Bloomberg News

United Technologies, AgustaWestland Await U.K. Helicopter Deal

July 20, 2012

United Technologies Corp. (UTX:US) and Finmeccanica SpA (FNC) may learn as early as next week whether they are on a shortlist to be part of a contract to deliver search- and-rescue operations across the U.K.

The U.K. is set to name the operators that are in the final round for a 10-year service contract with a value of as much as 3.1 billion pounds ($5 billion), according to information provided by the Department for Transport, which is running the competition for the Maritime and Coastguard Agency. Eurocopter, the subsidiary of Toulouse-based European Aeronautic, Defence and Space Co. (EAD), joins United Technologies’s Sikorsky and Finmeccanica’s AgustaWestland in vying for orders.

At a time of shrinking government spending in the U.K., the search-and-rescue program represents one of the few large government contracts helicopter makers can compete for. The deal could lead to an order of 20 to 25 rotorcraft.

“Competitive dialog with bidders will take place over the summer,” the ministry said in a written response to questions. As many as three operating companies will be selected for those talks with a contract signature planned in March, the government’s program schedule says.

The search-and-rescue program is the U.K. government’s second attempt to provide the emergency service.

Contract Canceled

In 2010, it named a winning team in the 6 billion-pound SAR-H program, which included CHC Helicopters as the operator using Sikorsky’s S-92 helicopter. On the eve of contract signature in February 2011, the program was canceled over contracting irregularities.

More than a half-dozen helicopter operators participated in a government-run presentation on the competition when it began late last year. Proposals put forward by service providers, as well as talks with the government in the coming months, will determine how many and what type of helicopters will be bought.

“The helicopter we have been discussing is the AW189,” Graham Cole, chairman of AgustaWestland’s U.K. business, said in a phone interview. “We are predicting sales well in excess of 200 search-and-rescue helicopters in the U.K. and for export.”

The AW189, which first flew in December, is an 8 metric-ton twin engine helicopter AgustaWestland is building in Italy. The search-and-rescue model will be developed and produced in Yeovil for the U.K. and for export, Cole said. Yeovil, in the south of England, is the helicopter maker’s main production facility in the U.K.

Eurocopter has been promoting to operators the EC225 and EC175, a company spokesman said in written answers to questions. The EC225 is a civil version of the military EC725 troop transport used in Afghanistan.

Industrial Benefits

Like AgustaWestland, Eurocopter is promising industrial benefits to the U.K. with its offering. The company would establish a search-and-rescue “center of excellence” to support the local program and exports. It also promises a dedicated maintenance center for the 7-metric-ton EC175 rotorcraft, the company says.

Sikorsky has been promoting the S-92 with operators, company spokesman Paul Jackson said in an e-mail. He would discuss details of the proposal.

The government is under schedule pressure to see the program through because the U.K. Ministry of Defence plans to remove from service AgustaWestland Sea King helicopters currently used in search-and-rescue roles. The Sea Kings are scheduled to be phased out in 2016.

The winning bidder is expected to start the service provision in April 2015, with all elements to be in place before July 2017.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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