As top-tier defense contractors begin to move away from an era of big-ticket weapons procurements, they are scrutinizing their portfolios in an effort to weed out lower-performing businesses. And one problem area keeps coming to the forefront: low-margin government services businesses.

Airbus jet’s -900 advances even as -800 enters deep stall

Boeing's long-term strategic plan to set up a second assembly site for the 787 took another step toward completion with the initial flight of the first aircraft to be built at Charleston, S.C., on May 23. The aircraft—the 46th 787—becomes the first Boeing jet airliner to be completed away from the company's facilities in Puget Sound, Washington, and the heritage McDonnell Douglas manufacturing sites in Southern California.

When the U.S. Air Force showed only a tepid interest in unmanned aircraft, a small San Diego company, General Atomics, decided to build them on its own dime. So when the Sept. 11, 2001, terrorist attacks hit and U.S. forces were suddenly sent to combat guerilla-like forces in the mountains of Afghanistan, the company's Hellfire-equipped Predators were not just a concept—they were in production.

European airlines are suffering. Almost every one of the continent's legacy carriers has its own restructuring program in place to reduce losses, minimize the pain and somehow climb out of the abyss they are in. That's the case for the very big players such as Air France-KLM, Lufthansa or the International Airlines Group's Iberia unit, and even more so for smaller carriers. Hardly any European airline is going to make a profit this year, and if they do, then it's more because of non-flying activities such as Lufthansa Technik.

There is no magic formula for a profitable airline business model, says Lim Kim Hai, head of Australia's Regional Express (Rex). Rather, success comes from focusing on a raft of minor details, and constantly searching for new ways to do them better.

The personal animosity generated by US Airways' very public advances toward AMR Corp.'s American Airlines division and the union furor that preceded that action have obscured something very important that is about to occur in the U.S. airline industry: Regardless of who is involved, more consolidation is coming, and it will likely bring an end to US Airways.

Ask Laurie Price, director of aviation strategy at the Mott McDonald consultancy, what an ideal European regional airline looks like and he will say: It should be well-established in niche markets with a significant share of public service obligation (PSO) routes. And it should have a strong relationship with one of the region's major airlines as a complement for the base network.