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Tuesday, March 1, 2011

American Eurocopter’s Marc Paganini   

President & CEO looks to raise the U.S. division of Eurocopter to new heights.

By Bob Cox

Marc Paganini has a well-focused vision for taking American Eurocopter to new heights. It will be a company with a stream of new and upgraded helicopter models, strong civil and military sales from a solid U.S. manufacturing and assembly base. It will also be a company with strong and growing service and customer support capabilities.

“We’re going to become a full-fledged manufacturer in the United States,” says Paganini, president and chief executive officer of the U.S. arm of the European company that over the last decade has gained a firm hold as the sales leader in the U.S. civil helicopter market. Following up on years of strong civil helicopter sales—600-plus civil aircraft delivered from 2003 to 2009—and a growing role in supplying the U.S. military and government, American Eurocopter is investing significant sums in building up its capabilities across the board.

“It’s exciting because we’re working on what we’re going to be the next 20 years, a very exciting and defining moment,” says Paganini. American Eurocopter expects revenues of about $800 million this year, a nearly four-fold increase in the last decade. The steady stream of orders from the Army for the UH-72A Lakota utility helicopter, which is assembled in Columbus, Miss., has helped offset the slump in the civil market.

But Paganini’s goal for the top-line number is much bolder: $1 billion by 2012 increasing to $2 billion by 2020. Much of that growth, he says, should come from commercial and military helicopter sales. With parent Eurocopter and EADS planning to spend $1.5 billion over five years on research and new product development, the company expects to have a steady stream of new models and new technology to insert into existing products.

“I don’t think any other helicopter manufacturer in the world is spending what we do on R&D.” It’s that unrelenting focus on new products over the last decade that has driven the growth of American Eurocopter, says Teal Group aerospace analyst Richard Aboulafia. “They’ve done a great job of blanketing every price point [in the helicopter market] with new technology and models.” Aboulafia says.

In the short term, the next product for the commercial market is the EC175—aimed at the offshore oil market—which is in flight test and due to be certified and ready for delivery by 2012. “The program is on time,” says Paganini.

X3 technology demonstrator

The CEO’s eyes light up when asked about parent-company Eurocopter’s recent disclosure that it is flying the X3 (“X cube” to non-engineers and math challenged folks) high-speed helicopter technology demonstrator.

The prototype, an EC155 (a large, 12-passenger airframe) is a five-bladed rotor helicopter outfitted with twin turboprop engines, mounted on short wings, that power the main rotor and also forward flight. “The challenge is to keep the hovering capability [of a helicopter] and go fast,” says Paganini, with a targeted top speed of 220 kts.

The concept, Paganini says, has exciting possible applications for both the civil and, especially, future U.S. military aircraft markets. But beyond new and upgraded helicopter models, Paganini is focused on building up the other aspects of the company’s business to provide ever-expanding service to customers.

After taking over the company in 2002, Paganini says he was immediately shocked to discover the great disparity between the safety records of fixed-wing aircraft and helicopters. “I was determined to make safety the top priority for my company and to make sure our customers are the best trained in the world.”

American Eurocopter recently added a new full motion, full cabin AS350 flight simulator at its headquarters in Grand Prairie to its existing EC145/UH-72A full motion cockpit simulator. The two simulators alone amount to a $15-million investment in just the last two years to build up flight training capabilities. A third simulator for the EC175 is slated to be ready around 2012 when that aircraft goes into service.

The company is already training about 1,200 pilots and nearly 800 service personnel a year. That part of the business now accounts for $20 million in annual revenues, a four-fold increase since 2002. The number that should grow even more with the existing levels of business. But the company is also expecting to tap into the foreign military sales market for UH-72A orders, which should drive even more training revenue growth.

Paganini also is building the company’s aircraft modification capabilities to meet the needs of both civil and military customers. Over the last two years the company has been adding engineering staff, now at 36 and headed to 50 by next year. The Army has already contracted for modifications to add capabilities to the UF-72A. “All of these modifications have been designed and implemented here in the U.S.,” says Paganini.

Working with Lockheed Martin, American Eurocopter engineers are modifying an EC145 into the first prototype of an armed scout helicopter aimed at meeting the Army’s requirements for an aircraft it wants to buy to replace its aging OH-58D Kiowa Warrior fleet. Lockheed and Eurocopter have self-funded development of three prototypes, with the first due to fly before the end of the year.

That broad-based focus on customer support in logistics, modifications and training capabilities, Aboulafia says, “is exactly how to get into the U.S. government and military market.” Now that it has major employment bases in Texas (about 550 people) and Mississippi (about 300), “it’s given them a significant political presence in the U.S.” The company employed about 250 when Paganini arrived in 2002.

In the short term, the growing capabilities on the customer service, training and now modifications is helping generate added revenues and enabling the company to ride out the downturn in civil aircraft sales without layoffs or cutbacks in other areas. Civil aircraft sales this year will be back to 2002 levels.

Paganini says there are some signs that the civil business may pick up, especially as business profits grow. The air medical sector continues to do well as operators replace old aircraft with newer models, but the business has shifted from a 50-50 mix of twin and single engine helicopters to more single engine models.

It will probably be several years, he says, before local government and law enforcement agencies return to the market because of their budget problems.

Until the business recovers, Paganini says he’ll keep American Eurocopter moving on the other fronts. “We have a lot of things on our plate. It is very exciting.”

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