The U.S. Air Force is finally getting a new helicopter to replace its aging UH-1N Huey fleet. The venerable Huey will be replaced by the MH-139, a militarized version of the AW139, being built by a team of Boeing and Leonardo. The UH-1Ns primarily provide ballistic missile base security but also perform VIP transport and search-and-rescue operations. Continue reading
By Bill Ostrove, Space Systems and Military Markets Analyst, and Raymond Jaworowski, Senior Aerospace Analyst, Forecast International.
As the Farnborough International Air Show 2016 kicks off, an exciting week is expected. Boeing will celebrate its 100th anniversary, even as the aerospace giant battles its rival for dominance in the commercial airline market. As is typical at Farnborough, a number of much anticipated aircraft debuts will occur, including that of the F-35B, KC-390, and Boeing 737 MAX. Hanging over this year’s show will be questions about Brexit, which has left businesses to deal with increased uncertainty. Continue reading
In an about-face, Poland will scrap its planned $3 billion procurement of 50 helicopters from Airbus, according to a report published in local daily Rzeczpospolita on February 4.
The decision came quickly.
As it deals with a global defense downturn and the possible return of sequestration in the U.S., Lockheed Martin has decided to double down on this core market. With the acquisition of Sikorsky and the planned divestment of its services operations, the company has made it clear that it will focus on what it does best, defense contracting.
With a protracted downturn anticipated in defense, Sikorsky was put on the block in early 2015 as its parent company, United Technologies, looked to focus on higher-margin commercial markets. After several months of negotiations with various suitors, Lockheed Martin emerged as the victor with a $9 billion offer. Continue reading
On the eve of the opening of the 2015 Paris Air Show, Sweden’s defense procurement head Lena Erixon announced that the country would receive its first anti-submarine warfare (ASW) NH90 helicopter in the fall. Erixon made the announcement at the Swedish Air Force fan club event in Paris on June 14, while Swedish air chief Maj. Gen. Micael Byden noted that what had originally been pitched as a turnkey program in 2007 remains under development and has raised concerns within the service. Continue reading
On the opening day of the Paris Air Show, United Technologies Corp (UTC) revealed that it has decided to proceed with a sale or spinoff of its Stratford, Connecticut-based Sikorsky Aircraft subsidiary. Earlier this year, UTC had announced that it was reviewing strategic alternatives regarding Sikorsky’s future within the UTC corporate portfolio.
At the time, Forecast International wrote that Sikorsky had a bright future with or without UTC. We pointed to such factors as Sikorsky’s continuing leadership in the military rotorcraft market among Western manufacturers, underscored by robust U.S. Army procurement of Black Hawk helicopters as well as key wins in such contests as the U.S. Air Force combat rescue helicopter and U.S. Navy VXX presidential helicopter programs. Added to this are Sikorsky’s smaller but growing presence in the civil rotorcraft market and the bright outlook for the firm in the increasingly important helicopter aftermarket.
by Ray Jaworowski, Forecast International.
In a move that could set the stage for a corporate divestiture, United Technologies Corp (UTC) has appointed a new president to head its Sikorsky Aircraft subsidiary. Effective immediately, former UTC executive Robert Leduc has been named president of the global helicopter manufacturer, succeeding Mick Maurer.
by Raymond Jaworowski, Forecast International.
The long-term business potential of Sikorsky Aircraft is bright, despite the fact that parent firm United Technologies Corp (UTC) is reviewing the possibility of selling Sikorsky or spinning it off into an independent firm. As reasons for a possible divestiture, UTC management has cited uncertainties regarding the military helicopter market as well as Sikorsky’s lower profit margins compared to other UTC units.
By Richard Pettibone, Forecast International
The downturn in military helicopters has begun. A quick look at Sikorsky‘s declining revenues, down 15 percent to $6.35 billion in 2013 from a high of $7.36 billion in 2011, shows that years of increased spending have ended. Now, after some 10 years of strong military procurement, the current downturn is expected to last almost as long.
A number of factors account for this decline. High levels of debt are forcing government officials in the U.S. and many other nations to look for ways to reduce spending, and defense budgets are taking an often disproportionate share of reductions. As it faces this new market, Sikorsky has taken action to deal with the current economic conditions. In early 2014, the company announced that it would cut 600 jobs, roughly 4 percent of its global workforce.
Despite the dour outlook, the company has been able to claim victory in two major procurement programs: the CRH program and the VXX program. For the U.S. Air Force’s Combat Rescue Helicopter (CRH) program, Sikorsky and teammate Lockheed Martin were the sole bidders. In late 2012, the other principal contenders for the contract decided not to bid on the program. This situation repeated itself in mid-2013 with the U.S. Navy’s VXX program to replace the Marine One presidential helicopter. Sikorsky was again the last one standing after competitors opted out of the competition following a review of the Request for Proposals. The Department of Defense did not restructure the procurements, and in May, Sikorsky was awarded an initial $1.24 billion contract to produce the S-92 for the VXX Presidential Helicopter program. This was followed in June by an initial $1.28 billion contract to develop the new Combat Rescue Helicopter.
According to Forecast International’s Rotorcraft Forecast, a return to significant and consistent growth in the market will likely have to wait until the post-2023 or even post-2028 timeframe. One program that could help spur this growth in the very long term is the U.S. military’s Future Vertical Lift project. FVL rotorcraft are slated to replace various attack and utility helicopter types across U.S. military fleets. Service entry is planned for around 2030. Technology intended for use in FVL rotorcraft is currently being developed under the Pentagon’s Joint Multi-Role (JMR) program. The Sikorsky/Boeing team moved up in this competition when it was selected (along with Bell Helicopter with a rival offering) to move forward with development of a prototype; a contract was awarded in August 2014.
Another bright spot for Sikorsky is in the commercial sector. Production of Sikorsky’s S-92, which suffered during the recession, is rising due to strong demand from offshore energy support markets. In addition, production of the company’s S-76, which is well known as an executive and offshore oil transport helicopter, is forecast to increase thanks to economic improvements and the introduction of a new model, the S-76D.
Early in 2014, reports circulated that Sikorsky was being considered for divestment by parent UTC. Because Sikorsky is the smallest and most government dependent of UTC’s operations, the consideration of this option is to be expected in the current economic climate. However, a sale is ultimately unlikely, as tax and regulatory issues and market timing could be problematic. The consideration likely arose from the divergence of fortunes between Sikorsky’s downturn and the upswing in UTC’s building and aerospace component business. Overall, the discussion is simply part of UTC’s ongoing strategy in managing a multi-market conglomerate.