Military

Lockheed Martin Counting on CH-53K to Drive Sikorsky Business

By S.L. Fuller | January 31, 2018

Sikorsky King Stallion CH-53K

Photo courtesy of Lockheed Martin

At the beginning of January, Sikorsky’s CH-53K chief engineer, Andreas Bernhard, told the American Institute of Aeronautics and Astronautics’ (AIAA) SciTech Forum that the CH-53K King Stallion would generate more revenue than the Black Hawk in the 2020s. Lockheed Martin EVP and CFO Bruce Tanner said during the company’s full-year 2017 earnings call Monday that what Bernhard said is as much a necessity for the future of the business as it is a projection.

Tanner said he’d also been watching oil prices, which is something he “doesn’t usually” do. Prices have been reaching $65 a barrel, he said, but it needs to have stability at that price to drive helicopter demand in the oil and gas industry.

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Tanner said the company does not expect a large increase in commercial helicopter business in 2018 compared to 2017. He said 2019 isn’t looing much better — but of course, that depends on barrel prices.

And with the recent sale of Sikorsky’s light helicopter line, it’s clear what market is expected to bring in the most business.

“In the longer term with Sikorsky, we’d like to see the growth coming from the 53K program as we start to enter the low-rate production phase of that program,” Tanner said. “Hopefully, you should think of the downturn in Black Hawk helicopter deliveries being offset by upticks in 53K volume, as well as some of the other development programs we’ve got going like the presidential helicopter program as well.”

“Rotary and Mission Systems” net sales in 2017 increased $753 million compared to 2016. Lockheed Martin attributes this primarily to some $680 million for Sikorsky programs “due to certain adjustments recorded in 2016 required to account for the acquisition and higher volume on certain helicopter programs; and about $160 million for training and logistics services programs due to higher volume.”

Operating profit in 2017 increased about $105 million for Sikorsky, “due to certain adjustments recorded in 2016 required to account for the acquisition,” Lockheed Martin said.

Despite these numbers, Tanner noted that there was a “pretty good drop-off” in government rotorcraft deliveries in 2017. Between the Naval Hawk and Black Hawk programs, he said there were some 50 fewer deliveries. Part of that, he continued, can be contributed to the way the programs and contracts are set up — 2017 had less value than 2016, and deliveries are set to increase in 2019.

“We negotiated a minimum quantity, and that’s sort of what’s in our planning purposes going forward,” Tanner said. “We’re obviously hopeful and we gave pricing for that in the multi-year for additional aircraft that we hope will ultimately get plussed up through budget adjustments going forward. We’re kind of at, hopefully, a bit of a low point there on the government deliveries.”

The presidential helicopter program mentioned before, the VH-92A, is set to enter service in 2020.

Lockheed Martin is also hoping to secure international deals for the CH-53K. Tanner said that the aircraft is set to fly at the Berlin Airshow, and Germany is one of two of the “most likely” customers.

The other likely customer is Israel, which U.S. Congress targeted April 2017 as an international customer for the King Stallion. Brig. Gen. Nir Nin-Nun, commander of air support and helicopter division for the Israeli Air Force, visited Patuxent River, Maryland, to take a test flight in November.

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