Defence

Development of the ARH-70A armed reconnaissance helicopter has been extended by a year. In addition, final assembly has been relocated from Canada to the USA, first production deliveries to the US Army have been delayed until 2009, and Bell Helicopter will take a $73 million charge to cover losses on the first two lots of 62 aircraft.

The changes are contained in a memorandum of understanding signed by Bell and the US Army after the service decided to continue with the ARH programme despite delays and cost overruns. Details of the agreement were revealed during an analysts' call by parent company Textron, which had previously warned it would lose money on its fixed-price contract for Lots 1 and 2.

The MoU covers aircraft specifications, pricing and deliveries for the first two production lots, said Textron chief executive Lewis Campbell. Pricing for subsequent lots will allow recovery of expected costs and reasonable profits, he said. The army will provide additional development funding and Bell will now deliver the first three production aircraft in 2009.

Instead of being assembled at Bell's commercial helicopter plant in Mirabel, Quebec and flown to the USA for installation of the military equipment, airframes will be trucked to the Fort Worth, Texas plant for final assembly. Given the extent of changes to the commercial Model 407, integrating the militarisation into final assembly of the ARH-70 will be more efficient, Bell says.

Three development ARH-70As and a company-owned aircraft have logged more than 750h flight testing, meanwhile, including more than 175h with the Honeywell HTS900-2 engine planned for production helicopters. The next milestone is limited user testing by the US Army, which plans to buy 512 ARHs to replace Bell OH-58Ds.