Australia Could Buy Up to 60 NH90s
(Source: defense-aerospace.com; issued Sept. 2, 2004)
PARIS --- While Australia’s planned order for 12 NH90 helicopters, announced Aug. 31, is valued at about A$ 1 billion, industry and government officials say repeat orders now in the pipeline or planned could boost the total number of NH90s to as many as 60, worth over A$ 5 billion.
However, the final contract negotiations for this first contract may prove more difficult than anticipated. Australia selected the NH90 on the basis of a Best And Final Offer for a 40-helicopter buy. The price quoted in that offer may no longer be acceptable to the supplier, as the initial order has now been reduced to 12. Australian Defence Minister Robert Hill told reporters that a decision on the upgrade or replacement of the Black Hawks, for which the remaining 28 NH90s were planned, would not be made before 2005 or 2006.
The risk for the NH90 industry group is that the Australian government may refuse to pay a higher price despite the lower number it is ordering. For domestic political reasons, Australia also is likely to insist on local assembly of at least some of the initial 12 helicopters, even though this makes much less financial sense than it would for 40 aircraft.
This would result in a substantial erosion of the contractors’ profit margin, but this is a sacrifice the NH Industries partners may be forced to accept as the price of locking in Australia’s transport helicopter market and, not least, of ejecting Sikorsky. NH Industries is a joint venture between France’s Eurocopter, Italy’s Agusta and Stork Fokker of the Netherlands. Formally, Australia’s MRH90s will be supplied by Australian Aerospace, a local subsidiary of Eurocopter.
According to current plans – which may change if the Howard government loses the general election it has called for early October – the NH90 should eventually replace the Australian Army’s Black Hawks, boosting the number required by the Army to 40, or possibly 42. The first batch of 12 will replace the Army’s UH-1s, which will be retired.
In addition, the Sea King and Sea Hawk helicopters currently operated by the Royal Australian Navy are also due for replacement, and the RAN will also require additional naval helicopters for the new Air Warfare Destroyers and new amphibious ships it plans to build. A number of NH90s – known as MRH90s in Australia – will also be required for training. In addition, the purchase contract will include a support contract lasting up to 20 years, generating substantial additional revenue for the manufacturers involved.
The Australian Industry Participation package now being finalized is worth about A$300 million, and centers on assembly of the aircraft by Australian Aerospace in Brisbane where the company is already assembling the Tigers on order.
“We're hoping the new helicopters will also be assembled in Brisbane and in the industry package that is to be negotiated, we'll look for a number of other capability enhancements, particularly in relation to the strategic area,” Hill said, adding that “opportunities for Australian industry are anticipated in helicopter assembly, common and similar aircraft systems, avionics equipment, structural and engine technologies and training systems.”
The offset package will be more ambitious than is normally the case, Hill added, “because we are not just looking at a traditional offset type of arrangement; we now search for opportunities to support our industry, investing into the global supply chain.”
“We think that that's the way of the future and there are a number of specialty niches in Australia and systems integration at the high-tech area, where our industry is poised to make real gains if it can get into further major contract opportunities,” he said.
Australian Aerospace and its local partners including ADI, KBR, Raytheon Australia and Thales Training Simulators will provide major components, mission systems, electronics, flight training facilities, training and maintenance for the helicopters, said Joseph Saporito, CEO of Australian Aerospace.
Following the Sultanate of Oman’s late July decision to buy 20 NH 90s, Australia is now the eleventh country to have selected the NH 90. Current orders stand at 357 aircraft plus 86 options, with additional orders planned by the original program partners.
Australia’s MRH90s will be modeled on the German Army's version, with slight variations such as electrically-folding main rotor blades and extensive navalisation features, according to Defence Minister Hill, including emergency flotation kits. He added the helicopters will form a new squadron based in Townsville; the first will be delivered in 2007, with all 12 aircraft expected to be delivered by 2008.
If confirmed, the NH90 order will give Eurocopter a firm hold on the Australian military helicopter market, where it has already sold the Tiger attack helicopter, and reinforces the position of its corporate parent, EADS, whose Airbus unit earlier this year beat Boeing in a competition to supply the Royal Australian Air Force with tanker aircraft worth A$ 2 billion.
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