For Sikorsky, a $7B cap on a very good year

Sikorsky Aircraft Corp. received an early holiday gift from dear old Uncle Sam ”“ a $7.4 billion order for nearly 540 military helicopters, with a government option for more than 260 more that could add another $4.2 billion in value depending on budget adjustments in future years.

The deal caps an extraordinary year for Fairfield County”™s largest employer. Stratford-based Sikorsky backed into 2007 under Pentagon criticism over its slow recovery from a 2006 labor strike, yet successfully forced the U.S. Air Force to reopen bidding on a potential $15 billion contract for search-and-rescue helicopters originally awarded to rival Boeing Co.

Sikorsky has more than 8,300 employees in the area, and is a subsidiary of Hartford-based United Technologies Corp., Connecticut”™s largest company.

The contract, the seventh inked by Sikorsky and the Department of Defense, includes Black Hawk helicopters for the U.S. Army and Seahawk helicopters for the U.S. Navy, as well as medical evacuation helicopters.

Deliveries are scheduled to occur through 2012. In 2005, the U.S. Army had signaled it might buy as many as 1,200 utility helicopters through 2015.

The deal also is likely to benefit Fairfield-based General Electric Co., which has supplied engines for Black Hawk and Seahawk helicopters via its GE Aviation unit based in Evendale, Ohio.

The new helicopters will use computer-based “fly by wire” systems for flight controls, replacing heavier mechanical and hydraulic controls. Such systems reportedly could pave the way for remote-controlled helicopters.

The new deal provides a confidence boost for Sikorsky, which in addition to losing out to Boeing on the Air Force pact was stripped of its status as supplier of the White House”™s presidential helicopters. Lockheed Martin Corp., which won the latter deal, has come under fire for delays and cost overruns in the early design and prototype work.

Just one year ago it was Sikorsky that was drawing the ire of government auditors, which hinted production problems could jeopardize future contracts.

While Sikorsky”™s civilian and international sales soared, the company was also served a sobering, $120 million lawsuit over the 2005 crash of a Sikorsky-model passenger helicopter in the Baltic Sea, which killed 14 people. In court papers, Sikorsky has said it is not responsible for the accident.

In response to its division”™s woes, UTC dispatched its corporate president to oversee a reengineering effort at Sikorsky, which has created new aircraft manufacturing capabilities in New York, Pennsylvania and Poland, while outsourcing some other work to external contractors.

 

Even as it plans for the new federal program, Turkey reportedly has stalled plans to buy more than 50 utility helicopters, according to a report in Defense News that cited unidentified government officials saying Sikorsky had been the frontrunner for the $700 million contract.

Sikorsky has not indicated how the new Black Hawk and Seahawk contract might impact future work force levels. Even as it begins work on the new deal ”“ and as it mobilizes anew on the Air Force bidding ”“ it has filled the former Dictaphone headquarters with 500 design engineers and support staff in an attempt to win a Marine Corps contract for heavy-lift helicopters.