In a major contract win bearing possible implications for future international sales, Sikorsky Aircraft Corp. won a $3.5 billion contract to deliver nearly 110 military helicopters to Turkey ”“ in part by promising to outsource assembly of the aircraft to a Turkish joint venture.
It was one of multiple big deals announced for Stratford-based Sikorsky, two months in advance of June”™s Paris Air Show that typically sets the stage for the aviation industry”™s biggest contracts of the year. In mid-April, Swedish officials announced the country is finalizing the purchase of 15 Sikorsky Black Hawk helicopters, at a possible contract value approaching $775 million. The U.S. Department of Defense awarded Sikorsky subsidiary LifePort a contract worth up to $45 million for aerial stretchers used in medical evacuation missions, making for LifePort”™s largest-ever military contract.
And the U.S. Air Force announced it would solicit bids for more than 90 helicopters that could be used for a small set of assignments, including providing security at nuclear missile sites and conducting search-and-rescue operations. Any contract is expected to amount to billions of dollars.
Sikorsky previously lost out to Boeing Co. on a bid to supply rescue helicopters for the Air Force, but the Obama administration canceled the program. The Air Force hopes to begin fielding helicopters from the new bidding process by 2015.
The Turkish deal was Sikorsky”™s biggest international deal since early 2010, when it announced it was part of a consortium to deliver more than 100 search-and-rescue helicopters to the United Kingdom, only to see the deal held up amid questions of how the contract was awarded.
Both Sikorsky and rival bidder AgustaWestland had agreed to demands by the Turkish government that the helicopters be assembled there. Sikorsky is complying with the contract by expanding manufacturing at Alp Aviation, in which it holds a 50 percent stake with Alpata Group. That plant could in time produce as many as 600 helicopters for Turkey”™s use or for export to other countries, with a possible impact on Sikorsky”™s existing international helicopter plant in Poland ”“ or even its Stratford plant that is the largest employer in Fairfield County with more than 9,000 workers, but which focuses on domestic production.
The U.S. Army, meanwhile, reportedly pledged to launch a new class of high-speed rotorcraft, with Sikorsky considered a prime contender for any contracts. Last year Sikorsky flew a precursor to its proposed S-97 Raider prototype at 290 mph, versus a maximum speed for its Black Hawk helicopters of less than 200 mph.
Speaking at a gathering of the Army Aviation Association of America, the Army”™s aviation chief committed the service to future purchases of high-speed rotorcraft, according to the trade publication Flightglobal. Boeing, Bell and Eurocopter are also developing high-speed helicopters.
In the first quarter, Sikorsky shipped 58 large helicopters, five more than it did in the same period a year ago, and sales were up 16 percent to $1.6 billion, amid across-the-board growth for parent company United Technologies in Hartford.
While Sikorsky”™s commercial sales remain sluggish, rival Bell Helicopter is seeing a rebound in commercial demand for its models, which could presage a resumption in commercial sales for Sikorsky as well.
Sikorsky is readying initial deliveries of maritime helicopters to the Canadian government, with the troubled contract expected to impact Sikorsky”™s operating profit in the second quarter.
“The Canadian maritime (contract) will continue to be a drag at Sikorsky,” said Greg Hayes, CFO of UTC, in a conference call with investment analysts. “We expect to deliver three Canadian maritime helicopters. We”™re losing $10 million to $12 million apiece on those, so that will put Sikorsky”™s (second quarter) under a lot of pressure.”
