February 26, 2018 / 10:22 AM / 10 months ago

UPDATE 1-Thales wins A$1.2 billion air traffic deal in Australia

(Adds background, details)

PARIS, Feb 26 (Reuters) - France’s Thales said on Monday it had won a definitive A$1.2 billion ($946 million) contract to unify Australia’s civil and military airspace under a single air traffic control system.

The long-awaited deal for systems to guide both jetliners and warplanes across 11 percent of the world’s airspace is the largest of its type for Thales, which competes with Raytheon and others to support fast-growing air traffic.

The OneSKY contract with Airservices Australia and the Department of Defence will result in reduced flight times and delays, Thales Chief Executive Patrice Caine told reporters.

“For the first time in the world, we will be delivering a service that integrates control of civil and military airspace,” he said.

The contract will not affect Thales’s revenue or profit guidance, he added.

Shares in Paris-based Thales rose 0.5 percent.

Airlines will have more flexibility to fly quicker and more efficient routes, saving fuel and reducing carbon emissions, Airservices Australia said in a statement.

Supported by artificial intelligence to help predict traffic flows, the new system will replace two separate platforms previously supplied by Thales on the civil side and by U.S. aerospace group Raytheon for Australia’s military.

The process for replacing them began with a white paper in 2009, followed by a tender in 2013, and has attracted criticism over delays and costs.

Thales was selected for exclusive negotiations in 2015, but the contract took another three years to finalise.

Last year, the Australian National Audit Office questioned whether the delayed contract provided value for money and was affordable overall.

Caine declined to comment on whether this would affect profit margins on the deal, citing commercial confidentiality.

The Australian contract comes amid lengthy debate over the best way to modernise air traffic control systems in Europe and the United States, as global air travel grows by more than 6 percent annually.

The Single European Sky initiative was launched in 2004 to reform European air traffic management systems by merging national air corridors to cut costs and emissions. But the proposals have met resistance from controllers and some nations.

In the United States, President Donald Trump outlined a plan last June to privatize air traffic control to lower flying costs, but the proposal has drawn criticism from Democrats who say it would hand control to special interests and big airlines. ($1 = 1.2681 Australian dollars) (Reporting by Tim Hepher, Matthieu Protard; Editing by Sudip Kar-Gupta and Louise Heavens)

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