If you’re new around here, welcome to the club! We’re back from our break, and we have a ton to catch you up on…and we just dropped a new pod. Fence in! |
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S&P Global Energy |
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Jet Fuel Crunch |
The stand-off in the Middle East is setting up the aviation industry for a potential systemic jet fuel shortage. |
The reason is threefold: |
1) Jet fuel is literally sandwiched between gasoline and diesel in the refining process. Governments across the globe are prioritizing gasoline and diesel production to stabilize domestic economies amid the conflict, and the latter competes for the same type of oil used to make jet fuel. |
2) There are all different types of oil. The Middle East exports medium sour crude, a premium-grade oil for making jet fuel. Due to the shortage, refineries (mostly in Asia) have switched to alternatives. Those alternatives make jet fuel, but at lower yields. |
3) Jet fuel is more of an ecosystem than a supply chain. Due to the volume and economics, most countries have limited capacity to store jet fuel. |
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Visual Approach |
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If the war lasts another month, expect significant impacts on global air travel. |
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In That Number |
267 + 200 |
The Air Force plans to more than double its acquisition of the Boeing F-15EX fighters, aiming for a total fleet of 267 jets to recapitalize aging platforms. |
On the heels of that, there is now a separate bill to buy an additional 200 F-15EXs to recapitalize the aging F-15E fleet. |
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Dcode the Pentagon Buying Machine |
What does it actually take to get new technology into the hands of warfighters—and why is it still so hard? |
In this episode, Mike sits down with the co-founders of Dcode, Meagan Metzger and Meg Vorland, to unpack the reality behind defense innovation, acquisition reform, and the flow of capital into the sector. |
Dcode operates at a unique intersection—working with startups, investors, and the Pentagon—giving them a rare, inside-out view of how the system really works. |
This is the inside baseball, and though it’s a bit nerdy, we keep it lively—hold our beer! |
Check it out! |
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TRIVIA |
On this day in 1966, while flying an F-4C Phantom II, Maj Paul Gilmore and 1st Lt. William Smith achieved a major aerial combat “first” during the Vietnam War. What was it? |
A) supersonic gun kill
B) outmaneuvered an SA-2 missile
C) shot down a MiG-21 |
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On the Radar |
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USAF |
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Air Force aircraft +108, -149. The Air Force wants to buy 108 new aircraft in 2027 (38 F-35, 24 F-15EX, 23 T-7, 15 KC-46), but also wants to divest 149 older aircraft (23 U-2, 20 KC-135, 20 F-15E, 16 C-130H, 14 T-6, 6 F-16). This would signal the end of the U-2. The F-15EX boost supports plans to double the fleet size (see above), and to that end, production is expected to increase to 36 jets/year in 2029. The number of unmanned wingmen (CCA) is not specified. |
The Merge’s Take: The Air Force’s targeted F-35 buy rate is 48/year, but instead, more money is being invested in the supply chain and to accelerate Block 4 by a year (to 2030). If you measure the Air Force by its manned aircraft, the trend of getting smaller continues. On the plus side, this is the smallest proposed divestment in years, and supposedly the last year of the massive 1,468 aircraft retirement plan (though not all of that manifested). Oh, and the KC-46 fleet plan went from 179 to 319 tankers, presumably because the next-gen tanker (NGAS) was canceled and the KC-135 ain’t getting any younger.
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USN |
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$70B Missile Surge. The Pentagon is requesting $70B in munitions funding for FY27, a 188% increase. Breakdown by service: $36B for the Army, $22B for the Navy, and $11B for the Air Force. Some of the standout items include a 1,458% increase in THAAD interceptors, 1,327% increase in Tomahawk cruise missiles, and 797% increase in Patriot missiles. |
The Merge’s Take: Over half of the $70B boost depends on the $350B reconciliation bill, so we’ll see whether it materializes. That said, the only way these magic numbers become reality is through multi-year contracts, which is good for the industry in that it locks in predictable production. If you look at the funding profile by service, you can see where some programs need to ramp and some that are surging now but will reduce in the out years. Finally, the increase in air-launched missiles is notable but pretty meager in comparison. Some would say that is because this budget helps replenish stocks from the Iran war, but that $200B supplemental is NOT included in this.
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Castelion |
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Air Missile Surge. Since the surface-launched missile request is so large, it overshadows some notable requests in the air-launched missile business: 290% increase in AIM-120, 229% increase in AIM-260 JATM, 115% increase in JASSM-ER. |
The Merge’s Take: There are two new-start stories to keep an eye on: First, the Navy is pausing AGM-88G AARGM-ER production due to development issues (likely why the Air Force is looking for a rapid acquisition of a SiAW-like missile, which is based on the AGM-88G). The second: the Navy is buying 4,500 MACE hypersonic missiles. These are start-up Castelion's Blackbeard missile and will arm F/A-18 Super Hornets. |
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USAF |
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A-10…again. The Pentagon has extended the A-10’s retirement to 2030. The updated plan, which extends the sunset by 1 year, is to keep 3 units (54 Hawgs) to 2029, then 2 squadrons (36 Hawgs) to 2030. |
The Merge’s Take: the headline got way more attention on social media than it deserved, and only slightly delays the inevitable. What everyone misses is that no official has been able to address over the past decade: which community will assume the mission? The Merge’s Spicy Take: Combat Search and Rescue (CSAR) is really f!cking hard, it requires high-caliber dedicated people with dedicated training to make the mish happen. If only that 2016 AX-2 concept was funded at anytime in the past 10 years, or in the new $1.5 trillion defense budget request……
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They Said It |
“It’s not that you’re buying one set baseline and you’re going to procure it forever. It’s an incremental capability. … You can buy items with research and development, but you just typically don’t buy a large lot of … one particular thing.” |
— Lt. Gen. Steven Whitney, Director for Force Structure, Resources and Assessment, April 21, 2026, describing the strategy behind the new $55 billion drone program. |
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ANSWER
C) They shot down a MiG-21 with an AIM-9 Sidewinder, marking the first downed MiG-21 of the war. This victory was a significant morale booster for U.S. pilots, as the MiG-21 was a formidable, fast, and highly maneuverable opponent in the skies over Southeast Asia. |
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