AIRSHOW-EADS spending millions to develop new helicopter

By Andrea Shalal-Esa

FARNBOROUGH, England, July 18 (BestGrowthStock) – Europe’s EADS
(EAD.PA: ) said it is spending around $50 million to $75 million
to develop a new armed version of its light utility helicopter
for a possible U.S. Army competition and emerging strong
interest by a “significant” number of foreign buyers.

EADS has built three technical demonstrator aircraft to
prove different aspects of the expected specifications for the
U.S. Army’s Armed Aerial Scout programme, Lutz Bertling,
president of EADS’ Eurocopter unit, told reporters ahead of the
Farnborough international air show.

Bertling told Reuters that the company was spending its own
money to develop the armed variant of its light utility
helicopter because it saw strong emerging demand from the
United States and other customers in the Middle East.

The new programme could involve orders for up to 500 new
helicopters and be worth $6 billion to $8 billion in the longer
term, according to defence analysts.

Winning the order would give a big boost to EADS’ strategy
to establish itself as a prime contractor in the U.S. market,
which accounts for about half of world defence spending.

The U.S. Army is expected to finish an analysis of
alternatives and make a plan for the new programme in the
second quarter of 2011, with funding to begin flowing in 2012.
But it could also delay the programme and modernise its
existing fleet of ageing OH-58 Kiowa helicopters to save money
now.

Bertling said EADS had a strong partner in Lockheed Martin
Corp (LMT.N: ), which will provide the weapons, or mission
package, for the new helicopter, if the programme proceeds.

The EADS-Lockheed team could face competition from rival
Boeing Co (BA.N: ), Sikorsky Aircraft, a unit of United
Technologies Corp (UTX.N: ), Bell Helicopter, a unit of Textron
Inc (TXT.N: ), and AgustaWestland, a unit of Italy’s Finmeccanica
(SIFI.MI: ).

In 2008, the Army cancelled a previous $6.2 billion
programme run by Bell Helicopter, to replace the existing,
ageing fleet of OH-58 Kiowa armed helicopters after its cost
threatened to increase sharply.

Bertling said EADS was well-placed to bid for the successor
programme, due to its work on the light utility helicopter it
is building for the U.S. Army, one of few Pentagon procurement
programmes that is meeting cost and schedule targets.

He said EADS had delivered over 120 of the new helicopters
to the Army, all on or ahead of schedule, and past performance
generally played an important role in Pentagon competitions.

The Army could still decide to modernise the current Kiowa
helicopters, which are used to protect military convoys, and
keep them flying a while longer, given mounting budget
pressures in the United States, Bertling said.

But he said a significant number of foreign countries,
especially in the Middle East, had expressed interest in an
armed version of the light helicopter, but gave no details.

EADS is also responding to the Army’s interest in possibly
using a combination of manned and unmanned helicopters to
replace the existing fleet, or development of an “optionally
manned” helicopter that could be used with or without a pilot.

He said the U.S. military had seen that using even one
smaller helicopter like the Kiowa to escort a military convoy
made a huge difference in deterring attacks and responding if
they occurred.
(Reporting by Andrea Shalal-Esa)

AIRSHOW-EADS spending millions to develop new helicopter