Turning around troubled MD will take time

HAI Convention News » 2007
March 15, 2007, 9:39 AM

MD Helicopters CEO Lynn Tilton said yesterday that the company plans to deliver 48 helicopters this year even as it continues to struggle with supply-chain issues and clear away the debris left by decades of mismanagement. “It’s not a one-year fix. It’s not a two-year fix. This is a five-year turnaround,” she said of the company.

Tilton also announced that MD would try to buy back some of its used helicopters to increase inventories and acknowledged that the company had held talks with parties looking to acquire it.

Tilton’s Patriarch Partners investment firm acquired MD in 2005. Late last year, MD lost in its bid to land the U.S. Army’s $3 billion light utility helicopter contract to American Eurocopter. In denying MD’s appeal of that award, the Government Accountability Office cited MD’s marginal or high-risk contract production capabilities and management, lack of a strong vendor base and the fact that it is “still missing deliveries on spare parts orders.” The GAO concluded that MD “is basically operating as a new start-up company.”

But Tilton thinks turning MD around presents challenges that are “even more difficult than a new start-up.

“This is a company that was 20 years broken,” said Tilton, who acknowledged that MD was paying for “the sins of the past,” which included an “absence of processes” and incomplete engineering that included drawings that had not been updated in almost 40 years.

Tilton said MD is continuing to clean up its internal processes while strengthening vendor relations, reducing the overall numbers of vendors, moving certain component production to less expensive offshore suppliers and bringing more parts production in-house.  But hints of strain with key vendors remain.  “We are fighting with TAI [Turkish Aerospace Industries] to get twin [engine] fuselages on time and with a payment schedule we can afford,” she said. 

MD plans to deliver 22 of its twin-engine MD 902 Explorers and 26 of its single-engine MD 500 and 600 series helicopters this year. She said MD is also planning modest product improvements.   

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