2012-09-10 06:21:16 - Italy Defence and Security Report Q1 2012 - a new market research report on companiesandmarkets.com
Defence spending is being severely impacted by the scale of Italys economic crisis and the resultant austerity measures. In August 2011, the Italian government announced plans for EUR20bn in cuts for 2012 and a further EUR25bn in 2013. In Defence terms, in 2011 the defence budget saw further reductions and was set at EUR25bn, with further cuts expected in the coming years. In addition to the monetary impact on the defence industry, the austerity package is also a threat to internal security. On September 7, three million people went on strike and serious civil unrest is a deep concern for the country. Despite the serious economic situation, the Italian armed forces continues to induct a number of new platforms into
its military. New aircraft, both fixed wing and helicopters, are furnishing the air force, while the navy is obtaining new frigates. The army is also benefiting from significant modernisation in the form of new armoured vehicles and air defence systems. While the countrys financial situation is posing a major challenge to these acquisitions, it is difficult to see how they could be postponed, or cancelled altogether, without Italys armed forces experiencing a major shortfall in capability.
The major foreign development in the quarter was the fall of Colonel Muammar Qadhafi with the National Transitional Council (NTC) taking over the country. NATO states, led by France and the United Kingdom, had been bombing Libya since March 19 2011, effectively serving as the air force of the Libyan rebels. The Italian government also committed to providing significant amounts of aid and funding to the Libyan rebel government, according to reports from Reuters. Rome decided to provide up to EUR400mn (US$586mn) in cash and fuel aid to the rebels, which is backed by frozen Libyan state assets in Europe. Meanwhile, with the fall of Qadhafi, Italian companies are flooding back to the country.
Petroleum firm Eni has signed a memorandum of understanding with Libyas NTC, according to Scandinavian Oil-Gas Magazine. The accord with Eni paves the way for the company to rapidly recover its operations in the country. At the start of the conflict Eni decided to end production at major Libyan oil fields. The field provides between 13% and 14% of Italian consumption.
In industry terms, in September 2011, Italian propulsion firm Avio announced that it will stage an IPO on the Milan Stock Exchange by the end of 2012. Unconfirmed reports suggest that Frances Safran is considering a bid for the firm. Avio generated revenues of EUR1.75bn in 2010 and is majority owned by private equity group Cinven, with Finmeccanica owning a 14% stake. Avio specialises in manufacturing aircraft engines as well as a range of space and defence programmes. Meanwhile, Finmeccanica is planning to cut as many as 1,200 jobs at its Alenia Aeronautica subsidiary business, with the parent looking to reduce operating costs significantly.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
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