FIDAE - Helicopters - Heavylift prospects attract suppliers

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US companies anticipate huge boost in military funding in Chile due to surge in revenues from state-owned copper business

Helicopter suppliers chasing a potential military need in Chile for a modernised heavylift fleet are optimistic of making a sale by the end of the year. Chilean army officials have not yet moved forward on the project, but an expected rise in arms spending this year has contractors eyeing a near-term deal.

Chile's would-be helicopter demand drew a solid corps of suppliers to the FIDAE 2004 show. Poland's PZL Swidnik displayed the 12-passenger, twin-engined W-3 Sokol helicopter. Meanwhile, Eurocopter strengthened its ties to Chile's Enaer, signing an agreement to launch joint helicopter assembly, manufacturing and repairs. Agusta-Westland also came to emphasise the EH101's heavylift capabilities.

US manufacturers are also expected to make a strong push for the contract. Bell Helicopter is advertising its Bell 412 for the army's multirole requirement, Sikorsky plans to offer the UH-60 Black Hawk, and Boeing plans to campaign with the CH-47 Chinook.

A multirole, heavylift helicopter fleet for the army is understood to be leading the Chilean military's wish list, which already has completed deals for 10 Lockheed Martin F-16s for the air force and four used frigates and cruisers for the navy since 2002.

Industry sources say the Chilean army wants a troop carrier helicopter that can also perform as an assault ship and a search and rescue platform. This could eliminate previous interest in a dedicated attack helicopter fleet to complement the army's Leopard tanks.

Some industry officials expect to see a competition with a decision to be completed by year-end. The accelerated pace is being driven by recent government estimates that revenues for arms sales could be doubled this year, thanks to a one-year quirk in the country's unorthodox financing mechanism.

Chile automatically sets aside 10% of annual revenues from its state-owned copper business to fund the military's weapon purchases. A normal year generates about $250 million, which is by law distributed evenly between the services. This year, however, copper prices have soared to a nine-year high, perhaps pumping $400-500 million into the funding stream.

Armen Kouyoumdjian, a Chile-based analyst for the Institute of Strategic and International Studies argues that the windfall could be exaggerated, as last year, when higher copper prices were offset by declining demand.