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Lockheed civil helicopter outlook worsens since Sikorsky deal

Lockheed Martin has seen the outlook worsen for a recovery in the commercial helicopter market since acquiring Sikorsky, says chief financial officer Bruce Tanner.

Speaking to investors and analysts at the Credit Suisse Industrials Conference on 2 December, Tanner said that consultants hired by Lockheed while conducting due diligence on the acquisition earlier this year had already taken a more pessimistic outlook on the market recovery than had Sikorsky parent United Technologies.

Lockheed’s estimates may have been closer to the mark, Tanner says, but it was still too optimistic compared to the company’s current forecast for a market rebound.

“When does the rebound sort of occur? I think that may be a little bit further to the right,” Tanner says.

A five-year boom in demand for large commercial helicopters evaporated last year as oil and gas operations pulled back exploration and offshore drilling due to falling prices.

“That pressure has not backed off any,” Tanner says. “Arguably it’s a little tougher than when we first started [evaluating Sikorsky].”

Sikorsky has seen deliveries of two commercial models – the S-76 and S-92 – dry up over the last year.

But Sikorsky’s defence business has more growth potential in the near-term, if the company can make a successful transition from development into production on five major programmes, Tanner says.

Sikorsky has already suffered major delays on the CH-53K helicopter for the US Marine Corps and the S-92-based Maritime Helicopter Programme for the Canadian military. The company also is development a presidential helicopter version of the S-92, a combat search and rescue variant of the UH-60 and a Turkish utility helicopter.

Lockheed has itself struggled to make a smooth transition from development to production on fixed-wing aircraft programmes such as the F-22 and the F-35. But Tanner thinks that experience can help Lockheed steer Sikorsky through the process.

“We’re going to help, I believe, Sikorsky get through that transition,” he says.

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