Resurgent commercial sales help helicopter manufacturers offset military slowdown
's decision to set its civil business up as a separate operation is paying off, as the company ramps up to meet demand for its commercial helicopters while sales of its military products come under pressure.
After more than a decade of growth on deliveries of its Black Hawk and Seahawk military helicopters, Sikorsky projects a 5% drop in sales this year as budget pressures squeeze domestic and international production volumes.
Led by the energy sector, the global commercial helicopter market is recovering more quickly than expected from the economic slump and is boosting order books at Sikorsky and, and at European rivals and , just as they face a downturn in their military business.
While Sikorsky's military revenues are forecast to fall by about 15% this year, sales at commercial division Sikorsky Global Helicopters (SGH) are expected to rise 30% on strong demand for the 19-passenger S-92 in the offshore oil and gas and search-and-rescue (SAR) markets.
Civil sales will also be boosted by first deliveries of the S-76D, the latest version of Sikorsky's popular 12-passenger helicopter. With delayedcertification of the S-76D expected this week, Sikorsky plans to deliver 10-14 green aircraft this year, says Ed Beyer, vice president and general manager of SGH. The first completed S-76D is scheduled for delivery to a Middle Eastern VIP customer in the first quarter.
At Bell Helicopter, the commercial recovery is helping the company balance a business that, like Sikorsky's, has grown on sales of its military rotorcraft to the U.S. government. But Bell has to reinvigorate its civil product line before it can fully tap into the demand.
The surge in civil activity is evident at Sikorsky's commercial helicopter facility here, where final assembly and completion of the S-92 and S-76D are performed. The plant's workforce, now at 1,200, is growing by 40% this year and by the same again in 2013, says Dorith Hakim, the facility's general manager.
The biggest growth is in the S-92A, once a slow seller, with production of 32 green aircraft expected this year, a 60% spike in production over 2011, to three a month, says Beyer. But the S-76D is also to climb to three a month next year and Sikorsky has moved production of the S-300C light training helicopter to Coatesville, with an “aggressive” build-up planned for 2013, says Hakim.
On the completions side, where it can take thousands of hours to customize a helicopter for delivery to a VIP, SAR or offshore customer, the growth in commercial activity is even more evident. The facility plans to complete 57 S-92s in 2013, up from 23 this year, and there are already 16 S-76Ds on the production line, ready to move into completion once certification is received.
SGH had to lease extra hangar space at the Coatesville airport to accommodate the S-76D line, and Hakim says she is running “what-if” drills in anticipation of having to find more space to house increases in output for both helicopters. One option is to take over the hangar where CH-148 Cyclone maritime-helicopter versions of the S-92 are being assembled for Canada. But Sikorsky is still negotiating to restructure the much-delayed CH-148 program; plans to complete delivery of the 28 helicopters in 2013 are shrouded in uncertainty.
Bell, meanwhile, is seeing a “substantial year-on-year increase” in commercial sales, says CEO John Garrison. “We are seeing it across all platforms,” he says, including the updated 407GX light turbine single, 429 light twin and 412 medium twin in the oil and gas and parapublic markets. Demand for the 429 has been highest in countries that have approved a 500-lb. increase in gross weight, but so far the FAA and(EASA) have refused to grant the certification exemption.
“and 11 others have approved the exemption; the FAA and EASA have not,” says Garrison, “We are working with the FAA on the process for resubmitting or appealing, and Transport Canada and Bell are engaged with EASA on certification. We are continuing to work it. In markets where they have the weight increase, the capability of the aircraft is being used successfully.”
While Bell is working to find international customers for its, and military rotorcraft to offset expected reductions in U.S. sales, the company is banking on civil sales to balance its business. Development of the Model 525 “super medium” twin is on track for a first flight in mid- to-late 2014, says Garrison. Sitting between the S-76D and S-92, the 525 will enable Bell to compete with Sikorsky, and European commercial market leaders AgustaWestland and Eurocopter.
At Sikorsky, commercial sales will help offset the “volume challenge” in 2012 and 2013, as military deliveries dip. Although the company signed its eighth U.S. multi-year contract in July for 653 Black Hawks and Seahawks worth $8.5 billion over five years, the new deal tightens profit margins and slows production rates. Significant foreign military sales are included, but deliveries do not begin until 2014.
Although U.S. government sales are forecast to decline over the next five years, international military sales are expected to recover after a slump in 2013. When combined with commercial sales, Sikorsky is projecting double-digit growth in 2014-16.
Offshore energy and search-and-rescue are the hottest markets on the civil side. The company is bidding on three SAR tenders that could bring in orders for 20-30 S-92s, says Mick Maurer, Sikorsky's president. The S-76D has secured a SAR launch order for up to 10 helicopters, and China's transport ministry is ordering up to eight. Overall, the Chinese market could be worth $1.6 billion over four years, he says.
Offshore demand has boosted the S-92 backlog to $1.5 billion and accounts for 75% of S-76D orders over the last two months, says Maurer. The first two of 16 S-92s for new offshore customer Bond Aviation Group were delivered at the plant here on Oct. 4. After completion, they will enter service on the North Sea in January with Bond's new subsidiary Norsk Helikopterservice in Stavanger, Norway.
The two S-92s are being delivered four months earlier than had been planned when the 16-aircraft order was placed in December 2011 to help Bond enter as the third player in the Norwegian North Sea market, says Richard Mintern, CEO for the U.K., Northern Europe and Australia. Norsk operates one helicopter in the U.K. but is bidding on several platform crew-change contracts on the Norwegian continental shelf. While the initial focus is on offshore, Norsk plans to have a SAR capability in place by early 2014.
Mintern also expects to field the S-92 with new subsidiary Bond Helicopters Australia, looking to break into that country's offshore market. “We anticipate the S-92 appearing in Australia. We have an air operator's certificate with a Bell 412 and have two Australian-equipped [Eurocopter] EC225s waiting for a home,” he says. “Our feedback is they want a robust third entrant, and we have the financial capability and operating experience.”