Boeing Sees Two Major Helicopter Deals on the Horizon

by: Matthew Potter
November 9, 2011

Category: Bell, Boeing, Business Line, Canada, Companies, Contract Additions, Contract Awards, Countries, Department of Defense, England, Events, Federal Budget Process, Holland, India, logistics, Military Aviation, production program, Services, U.S. Air Force, U.S. Army, U.S. Marine Corps | RSS 2.0

Boeing (BA) along with its industry partner Bell Helicopter, part of United Technologies (UTX), produces two major helicopters for the U.S. military as well as export and the only tiltrotor in use today. These are the AH-64D Apache attack helicopter and the CH-47 Chinook heavy lift cargo helicopter as well as the unique V-22 Osprey used by the U.S. Navy, Marines and Air Force.

Boeing is looking forward to two major contracts involving the helicopters that will continue their production for the next several years.

First there is word that the AH-64 easily won a contest with the Indian Army to serve in limited numbers in attack and reconnaissance missions. The U.S. Army had earlier this year informed Congress of their intent to sell over twenty of the aircraft along with engines, Hellfire and Stinger missiles and other support. The estimated value of that contract was about $1.4 billion.

India, it turns out, conducted a “Fly Off” between the Apache and a similar Russian Mil-28 Havoc helicopter. Based on reports the AH-64 bested the Russian in most major areas including performance, armor, electronics and overall capabilities.

The AH-64 has seen a great deal of use in Iraq and Afghanistan providing fire support to ground troops using its Hellfire missiles and 30mm chain gun. The U.S. Army, Great Britain, and the Netherlands have all had successful deployments of the aircraft to Afghanistan. It has also been sold to countries like Israel, Egypt and Singapore.

Boeing has also submitted its proposal to the U.S. Army for the next multi-year production contract for the CH-47. The CH-47 like many major U.S. aircraft is able to negotiate five year contracts for deliveries rather then just one year as most programs as it is felt this saves money by allowing smoother production lines and the ability to order more parts and components at a time. The CH-47F is the current model in production under a 5 year contract signed in 2008.

The new contract is for a further 155 helicopters and could be worth several billion. The U.S. Army has invested heavily in CH-47 as their heavy lift capabilities are at a premium in Afghanistan’s high and hot conditions. Canada and the U.K. have also invested in the Chinook. Because this is a sole source contract the Army will be negotiation with Boeing on pretty much on price and schedule and not with multiple companies to provide the aircraft.

The U.S. has spent a great deal of money the last decade on Army aviation. With the coming decline in defense spending and the ending of the fighting in Iraq and Afghanistan that level of funding will not continue. Cuts to annual buy quantities will most most likely occur reducing Boeing’s sales to the U.S. military. This will be true for the AH-64 and V-22 as well. Foreign sales like the Indian Apache deal will make up some of the cuts to help Boeing keep its revenue and earnings up.

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