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Thursday, March 5, 2015

MD Helicopters Sees Increase in Military Sales, Tilton Says

By Pat Host

HAI Heli-Expo 2015 Orlando, Fla. - MD Helicopters has experienced growth in its military helicopter business while its competitors' sales have declined, according to company CEO Lynn Tilton.

"We're sort of on the 'other end' of the wave," Tilton told an audience Tuesday here at the Helicopter Association International's (HAI) Heli-Expo show. "I hope it will continue, though, and not be short-lived."

Tilton attributed the increase in military business to the company "evolving and enhancing" the scout helicopter market in tandem with the United States' ongoing campaign against ISIL in the Middle East. Tilton said MD Helicopters' ability to build aircraft in under six months has been a "great advantage" for the company in a time of "urgent and compelling needs."

Tilton said MD Helicopters will be busy through 2016. The company is scheduled to deliver aircraft to Afghanistan in a week and through the end of the year, she said, plus MD Helicopters has aircraft returning from theater to be upgraded and armed. The company was awarded a $44 million contract in October to weaponize 17 of its 530F helicopters for the Afghanistan air force. MD Helicopters said Wednesday 44 percent of the company's active fleeted aircraft is to militaries around the world.

Tilton also said the company is negotiating contracts with potential foreign military sales (FMS) customers in the Middle East that will be announced shortly.

"We will be building military aircraft all year and into 2016 based on either existing contracts or contracts that are in the middle of negotiation," Tilton said.

Richard Aboulafia, vice president of analysis at Teal Group, told Rotor & Wing Wednesday while MD Helicopters has been able to grow its military business due to an emphasis on counter insurgency and light attack missions, it faces limited market growth. Aboulafia said the Army decided to move forward with the Boeing AH-64 Apache and its heavy attack and reconnaissance capabilities for scout missions, leaving only Iraq and Afghanistan, and possibly Saudi Arabia, as the "wide-open desert markets" the MD 500-series is best suited for.

"From a light attack perspective, counter insurgency, the MD 500 series is more relevant than ever," Aboulafia said. "It's just that most of it is not the U.S. military, it's Afghanistan and Iraq."

Tilton said rebirth, renewal and revival are MD Helicopters' themes for 2015 as it is 10 years since she purchased the company. Aboulafia said MD Helicopters struggled at first because the company was a niche player in the civil market, which he said was very tough because of the established players who serve the market well.

MD Helicopters was able to find success, Aboulafia said, by focusing on simple market realities: He said 70 percent of the rotorcraft market is military.

"To give them the kind of growth they're seeing now, they had to get back into the military side, and that's just the structure of the rotorcraft market," Aboulafia said.

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