4
Second Quarter 2016
The Internet of Things (IoT) creates compelling opportunities to improve
efficiencies across a wide range of industries, specifically in the
commercial aviation sector. The IoT connects physical devices to a
network that uses sensors and software to collect and analyze data in
real-time. This enormous amount of data can be mined to determine
patterns and cycles that improve the power of prediction and boost
efficiencies. Specifically, engine manufacturers, OEMs, and operators
can improve operating efficiencies, thus expand margins, by
implementing connected technologies throughout their operations and
product lines.
At the 2015 Paris Air Show, many vendors displayed cutting-edge
technologies, such as aircraft engines that have 5000 sensors, compared
to 250 sensors in a non-connected engine. These IoT engines have the
ability to generate 10 TB of data per flight. With data loads of this size,
engineers can produce artificial intelligence models that predict engine
demands and optimize flight paths to optimize fuel consumption. IoT
engines, such as Pratt & Whitney’s GTF, also have the potential to
reduce fuel consumption by 10-15%, produce less engine noise, and
lower emission levels.
Similar to the industrial and consumer IoT space, we predict
consolidation in the IoT aerospace industry as larger firms weigh the
benefits of acquiring new technologies over developing these
technologies organically.
Industry Trends
(Aerospace Component Manufacturers M&A update)
Source: S&P Capital IQ, Public filings
Buyer
Target
Notable Acquisitions and Consolidations