Suppliers of Army helicopters are building closer ties to develop export opportunities
Export customers are playing a key role in shoring up production for the wave of U.S. Army helicopters entering service.
The U.S. Army is openly widening its pursuit of Foreign Military Sales (FMS) programs, closely engaging with the manufacturers in pushing's AH-64E Apache and the Chinook, as well as 's Black Hawk, in a bid to help secure the Army's multiyear buys and the economies of scale needed to deliver lower per-unit prices.
“Both the Apache and Chinook programs have the greatest percentage of international market space of any of our programs in the defense sector,” says Leanne Caret, vice president and general manager of vertical lift at Boeing. “Selling globally involves a lot of time. If you are dealing with 20 different countries, each with different fleet sizes—maybe of eight or ten aircraft—that's not enough to keep a production line open on its own, so it is really that combination of the U.S. [sales] base with the international sales that makes it affordable.”
Caret notes the company has enjoyed a close relationship with the Army as it pursues international sales with an ever-wider group of countries. Currently, 18 nations operate the CH-47 Chinook, but new opportunities include sales to four additional countries as well as supplying additional aircraft to 11 more, resulting in direct commercial (DCS) and foreign military sales of some 150 helicopters to international customers. On the Apache, Boeing has currently sold aircraft to 12 nations, but this will soon increase with sales to India and South Korea, which have both selected the aircraft. The government of Indonesia is also considering an order for eight Apaches.
“On that weapons system, countries have the same desire for the same capabilities, and a partnership with the U.S. Army helps to construct that,” Caret explains. Boeing also points to the Chinook, for which it says it has “proactively” thought about the potential for international sales and planned those into the option quantities within the multiyear contracts. The one signed in June includes 155 aircraft and 60 options.
“With those options, we are able to work collectively and collaboratively with the Army and identify where this would fall on a country-by-country perspective,” says Caret.
“The multiyear contracts bring stability for the next five years, and what we want to do is make certain that we are working with the U.S. Army and generating that interest, which will bring that further stability.
“Where the benefit comes in is from the supply chain and from our own production rate,” Caret notes. “The greater the stability in the supply chain, whether it is at our level as the OEM or within the supply base, then they [customers] are going to continue to see the benefits.
“Regardless of whether it is a DCS or FMS sale, we will always partner with the Army, because we don't want to catch them off-guard, and many times the customers don't always realize what is involved in setting up a new operation.”
Production of CH-47Fs for the Army is scheduled to end in 2019, but deliveries of the upgraded Block 2 aircraft are planned to begin in 2020, and it is expected that the Army will upgrade all of its Chinooks to Block 2. At the same time, international sales are expected to increase, and while Boeing is projecting deliveries to dip to 40 aircraft in 2020 from today's level of around 55 a year, it is forecasting that annual production could climb to above 70 by 2023.
Chinook sales have been generally a mix of DCS and FMS. DCS contracts allow the customers to modify the aircraft for their specific needs. For example, Canada's 15 new CH-147Fs will be among the most advanced Chinooks, featuring a new cockpit avionics suite and a new electrical system centered on two new 60 KvA generators. The U.K.'s Chinook Mk6s have been fitted with acockpit to align them with the rest of the U.K. Chinook fleet. Opportunities also exist in Libya, possibly through Boeing's marketing agreement with to support sales of the Chinook in other regions. Potential sales may also come from Turkey, Saudi Arabia and Qatar, as well as with follow-up orders from Morocco, Egypt and the UAE.
Sales of the Apache have also grown significantly, particularly since the launch of the Block 3 program, now AH-64E, with Middle Eastern customers ordering upgrades and enlarging existing fleets. Saudi Arabia is set to become the second-largest operator of the type, with orders from the land forces, national guard and royal guard. The United Arab Emirates is also requesting 30 upgrades for its existing Longbow Apache fleet, and another 30 new-build aircraft.
Further opportunities may emerge from Qatar, which has requested 24 aircraft. South Korea's heavy attack helicopter program has ordered 36 AH-64Es, while Boeing is the preferred bidder in India's attack helicopter program, for 22 aircraft. Eight have also been requested by the government of Indonesia as it works to strengthen its armed forces. Boeing has also delivered Block 3 Apaches to the Taiwanese Army—the customer once known as “Sky Eagle.”
Most of these purchases will be completed through the FMS system, because those nations want the close association with the U.S. Army. Boeing does offer the option of delivering Apaches through direct commercial sales; but the purchase of mission equipment and weapons has to go through the FMS system, often resulting in the entire package—including aircraft—being delivered through the FMS process.
Sikorsky is also pushing its UH-60M Black Hawk, achieving FMS and DCS sales for the model in Bahrain, Mexico, Sweden, the UAE and Saudi Arabia, as part of the wider sale of helicopters to the Saudi land forces and national guard. The Defense Security Cooperation Agency (DSCA) also has FMS prospects for Qatar, Taiwan and Thailand.