, designed for inner-city use.</p><p class="MsoNormal" style="text-align: justify;">Meanwhile, Archer Aviation is working on its own eVTOL model, 'Maker,' which promises a 60-mile range and a top speed of 150 mph. These companies leverage advanced technologies like battery optimization, lightweight materials, and autonomous flight systems.</p><p class="MsoNormal" style="text-align: justify;">Additionally, partnerships with aviation regulators like the FAA and EASA are critical for certification and large-scale deployment.</p><p class="MsoNormal" style="text-align: justify;">Other key players include aerospace giants like Airbus and Boeing, which are exploring their own UAM concepts. Technological advancements in battery density, propulsion systems, and AI-driven autonomous capabilities continue to push the industry toward commercialization, with the goal of reducing urban congestion and lowering emissions.</p><p class="MsoNormal" style="text-align: justify;">The Chinese industry is represented by EHang, a UAM technology copter platform. Based on publicly known information, it might be another potential success on the market.</p><p class="MsoNormal" style="text-align: justify;">Czech Republic is represented by project Zuri. Project is using mainly angel&rsquo;s money donation for each phase of the introduction of the product on the market.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q3. What are the Trends in International Defense Partnerships and Export Markets for Next-Generation Fighter Jets and Military Aircraft?</span></h2><p class="MsoNormal" style="text-align: justify;">International defense partnerships are increasingly crucial in the development of next-generation fighter jets and military aircraft. A notable trend is the collaboration between countries to co-develop advanced platforms.</p><p class="MsoNormal" style="text-align: justify;">For example, the UK's Tempest program involves a consortium of countries including Italy and Sweden, with the aim of producing a 6th-generation fighter by 2035. These partnerships help to spread the high development costs, leverage shared technological expertise, and foster political and military alliances.</p><p class="MsoNormal" style="text-align: justify;">Similarly, Japan and the UK have announced plans to collaborate on a new fighter jet development, aligning with Japan&rsquo;s defense needs and the UK's technological advancements. The U.S. remains a dominant player in exporting fighter jets, with its F-35 Lightning II program being widely adopted by NATO allies and partners like Japan and South Korea. The F-35 program itself represents one of the most successful defense export partnerships, involving several countries in its production and development.</p><p class="MsoNormal" style="text-align: justify;">In terms of export markets, countries are increasingly looking toward the Asia-Pacific and Middle Eastern regions, where defense spending is on the rise due to growing geopolitical tensions. New markets in Southeast Asia, bolstered by rising military budgets, present opportunities for defense contractors. Collaborative ventures such as joint aircraft development, technology transfer, and defense offset agreements are shaping the future of international defense partnerships.</p><p class="MsoNormal" style="text-align: justify;">The trend of UAVs is present in the Defense sector mainly after the success of these vehicles in the Ukrainian conflict (Bayraktar and others). The potential of UAVs for data collection and situation monitoring (Norad, in Czech Republic Primoco) has been known for more than a decade. With new technologies introduced in data processing, a wide range of other tasks have proven to be relatively cost-effective.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q4. What are some of the major deals and Their implications for market dynamics?</span></h2><p class="MsoNormal" style="text-align: justify;">Several major deals have significantly impacted market dynamics in the aerospace and defense industries. One of the most notable is the Lockheed Martin F-35 Lightning II program, valued at over $1.7 trillion over its lifespan, with orders from countries like Japan, South Korea, and various NATO members. This program has established Lockheed Martin as a dominant force in the fighter jet market, setting new standards for stealth technology, multi-role capability, and export collaborations.</p><p class="MsoNormal" style="text-align: justify;">Another significant deal is Boeing&rsquo;s contract with the U.S. Air Force to deliver the KC-46A Pegasus aerial refueling tanker, valued at over $44 billion. This contract further solidifies Boeing&rsquo;s position in the military aircraft market while providing key aerial refueling capabilities to U.S. allies around the world.</p><p class="MsoNormal" style="text-align: justify;">In Europe, Dassault Aviation and Airbus are collaborating on the Future Combat Air System (FCAS), a sixth-generation fighter program designed to replace current fleets by the 2040s. This project is valued at tens of billions and involves France, Germany, and Spain. Its success or failure will have wide-reaching implications for the European defense industry and its ability to compete with U.S. and Asian manufacturers.</p><p class="MsoNormal" style="text-align: justify;">These deals underscore the increasing complexity of military procurement and defense partnerships. They not only shape the competitive landscape of the industry but also influence global military readiness and technological superiority.