Bell prepared to finance new civil helo program

 - March 31, 2011, 8:45 AM

At this year’s Heli-Expo, Bell CEO John Garrison was adamant that the company could afford a new civil helicopter program. “Capital-wise we have the ability to invest in new platform development. That is not a constraint. We just have to pick and choose,” Garrison said, declining to identify the market sectors Bell was considering. “The business has the ability to fund it.”

Earlier this year an internal memo on a new Bell program called Magellan leaked to the media. No timetable for the program was given and Bell declined to provide any additional details, but it is widely assumed the new program will be a replacement for Bell’s Vietnam-era, Huey-based 412 medium twin and aimed primarily at the superheated deepwater offshore oil and gas market. 

The internal memo said the Magellan is a follow-on to “Project X.” It also is believed that it will have civil and military applications. While giving few details, the memo said the Magellan is part of a strategy to provide customers with a “comprehensive product line-up that best meets or exceeds their operational requirements.” The memo disclosed that a customer advisory panel already had been formed for the Magellan and that Larry Thimmesch, vice president of commercial programs, will lead the development team.

If the Magellen is a medium twin, it would be Bell’s second attempt at fielding a replacement for the 412. In 1998 the company had formed a joint venture with AgustaWestland to develop what is now the AW139, but was forced to recuse itself from that project to meet the resource demands of the military V-22 Osprey tiltrotor program. Subsequently, the AW139 has grown into an unchallenged commercial success, with more than 300 delivered and nearly 500 ordered.

Bell’s other joint venture with AW, the BA609 civil tiltrotor, is now dragging into its 15th year of development as both companies have devoted substantial resources to other projects. What communication there has been on the program from the companies appears to be conflicting, right down to the percentage of the program each company claimed it owned.

AW said it was building two more test ships, a claim Bell disputes. At Heli-Expo, AW president Giuseppe Orsi said the company had bought out Bell’s share, a claim a Bell spokeswoman denied. Garrison said he was dispatching a team to AW in mid-March to sort out the program–which could or could not mean finalizing a divorce.

Civilian Helo Improvements

Since taking the reins at Bell two years ago, Garrison has made significant personnel changes on the commercial side of the business, including recruiting industry veteran Larry Roberts to rejuvenate sales. Overall revenues increased by $400 million between 2009 and 2010. Last year Bell posted sales of $3.2 billion, of which $1.5 billion came from military sales and $1.07 billion from product support, areas that both posted growth. Earlier this year Bell announced the brand consolidation of its service and parts subsidiaries in an attempt to gain more maintenance and aftermarket modification revenues from its existing customer base by facilitating “one-stop shopping.”  

However, revenues from the sale of civil helicopters in 2010 fell to $667 million, down from $672 million in 2009. Bell sold 131 civil helicopters last year, including twenty-two 429 light twins. And Bell’s revenues have been relatively flat–in absolute dollars–since the Vietnam war.

The company’s corporate parent, Textron, is clearly the poor kid on the block {{E-mailed Huber for evidence.-- NM}} compared with the deep-pocketed parents of its competitors such as AW (Finmeccanica), Sikorsky (United Technologies), Eurocopter (EADS) and Boeing.

Under Garrison, Bell has moved quickly to maximize what it has that still makes money. It sold off the type certificate for the iconic Bell 47 and shuttered the B206B3 JetRanger production line.

Performance STCs were announced for the Bell 407 and the 412EP. At this year’s Heli-Expo, the company unveiled two new versions of the 407–one with a Garmin G1000H integrated glass panel avionics system, the 407GX, and the other with rockets and guns badged the 407AH (armed helicopter). All of these moves allow Bell to substantially increase prices on its legacy products while offering customers increased versatility and performance. Bell also is continuing to work on removing weight from the 429 light twin, a program plagued by delays, with an eye to increasing its mtow to at least 7,500 pounds. A wheeled version of that helicopter could be ready by next year.

Garrison said the company is looking beyond tweaking the existing product line and has secured a substantial commitment from Textron for more R&D spending. He said it would increase by 50 percent over the next five years, including new products and primary components such as rotor blades and transmissions, but he offered few details. “We’re not going to show you what we’re going to do, we’re going to show you what we’ve done.”

Just when this translates into the formal announcement of a truly new civil helicopter program remains to be seen. o