Bloomberg News

AgustaWestland Sees U.K. Civil Helicopter Production Taking Off

February 06, 2013

AgustaWestland, the world’s second- largest helicopter maker, will start civil rotorcraft production in Britain if the company prevails in a competition to supply search-and-rescue choppers in the country, its chairman said.

Bond Aviation Group and Bristow Helicopter Group Ltd, the finalists in a 10-year, 3.1 billion-pound ($4.9 billion) contract to provide operations for the Maritime and Coast Guard Agency, will decide which helicopters are used. Both are customers for AgustaWestland’s 8-ton AW189.

“If we win, there will be an immediate production order,” with assembly to start this year, AgustaWestland Chairman Graham Cole said.

Business with the British military once represented more than 75 percent of sales for the U.K. arm of AgustaWestland, Rome-based Finmeccanica SpA’s helicopter manufacturer. Declining defense spending has driven the need to broaden the company’s product offering into the civil space.

“Five or six years ago it became clear that we could not continue with the strategy that we had where we were largely dependent on the U.K. Ministry of Defence,” Cole told reporters in Yeovil, England. “We are aiming for a balanced portfolio.”

Production of about 10 helicopters for the rescue program is a strong possibility, Cole said. Other helicopter types in the running include the S-92, built by United Technologies Corp (UTX:US).’s Sikorsky.

’Big Issue’

Starting commercial helicopter production would be a “big breakthrough,” Unite union representative Joe Conway said in an interview. Not winning would be “a bitter blow for everybody” at AgustaWestland’s Yeovil facilities, which the union would make into “a big issue,” he said.

The Department for Transport, which is running the helicopter competition, suffered a public backlash two years ago when it awarded a train contract to Germany’s Siemens AG rather than Bombardier Inc., threatening jobs at the Derby, England site where the Canadian firm builds rail cars.

Bond Aviation and Bristow, helicopter service providers to the oil and gas sector, are competing for a U.K. government contract to run search-and-rescue services across the U.K. and within 250 nautical miles offshore.

Cole said failing to win in the program would not necessarily torpedo plans to build commercial choppers in Britain, although the plans may be reviewed. The company mainly produces its civilian helicopters in Vergiate, near Milan, Italy.

Streamlined Operations

The first AW189 would need to be ready for U.K. operations in 2016. AgustaWestland sees export potential for U.K.-built AW189s topping 2 billion pounds, he said.

AgustaWestland was forced to streamline operations at Yeovil to compete in the commercial market, managing director Ray Edwards said. “We are 30 percent to 40 percent more competitive than we were three years ago,” he said, with 44 major initiatives in process to make further improvements.

The U.K. is spending more than 100 million pounds through a regional investment program to help the U.K. business build up industrial capacities for the AW189, as well as the smaller AW169 and AW609 tiltrotor, designed to take off like a helicopter and then rotate engines to fly like an airplane.

“The industrial strategy is working,” Cole said. However, he added, it needs to represent a lasting commitment. “The industrial strategy cannot just be for a crisis, it has to be an ongoing government policy. As the economy picks up it would be wrong if that emphasis drops off.”

First Exports

Winning business abroad for its military products is also part of the effort to offset limited prospects of U.K. defense sales and compete with top helicopter maker Eurocopter, an arm of European Aeronautic, Defence & Space Co. AgustaWestland won the first export order for the AW159 Wildcat last month with South Korea saying it would buy eight aircraft. The deal could grow to 40 units, Cole said, as the company also chases business in markets such as Vietnam, Malaysia, and Thailand.

Production of AW159s will last until 2016 on the strength of the U.K. order for 62 units, of which 12 have been handed over, and the South Korean program. Extending production of EH101 helicopters at Yeovil beyond 2014 also will require additional orders. The U.K. site builds head-of-state versions for countries such as India, Saudi Arabia and Turkmenistan.

While Cole wants to expand commercial output and export activities, he said achieving an equal balance is not necessary. “We are aiming for a stable company that is growing,” he said.

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

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


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