Remote spectral sensing in the infrared to detect and identify chemical species, and IR imaging of remote targets are mature technologies that have been developed and used successfully for decades. Combining the two technologies represents a new opportunity to collect spatial and spectral information simultaneously (hyperspectral imaging). This allows the user to record target and background information at the same time, to observe multiple targets in the field of view independently, and to obtain spectral data on distinct portions of an extended target. Several approaches to imaging spectroscopy are being developed currently. This paper discuses imaging spectroscopy using a Michelson Fourier transform spectrometer (FTS) coupled with a focal plane array (FPA) for airborne observations of targets such as the effluents from industrial smoke stacks. This approach offers high sensitivity, and fine spectral resolution for specific chemical detection and identification, and rapid data acquisition, all in the compact, light-weight package needed for airborne sensors. The objective of the work reported here is to evaluate performance trade-offs and define the sensor performance that we can achieve with today's technology in the areas of FTS, FPA, and signal electronics, and data collection and storage. We present the spectral and spatial resolution, sensitivity, and temporal resolution that can be achieved in the near-term future.