Sikorsky Aircraft Corp. has been sued by members of the Schweizer family, who sold their light aircraft company to Sikorsky in 2004, only to claim years later that Sikorsky management shortchanged them on the deal ”“ in part due to differing views over legal liability stemming from a pair of Schweizer helicopter crashes.
Plaintiffs in the lawsuit include Stuart, Leslie and Paul H. Schweizer, who all served as president of Schweizer Aircraft, and who claimed they were promptly displaced as head of Schweizer operations after the deal closed. The Schweizers claim that violated the terms of the acquisition agreement, saying they had been pegged to continue running the unit on a semi-autonomous basis, and would not become a “mini-Sikorsky,” in their words, remotely controlled from Sikorsky headquarters in Stratford.
Kawada Industries Inc. also is listed as a plaintiff in the lawsuit, with the Japan-based company having acquired a 25 percent stake in Schweizer in 1992. Together, the Schweizers and Kawada are seeking at least $2.8 million.
At deadline, Sikorsky had yet to file a formal answer in federal court, and spokesman Paul Jackson said the company has a policy of not publicly discussing litigation.
“I will say only that we strongly believe we complied with our contractual obligations and will defend our interests accordingly,” Jackson said.
Schweitzer roots are in gliders, light helicopters
If not occupying the pantheon of aviation royalty reserved for pioneers like Igor Sikorsky, Depression-era brothers Bill, Ernest and Paul Schweizer nevertheless won wide respect for gliders they built, creating a lasting company which would go on to acquire production rights to light helicopters originally designed by Hughes Aircraft. Those light helicopters have been among the best-selling in the world, used for training flights, police work, aerial surveying and other uses.
At the time of the deal, Schweizer had 430 employees in Elmira; this past summer Sikorsky decided to demolish the old Schweizer plant and move its light helicopter manufacturing to Coatesville, Pa., where its Keystone Helicopter subsidiary is based. Sikorsky continues to maintain a large work force in the Elmira area, focused on finishing work for Black Hawk helicopters and other models.
Sikorsky parent United Technologies Corp. never disclosed what it paid for Schweizer in 2004 ”“ according to the lawsuit, UTC paid $12 million in cash up front for the company, and agreed to pay between $10 million and $14 million more in deferred and contingent payments.
Payments, crash reports in dispute
Those subsequent payments are at the center of the legal dogfight. At the time of the acquisition, the Schweizers claim their company provided Sikorsky with reports on a pair of helicopter crashes, one in 2002 in New Jersey and another the following year in California. According to Schweizer, those reports stated that no evidence existed showing the crashes were the result of product defects in the helicopters.
The plaintiffs say that Sikorsky settled lawsuits stemming from those crashes for a combined $8.5 million, and accuse the company artificially inflating Schweizer earnings by $15 million through an accounting maneuver in which Sikorsky allegedly subtracted the difference of the settlement amount from reserves created to account for any legal payments ”“ reserves Schweizer claims were never necessary due to the reports absolving their company of product liability.
Separately, the Schweizers also claim that their company”™s best engineers were reassigned from their work on a Pentagon drone project, and tasked to Sikorsky”™s X2 helicopter prototype, which recently set an unofficial speed record at nearly 290 miles an hour.
With Schweizer”™s remaining engineers having to pick up the slack, the family says they were unable to complete other projects in the time period stipulated in the merger agreement, and said they would not have agreed to deferred payments pegged to those schedules.
