Combat operations have been a boon to helicopter manufacturers, especially at a time of anemic commercial orders. European companies in particular are counting on military demand to sustain them for at least another year.

The Polish government, for example, is preparing to acquire 26 medium, multirole helicopters, with the goal of fielding the equipment through 2017. The aim is to buy a single helicopter type that could fulfill different missions. The bulk of the fleet, 16 rotorcraft, would be used by the Polish army for troop transport. Another three would be for land-based search-and-rescue missions, with three more slated to be used for maritime SAR. A final four would be dedicated to maritime surveillance and anti-submarine warfare, the defense ministry says. First deliveries should take place as early as this year.

India also remains in the market for more military rotorcraft (see p. 28).

Moreover, the U.K. intends to order more helicopters. It plans to add four AgustaWestland AW159 Wildcats to its 62-rotorcraft commitment, according to Peter Luff, minister for defense equipment and support. The Anglo-Italian company is set to release the helicopter for service soon. The first AH-159 for the army is slated for delivery in April, and the first HMA-159 for the navy will follow a year later. The AH-159 is due to become operational in 2014.

Another source of activity could stem from some 2011 procurements that did not materialize owing to budget constraints, according to industry officials

“We will grow on the military side,” Eurocopter CEO Lutz Bertling declares. Recent years had seen NH90 transport and Tiger attack helicopters helping to offset weak commercial demand, and the strong market success of the EC725 troop-transport helicopter has reinforced that situation during the past two years.

But Bertling says his company needs to protect its position as the second-largest military helicopter maker, especially since Sikorsky's strong position with the Pentagon keeps the U.S. manufacturer clearly in the top slot.

One important new arena of competition is Russia's resurgent rotorcraft industry—underscored by strong global sales of the Mi-171. Russian Helicopters, which is also making inroads in commercial markets, projected a more than 20% year-on-year increase in deliveries for 2011, to roughly 260 units.

Eurocopter will try to reclaim some of the market from its Russian rival. The EADS unit hopes to sign the first contracts soon for a low-cost Super Puma version. While the price remains above what the Russians can offer for the Mi-171, Bertling says that if Eurocopter's lift rotorcraft is used more than 1,200 hr. a year, it should pay for itself within two years.

The focus on military rotorcraft—in addition to the oil and gas sector, which has been the one commercial segment that remained resilient during the economic downturn—enabled Eurocopter to boost revenues in 2011 to more than €5 billion ($6.4 billion), up from €4.8 billion the year before, even as deliveries fell for the third year in a row; they reached roughly 500 units after peaking in 2008 at 588. However, there are signs that the business is stabilizing, with cancellations last year at the typical level of around 20 units.

But the market balance, now dominated in value by military sales, will shift in the coming years; parity is likely in terms of the size (in value) of the military and commercial sectors around 2025. Bertling notes that, particularly in the medium-twin category, his company needs to strengthen its offerings in the face of pressure from AgustaWestland. The AW139 has had a strong market presence, he adds, and AgustaWestland is further strengthening its products in that sector with the first flight of the AW189 late last year.

Eurocopter, meanwhile, intends to fight back, initially with the EC175 being codeveloped with China's Avic. Based on flight-test results, the company says it can offer better-than-expected performance, with the helicopter delivering a 135-nm radius-of-action with 16 passengers and 190 nm with 12 passengers, representing a 30% improvement over the initial baseline. The company also is working on an 18-passenger configuration, which would have a 100-nm radius of action.

After discussion with potential customers, Bertling says, “we have incorporated certain adaptations that will further improve the helicopter's operational capability, placing it ahead of the competition from its entry into service.” The EC175 is slated for delivery this year. The first two helicopters are now in assembly at Eurocopter's facility near Marseille, France. Flight testing has focused on two prototypes, which have logged more than 270 hr., and industrial activity is continuing.

The next major thrust to reclaim momentum in the medium-twin segment centers on the Dauphin and EC155 replacement program, the X4, which should come to market in late 2016.

With an improved cash position, Eurocopter also is seeking small-scale opportunities, with some deals possible in the near future, says Bertling. However, a larger move is unlikely, he adds. Instead, the focus will be on exploiting deals already made, in particular the acquisition of service company Vector Aerospace, which closed last year.

With continued speculation that a larger restructuring of the helicopter industry looms, Bertling remains skeptical about the ability of Eurocopter and AgustaWestland to act as consolidators because of likely anti-trust concerns. Still, he would not rule out the company playing a role if the opportunity arises.