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U.S. NAVY CHOOSES LOCKHEED MARTIN TEAM US101

U.S. NAVY CHOOSES LOCKHEED MARTIN TEAM US101 AS PRESINDENTIAL HELICOPTER REPLACEMENT

28 Jan 05. Reuters reports that the U.S. Navy has chosen a trans-Atlantic team led by Lockheed Martin Corp. (NYSE:LMT – News) to build a new U.S. presidential helicopter fleet (VHX), a congressional source familiar with the decision said on Friday.

The decision was a stunning setback for Connecticut-based United Technologies Corp.’s (NYSE:UTX – News) Sikorsky Aircraft unit — which for nearly 50 years has built and maintained the green and white “Marine One” helicopters that fly the president.

Sen. Charles Schumer, a New York Democrat, announced the decision in a press release, saying Lockheed’s victory would bring hundreds of new jobs to its Owego, New York plant.

Comment: In our piece last week (BATTLESPACE UPDATE Vol.7 ISSUE 3, 21st January 2005, U.S. Navy to announce Presidential helicopter winner on Jan. 28), we suggested that the move to buy new Blackhawk helicopters from Sikorsky rather than refurbish old models could be a pointer to the eventual winner of the Presidential Helicopter winner.

It also paves the way for an additional order for an $800m follow on CSAR requirement. The VHX contract calls for the replacement of 19 HMX Sikorsky Sea King helicopters, some dating from 1974, with 23 new ones by 2008. The helicopter is being offered for the 132 machine US CSAR requirement being competed by Sikorsky and a Northrop/EADS Team. The US101 will create a new facility in Owego, Hilary Clinton’s constituency, and bolster Bell’s and Agusta’s Philadelphia facility where the 109 is made.

This announcement is good news for Lockheed Martin nd its partner Bell as well as Finmeccanica and the Westland business in UK. It vindicates the huge effort put into the US101 project by, the UK Government, DESO and AgustaWestland and also vindicates the huge investment, frowned upon by a number of observers (BATTLESPACE being one of them!) into the EH101 project by the UK Government; the UK will benefit from royalties from this announcement. In addition, this announcement will, in some way, placate the ITAR arguments we highlighted in our October AUSA issue.

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