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q5. Give a brief outlook on the emergence of new entrants, especially in cutting-edge technologies in the aerospace industry.</span></h2><p class="MsoNormal" style="text-align: justify;">The aerospace industry is witnessing the emergence of several new entrants, particularly in cutting-edge areas like hypersonic flight, autonomous systems, and space exploration.</p><p class="MsoNormal" style="text-align: justify;">Startups such as Hermeus and Boom Supersonic are pushing the boundaries of speed, with Hermeus developing hypersonic aircraft capable of Mach 5 speeds and Boom aiming to bring back commercial supersonic travel with its Overture jet. These companies are leveraging advancements in materials science, propulsion systems, and AI to create next-generation aerospace solutions.</p><p class="MsoNormal" style="text-align: justify;">In defense, companies like Anduril Industries are pioneering autonomous drone and sensor systems for military use. These platforms promise to revolutionize the battlefield by providing real-time intelligence and reducing the need for manned operations in high-risk environments. Meanwhile, in the space sector, SpaceX and Blue Origin have revolutionized space transportation with reusable rockets, drastically lowering the cost of space access and setting the stage for further commercialization of space.</p><p class="MsoNormal" style="text-align: justify;">The rise of electric propulsion in aviation is also fostering new entrants. Companies such as Eviation are developing all-electric commuter aircraft that aim to transform short-haul travel with zero-emission planes. These technologies, along with advancements in battery storage and artificial intelligence, are creating opportunities for new players to disrupt traditional aerospace models and challenge established giants like Boeing and Airbus.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q6. What are the impacts of geopolitical tensions on military aircraft demand?</span></h2><p class="MsoNormal" style="text-align: justify;">Geopolitical tensions are a major driver of increased demand for military aircraft, as nations seek to bolster their defense capabilities in response to regional threats and global power shifts. Tensions in the Asia-Pacific region, particularly between China and the United States, have led to increased defense spending by countries such as Japan, South Korea, and Australia. This has spurred demand for advanced fighter jets, drones, and surveillance aircraft as these nations seek to counter China&rsquo;s growing military capabilities.</p><p class="MsoNormal" style="text-align: justify;">In Europe, Russia&rsquo;s invasion of Ukraine has reignited defense spending across NATO countries, with many governments pledging to meet or exceed the alliance&rsquo;s 2% GDP defense spending target. Countries like Germany and Poland have significantly increased their procurement of fighter jets, drones, and other military aircraft. Additionally, tensions in the Middle East, particularly between Iran and its neighbors, have resulted in increased military investments from countries like Saudi Arabia and the UAE.</p><p class="MsoNormal" style="text-align: justify;">This rise in demand is putting pressure on defense contractors to ramp up production and secure supply chains, while also accelerating technological advancements in areas like stealth technology, hypersonic weapons, and autonomous aircraft. Geopolitical instability is expected to continue driving demand for next-generation military aircraft, ensuring a robust defense market for the foreseeable future.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><h2 class="MsoNormal" style="text-align: justify;"><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><p class="MsoNormal" style="text-align: justify;">A critical question to pose to senior management by an investor would be:</p><p class="MsoNormal" style="text-align: justify;">How are you positioning your company to adapt to the rapid technological disruptions, regulatory challenges, and evolving geopolitical landscape?</p><p class="MsoNormal" style="text-align: justify;">This question is vital because the aerospace and defense industries are undergoing significant transformations due to advancements in autonomous systems, electric propulsion, artificial intelligence, and space exploration.</p><p class="MsoNormal" style="text-align: justify;">Understanding how a company plans to innovate and integrate these cutting-edge technologies into its product line can provide insight into its future competitiveness. Additionally, regulatory challenges, such as safety certifications for eVTOLs or export restrictions on defense technologies, can affect the speed of market entry and revenue generation. It&rsquo;s also essential to know how management navigates the complexities of international partnerships, especially in light of geopolitical tensions that could affect supply chains and cross-border sales.</p><p class="MsoNormal" style="text-align: justify;">Furthermore, the impact of sustainability initiatives and government policies pushing for lower carbon emissions is another critical area for consideration. Investors should assess whether a company has a clear strategy to remain compliant and competitive in a rapidly changing regulatory environment while capitalizing on new opportunities in the commercial and defense sectors.</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p><p class="MsoNormal" style="text-align: justify;">&nbsp;</p>