Bell Helicopter CEO Says 2011 Was Market Bottom for Civil Sales
John Garrison, CEO of Bell Helicopter (Booth No. 9846), said on Sunday he believed that 2011 was the market bottom for the civil helicopter sector and that Bell’s newly-announced 525 super-medium twin program would proceed regardless of whether the Pentagon ordered more V-22 Bell/Boeing tiltrotors after 2014.
The board of directors of Bell’s parent company, Textron, formally approved the 525 program in late 2011 and Bell formally announced the program here at Heli-Expo 2011. Bell vice president Larry Roberts pegged the development cost of the 525 at “hundreds of millions” of dollars. Some industry analysts estimated the development costs at close to $500 million.
Garrison said that Bell planned to deliver revenue growth in 2015 and 2016 regardless of the V-22 production rate which, even if it is renewed, he expects to be less than the current contract. “We’re confident that we can execute the  program,” he said.
Roberts said that Bell could subcontract parts of the 525’s fuselage, perhaps to a foreign supplier, but a decision on that had yet to be made. When asked whether Bell was currently seeking additional risk-sharing partners to help defray development costs on the 525, Roberts would only say, “This will be a Bell Helicopter/Textron program.”
Bell currently derives a substantial portion of its income from V-22 sales and the current contract expires with the 2014 deliveries. Garrison said that Bell intended to grow all sectors of its business; military, service, and civil, but expressed confidence that the DoD would order more V-22s for delivery after 2014. “Military budgets are under pressure, I think there is no doubt about that, but there is opportunity for programs that are performing.” Garrison clearly sees the V-22 in this category, citing Marine Corps aircraft survivability data.
He also said that Bell was looking to the export market, specifically Canada, to keep the V-22 production line rolling. Bell delivered 34 V-22s in 2011 and is scheduled to deliver 115 more through 2014.
Garrison said Bell achieved “record” financial performance last year, doubling its commercial bookings over 2010, with strong performance from the BRIC (Brazil, Russian, India, and China) markets, and good military program execution. Compared to 2010, revenues last year grew by 9 percent and the company achieved a gross 22 percent operating margin. Sales increased from $3.24 billion to $3.51 billion, with a 65 percent to 35 percent military-to-civil split, and most of the military sales attributed to the V-22 program. Commercial deliveries on the year fell, from 131 to 125.
Garrison said he expected any coming decline in military sales to be offset by a growth in the company’s commercial business. “We subscribe to the belief that 2011 was the bottom of the commercial market and that growth will return,” he said.
The Bell CEO pointed to several bright spots on the civil side including the popularity of the new Bell 407GX that features Garmin G1000H glass-panel avionics. “We underestimated the demand for the  GX, and it is outpacing all of our expectations,” Garrison said. He also said that Bell 407AH (armed helicopter), also introduced last year, posted one of the world’s largest civil sales in 2011, though he declined to provide any details citing “confidentiality agreements.”
“We saw a lot of momentum in the last four to five months of 2011 and that is carrying over to 2012. Longer-term, this is plenty of growth in the commercial market,” Garrison said.