ARMY AVIATION58 AVIATION WEEK & SPACE TECHNOLOGY/MARCH 30-APRIL 12, 2015 AviationWeek.com/awst
S
ikorsky is a major player in a modest market dominated by
a single customer, which is why parent company United
Technologies (UTC) is looking at “strategic alternatives” for the
helicopter manufacturer, including a spin-of.
The problem is Sikorsky’s major customer, the U.S. Defense
Department, which drives the company’s revenues but caps its
profi ts. It may be the largest military helicopter manufacturer and
a profi table one, but pressure on defense budgets and its role as a
platform provider mean future growth and margin projections do
not meet the targets UTC has set for its businesses.
UTC CEO and former CFO Greg Hayes puts Sikorsky’s pro-
jected 2013-23 annual growth rate at 3-5% compared with
6-8% for Pratt & Whitney, and its 2014 margin was 10% com-
pared with 15% for the engine maker and higher for equipment
supplier United Technologies Aerospace Systems (UTAS). “That’s
not as attractive as the other businesses,” he says. Then there is
the matter of scale—Sikorsky has $7-8 billion in annual revenues
compared with $29 billion for P&W and UTAS combined.
Sikorsky has more future business lined up than any military
helicopter manufacturer—its backlog of $49 billion includes
65% of all Pentagon programs of record. The CH-53K heavy-lift
helicopter is the single largest Defense Department rotorcraft
program at almost $25 billion. In 2014 Sikorsky won both the
$8 billion U.S. Air Force Combat Rescue Helicopter (CRH) and
$3.2 billion U.S. Navy VXX presidential helicopter programs. But
these will not begin adding to Sikorsky’s bottom line before the
early 2020s.
To bridge the gap and make up for reductions in U.S. procure-
ment, Sikorsky is targeting international sales. In 2014, Turkey
fi nally signed a contract to co-produce 109 T-70 Black Hawks,
plus 109 S-70Ts for sale to other customers. Sikorsky also fi nal-
ized a contract with Canada that will see losses on the CH-148
Cyclone maritime helicopter program end this year. The Indian
navy has selected the MH-60R Seahawk for a $1-2 billion pro-
gram Sikorsky’s president Mick Maurer describes as a “strategic
win” in a potentially massive Indian market.SPINNING SIKORSKY
Graham Warwick Washington
Rotary Reset
Fleet retirements, procurement reductions
key to keeping modernization of U.S. Army
aviation on track
T
iming is everything. Barely fi ve
years ago, U.S. Army helicopters
were heavily engaged in combat,
and the aviation branch was planning
procurement of a new armed aerial
scout to operate alongside fully mod-
ernized fleets of attack, utility and
cargo rotorcraft.
Today the dedicated scout heli-
copter is fast on its way to becoming
a memory. Plans to restructure and
reduce the aviation force to cope with
steep reductions in the Army’s budget
and force structure are mired in con-
troversy. And the careful compromise
reached to protect modernization is
now threatened from further reduc-
tions in funding.
But the Army is proceeding apace
with its Aviation Restructure Initiative
(ARI), convinced it is the only way it
can afford to complete the modern-
ization of its current helicopter fl eets
while protecting the funds needed to
develop future replacements for its at-
tack, utility, cargo and scout machines.
ARI includes cutting 800 helicopters
from the active and reserve forces, re-
moving entire fl eets.
The Army is retiring Bell OH-58D
Kiowa Warrior armed scouts and
fi elding Airbus Helicopters UH-72 La-
kotas to replace its Bell TH-67 Creek
training machines. The service is re-
training OH-58D pilots to fl y Boeing
AH-64 Apache attack helicopters and
proceeding with plans to transfer AH-
64Ds from the National Guard to the
active Army for remanufacture to AH-
64Es, and teaming them with Textron
Systems RQ-7B Shadow and General
Atomics MQ-1C Gray Eagle unmanned
aircraft to perform the scout mission.
The upgrade of Sikorsky UH-60L
Black Hawks to digital-cockpit
UH-60Vs is under development and
the Army plans to launch the Im-
proved Turbine Engine Program
(ITEP) this year to re-engine the UH-
60M. The Joint Multi-Role (JMR) tech-
nology demonstration is underway to
test-fl y high-speed rotorcraft that will
be candidates for the Future Vertical
Lift (FVL) Medium program to replacefi rst the UH-60 and then the AH-64,
beginning in the mid-2030s.
Several hurdles lie ahead. The Na-
tional Guard is opposing the transfer
of its AH-64s and their replacement
with UH-60s, and a congressionally
directed commission must examine
the plan and report back by Febru-
ary 2016. Meanwhile, the Army has
authority to transfer an initial 48
Apaches between October 2015 and
March 2016. The Army also must
complete a study into the impact on
the industrial base of retiring 181 TH-
67s and potentially putting them up
for commercial sale.
So far industry is rolling with the
punches swung by its biggest customer