Aircrafts and Helicopters: Finmeccanica Seeks To Make U.S. Home Market

Finmeccanica is looking to further increase its business activity in the U.S., capitalizing on its acquisition of DRS Technologies.The company has long eyed the U.S. and, through a growing industrial footprint, has tried to make it a “home market” in addition to Italy and the U.K.

A round of upcoming helicopter competitions will prove a crucial test case for that business plan.

Most visible will be AgustaWestland’s effort to once more secure the contract to supply the White House with a presidential helicopter. Finmeccanica was part of a team led by Lockheed Martin selected in the original VXX competition to produce a version of the AW101 as the presidential helicopter, before the contracting agency, the U.S. Navy, terminated the deal after requirements changed. Recently, the Navy launched the Presidential Vertical Lift Platform Analysis of Alternatives which aims to replace the White House’s VH-3D/VH-60N in 2017-23.

Although the cancellation of the VXX was badly received in Italy, and termination liability negotiations are still underway, Finmeccanica Chairman and CEO Pier Francesco Guarguaglini says AgustaWestland will again make a run at the program. However, this time the industrial setup could be very different. Lockheed Martin has indicated it may not be interested in serving as prime contractor yet again, Guarguaglini says.

That has the Italian company weighing its options. One possibility is for DRS Technologies to play a bigger role and do much of the systems-integration activity that Lockheed Martin would have done. Other U.S. industrial partners are also in the mix, though. For instance, Finmeccanica already has strong ties with L-3 Communications through their partnership on the C-27J Joint Cargo Aircraft, and relations with Boeing also are on the mend after a difficult period.

There is no rush to decide. Guarguaglini says strategic options will be considered for another 1.5-2 years, with the presidential helicopter project still in its early stage.

For now, after reviewing the tentative demands the U.S. Navy has spelled out, AgustaWestland officials are optimistic about their chances. They believe the range, speed and payload are a good match for the AW101. In particular, they say the requirements do not support a serious tiltrotor offering. Finmeccanica estimates the value of the presidential helicopter as $7-10 billion.

But AgustaWestland also has other targets in sight. It plans to offer the AW139 helicopter for the U.S. Air Force Common Vertical Lift Support Platform program, where it will face sjpeg competition not just from U.S. manufacturers but also Eurocopter. The program would be worth about $2 billion. The AW139, assembled in Philadelpha, could also find its way into the foreign military sales market.

Furthermore, the AW119 is slated to be proposed for the U.S. Army Armed Aerial Scout project. There, too, the company will be fighting against multiple rivals, with Eurocopter planning to bid the EC635 and Boeing and Bell also in the running.

By mid-year, Guarguaglini also hopes to have wrapped up discussions with Bell Helicopter over how to restructure their joint venture on the BA609 tiltrotor. The BA609 is one of the two programs (the other being the AW139) run by the Bell/Agusta Aerospace Co. joint venture. AgustaWestland has been gradually increasing its role, buying out Bell’s 25% share in the AW139 and raising its responsibility on the BA609 to 40% from 25%. Now it is discussing the acquisition of the remaining 60% of the BA609. Facilitating the discussion is the fact that the BA609 needs another $1 billion to complete development and be readied for production. Bell would receive royalty payments on BA609 sales to help fund the buyout.
AgustaWestland considers the BA609 key to its U.S. and global strategy.

In addition to the rotorcraft activity, Finmeccanica is refining its plans to offer the M-346 advanced jet trainer for the U.S. T-X program to replace Northrop Grumman T-38s. The company has scrapped the notion of serving as a prime contractor, and instead is looking for a U.S. partner.

Finmeccanica has discussed the program with Northrop Grumman, but early enthusiasm appears to have cooled. On the other hand, Alenia Aermacchi and Boeing have jointly offered the M-346 to Singapore and could bid together again in other markets, such as Saudi Arabia, and possibly also the U.S.

Guarguaglini says his company’s strategy could lead to two types of M-346 being available for export, either the Italian system already on the market, or the U.S. system through foreign military sales. The approach mirrors effectively what is already taking place with the C-27J tactical transport.

The potential teaming with Boeing on the M-346 would be aided by improved relations between the two companies after difficulties involving their collaboration on the Boeing 787 commercial twin-widebody.

Boeing and Alenia Aeronautica have now resolved the payment structure for the first 200 airframe section shipsets, including the thorny question of who has to bear the financial burden stemming from the delayed production. A further agreement, covering industrial cooperation, investments, production and materiel costs, is still being finalized, says Finmeccanica Chief Financial Officer Alessandro Pansa. The hope was to close by the end of March, but a few more weeks could be needed to address financial and technical details.

By Andy Nativi – Genoa – Aviation Week