Company Steps In To Prevent Failure Of Defense Bid

Embattled manufacture MD Helicopters Inc., which was created when a Dutch group, RDM Holdings, bought the former Hughes Helicopter 500, 600 and 900 lines out of Boeing in 1999, was just saved from possible liquidation by a last-minute deal with Boeing. The deal was finalized late Monday afternoon at Heli-Expo in Anaheim, CA. Ironically Boeing, which got the helicopter group as an unwanted part of its 1997 purchase of McDonnell Douglas, finds itself paying...again.

Sikorsky had been in discussions with MD Helicopters, whose once-popular turbine helicopters fit nicely into the price/performance niche between Sikorsky's costly offerings and its subsidiary, Schweitzer's, more basic ones. (Schweitzer was another line once owned by Hughes and Boeing). But Boeing has a stronger interest in the survival and success of MDHI: its entry in the Army ARH competition is essentially the MDHI H-6 (in its updated MD530MG variant, as seen here in file photos). Its proposal would have been thrown into chaos by any collapse of MDHI and the resulting uncertainty about the rights to the old Hughes design.

The Army has tried to break itself of the H-6 habit, but as the conventional Army was phasing out the small helicopters, the Army's 160th Special Operations Aviation Regiment, generally called "Task Force 160" by soldiers, was finding myriad new uses for them. The ARH, one of the requirements that arises from the cancellation of the Apache program, could wind up with the Army readopting an airframe it has been flying for forty years (first flight of the OH-6 was in 1963).

The Boeing ARH (Armed Reconnaissance Helicopter) candidate may not win the competition, of course. It has to beat the Bell 407 ARH contender. The winner gets an order for up to 100 airframes.

MDHI has been on the ropes, as plummeting demand for its aircraft caught it flatfooted, committed to orders for large quantities of long-lead-time components. Kaman, for example, which manufactured fuselages, rotor blades, and other components for MDHI, has taken large charges against earnings for unrecoverable billings. MDHI owed other suppliers smaller sums, and also owed Boeing quite substantial sums, resulting from the original sale of MDHI from Boeing to the current owners.

FMI: www.mdhelicopters.com, www.boeing.com