Army Picks Companies to Develop New Helicopters

Aug. 12, 2014 1:46 p.m. ET

The U.S. Army has selected the Bell unit of


Textron Co.



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Textron Inc.


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and a team of


Boeing Co.



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Boeing Co.


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and Sikorsky Aircraft Co. to develop the next phase of a helicopter replacement program that the Pentagon forecasts could be worth as much as $100 billion, though any new choppers wouldn’t be deployed until the mid-2030s.

Textron and the Boeing-

Sikorsky

team said in separate statements on Tuesday that they had been chosen. The two were selected from among four bidders vying to build a demonstrator for the Army’s planned Joint Multi-Role helicopter, which would replace its workhorse Apaches from Boeing and Black Hawks made by Sikorsky, a unit of


United Technologies Corp.



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United Technologies Corp.


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Rev. per Employee
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While the program wouldn’t generate significant revenues for several years, investors are closely watching the test phase as manufacturers position themselves with new technology aimed at making military helicopters fly faster and longer.

The Army had previously indicated only two teams would be chosen to build demonstrators. In addition to the Bell and Boeing-Sikorsky teams, the Army had also provided initial funding to two privately held competitors, AVX Aircraft Co. and Karem Aircraft Inc., to develop prototypes for the new helicopter.

An AVX spokesman said it is in talks with the Army to secure funding to continue development work, though confirmed it hadn’t been selected to build a demonstrator.

Karem didn’t respond to a request for comment. An Army spokesman declined to comment on the selection process.

Analysts view the contest as a test of the Pentagon’s ongoing reforms of the way it develops and buys new weapon systems. Officials are trying to avoid the problems of past programs dogged by huge cost overruns and advanced technology that proved too complicated and expensive to actually field with the military.

The Army could decide after reviewing the demonstration aircraft that it can’t afford all-new helicopters, and opt for a major upgrade of existing designs.

The service wants the demonstration helicopters to start test flights in 2017. Final versions aren’t expected to enter operations until the mid-2030s as part of its Future Vertical Lift program. Initial contract awards are expected in 2019 if the Pentagon opts for an all-new design and can secure funding.

Army officials have said that technologies from all four bidders could be used in a final design.

Write to Doug Cameron at doug.cameron@wsj.com

  Click to listen highlighted text! Aug. 12, 2014 1:46 p.m. ET The U.S. Army has selected the Bell unit of Textron Co. TXT -0.61% Textron Inc. U.S.: NYSE $37.57 -0.23 -0.61% Aug. 12, 2014 3:59 pm Volume (Delayed 15m) : 1.38M P/E Ratio 21.48 Market Cap $10.55 Billion Dividend Yield 0.21% Rev. per Employee $398,812 07/16/14 Stocks to Watch: Time Warner, … 07/16/14 Morning MoneyBeat: What the Fe… 07/16/14 Textron Posts Higher Profit as… More quote details and news » and a team of Boeing Co. BA -0.26% Boeing Co. U.S.: NYSE $120.48 -0.32 -0.26% Aug. 12, 2014 3:59 pm Volume (Delayed 15m) : 1.95M P/E Ratio 17.94 Market Cap $87.05 Billion Dividend Yield 2.42% Rev. per Employee $525,220 08/12/14 U.S. Army Selects Textron Unit… 08/12/14 Airbus A350 set to complete fi… 08/12/14 Iron Maiden’s Bruce Dickinson … More quote details and news » and Sikorsky Aircraft Co. to develop the next phase of a helicopter replacement program that the Pentagon forecasts could be worth as much as $100 billion, though any new choppers wouldn’t be deployed until the mid-2030s. Textron and the Boeing- Sikorsky team said in separate statements on Tuesday that they had been chosen. The two were selected from among four bidders vying to build a demonstrator for the Army’s planned Joint Multi-Role helicopter, which would replace its workhorse Apaches from Boeing and Black Hawks made by Sikorsky, a unit of United Technologies Corp. UTX -0.75% United Technologies Corp. U.S.: NYSE $104.93 -0.79 -0.75% Aug. 12, 2014 3:59 pm Volume (Delayed 15m) : 3.73M P/E Ratio 16.41 Market Cap $96.71 Billion Dividend Yield 2.25% Rev. per Employee $302,783 08/12/14 U.S. Army Selects Textron Unit… 08/10/14 Connecticut GOP Gubernatorial … 08/08/14 DynCorp Dismisses CEO Gordon W… More quote details and news » While the program wouldn’t generate significant revenues for several years, investors are closely watching the test phase as manufacturers position themselves with new technology aimed at making military helicopters fly faster and longer. The Army had previously indicated only two teams would be chosen to build demonstrators. In addition to the Bell and Boeing-Sikorsky teams, the Army had also provided initial funding to two privately held competitors, AVX Aircraft Co. and Karem Aircraft Inc., to develop prototypes for the new helicopter. An AVX spokesman said it is in talks with the Army to secure funding to continue development work, though confirmed it hadn’t been selected to build a demonstrator. Karem didn’t respond to a request for comment. An Army spokesman declined to comment on the selection process. Analysts view the contest as a test of the Pentagon’s ongoing reforms of the way it develops and buys new weapon systems. Officials are trying to avoid the problems of past programs dogged by huge cost overruns and advanced technology that proved too complicated and expensive to actually field with the military. The Army could decide after reviewing the demonstration aircraft that it can’t afford all-new helicopters, and opt for a major upgrade of existing designs. The service wants the demonstration helicopters to start test flights in 2017. Final versions aren’t expected to enter operations until the mid-2030s as part of its Future Vertical Lift program. Initial contract awards are expected in 2019 if the Pentagon opts for an all-new design and can secure funding. Army officials have said that technologies from all four bidders could be used in a final design. Write to Doug Cameron at doug.cameron@wsj.com Powered By GSpeech