Bell: tough times until 2012 uptick
Bell Helicopter CEO John Garrison told a press conference here yesterday that he did not expect an uptick in the company’s civil helicopter sales until 2012 and called the company’s 2009 “quite a year in a very challenging environment.”
He also acknowledged that Bell had converted only approximately 50 of the 300 customer letters of intent for the new Bell 429 light twin into firm orders and admitted that the company was working on weight reduction as part of a “continuous improvement program” for the helicopter, but said overall that the company “was very pleased” with it.
Two 429s were delivered last year, but Bell plans to ramp production to 25 this year and 50 in 2011. Garrison said Bell intended to “take market share” with the 429, citing sales of five of the aircraft at the recent Singapore Air Show and increasing interest among prospective customers for it in Asia, Europe and the Middle East.
Garrison said Bell has revised the maintenance manual for the new 429 light twin twice in recent months to reduce the number of life-limited parts from 87 to 43, and pointed out that the 429’s maintenance program is the only one in the helicopter industry based on Maintenance Steering Group 3 (MSG-3), originally developed for the Boeing 747 in the 1970s.
Garrison was evasive on questions about Bell’s ongoing participation in the BellAgusta BA609 civil tiltrotor program and public entreaties by AgustaWestland executives to gain control of it. “The 609 continues to be a development program,” Garrison said, adding, “We’re basically working through what’s the right scope of work going forward.”
He also noted continuing demand for Bell’s legacy civil aircraft and said the company would deliver the 1,000th 407 later this year.
Garrison credited Bell’s “balanced business model” with producing $2.8 billion in company revenues last year, but sales of new civil helicopters amounted to only $672 million of that total, with military sales and customer support accounting for the remainder in almost equal shares. Bell’s overall civil sector sales currently account for 43 percent of its business. Last year Bell accounted for 27 percent of parent company Textron’s revenues and, despite Textron’s well-publicized financial difficulties, Garrison said it will “continue to make investments” in Bell.
However, the worldwide recession forced Bell to “adjust our production schedule for our commercial business aggressively to match the downturn in the industry,” Garrison said. Nevertheless, Bell “had the best productivity year we have ever had on several of our models and we were quite pleased with that” despite a six-week strike at the company’s Hurst, Texas plant over the summer, and he praised his company’s top-ranked customer support.
Bell is making a variety of aggressive moves designed to drive sales of new helicopters and refurbishment of legacy models in the current down market. They include offering incentive financing on new aircraft purchases and exploring a possible re-engining program for JetRangers.
For civil helicopter acquisitions completed during the first half of 2010, Bell Helicopter Finance Group is offering a variable rate of 5.15 percent (Libor plus 4.9 percent) with terms of seven to 10 years. The offer is dependent on customer credit, helicopter use and down payment and is estimated to be available to customers in 60 countries.
While Bell has discontinued production of the venerable 206B, it is also looking to extend the life and utility of legacy Jet Rangers. The manufacturer has signed a memorandum of understanding with Rolls-Royce to explore the retrofit of the RR500TS engine in these helicopters. The MOU will allow the joint evaluation of potential suppliers to develop RR500TS STC retrofit kits, replacing the Model 250 engine that currently powers these helicopters. The RR500TS has more takeoff power and better high and hot performance than the original engine, longer engine overhaul intervals and reduced total ownership costs, according to Bell. FAA type certification for the RR500 is expected next year.
Garrison said that Bell continues to be pleased with the military side of the house. “We have several products doing quite well,” he said, including the V-22 military tiltrotor that will increase production from 20 units in 2009 to 28 in 2010. He said Bell Helicopters were “combat proven” in Iraq and Afghanistan and he sees that creating more export opportunities for these aircraft in the international market.