The Weekly Wire: For Your Situational Awareness 11/18/20

 In Weekly Wire

End of Year Tail Wind for Leonardo Helicopters

Alix Leboulanger, Research Associate

At a time when the helicopter industry is being impacted by multiple factors, from COVID-19 to sluggish oil prices, the past few weeks have been particularly active for Leonardo Helicopters.

On the military front, Leonardo continues to grow its market footprint in the US, with another successful win earlier this week. The US Department of Defense has decided to exercise its option to procure a second batch of 36 additional TH-73As for $171 million, as part of the new training helicopter program for the US Navy. In January 2020, Leonardo won the US Navy’s tender for 32 TH-73As in a deal said to be worth $176 million. In Europe, further discussions between the Austrian and Italian Ministries of Defense have taken place around starting a cooperative program that would leverage both countries’ requirement for Light Utility Helicopters. Austria previously signed for 18 AW-169M helicopters for $356 million in September 2020 and Italy is considering acquiring 22 units.

Over the years, Leonardo Helicopters has gradually increased its market share in the military domain. As incumbent OEMs such as Bell Helicopter and Airbus Helicopters are competing for the same programs, they are likely to face tougher competition in the years to come across the light single/twin engine utility segment that used to be their core segments.

On the civil front, Leonardo is moving ahead with the SH09 Kopter program despite the pandemic. It has named a new CEO, Marko Viola (Ex-Leonardo) for the Kopter Group and it is also considering new production sites for its new light single engine addition, specifically in Philadelphia Pennsylvania, US. Though new sites are not certain yet, and the SH09 still needs to be certified, the growing footprint of Leonardo in the US market represents another headwind for Bell Helicopter and Airbus Helicopters, who traditionally enjoyed market leadership in the helicopter light segment.


On November 18, the UK Ministry of Defense will get a budget increase of £16.5 billion ($21.7 billion) spread over the next four years. In addition, the budget will also continue to grow at a rate of 0.5% above inflation, what at the moment would mean an increase of 1.3%. This represents a significant victory for Defense Secretary Ben Wallace both in terms of securing a multi-year budget settlement and an increased budget. Throughout 2020, it appeared that it would be unlikely that defense spending would be increased and there were reports that spending across most government departments would be cut due the COVID-19 pandemic. Such reports prompted speculation over significant cuts being made both in terms of equipment and personnel. Securing additional funding is likely to mean that major reductions can now be avoided, although some capabilities could still be retired as part of a change of priorities under the Integrated Defense and Security Review currently being carried out. The outcome of the review was due to be released in November 2020, however reports suggest that this has now been delayed until January 2021.


The French Armament Directorate gave a green light to MBDA France to launch development and production of a future air-to-surface missile. This program is in the framework of the Tiger Mk III attack helicopter program and is aimed at replacing the US made Hellfire missile. The program for the High Frame Missile (Missile Haut de Trame – MHT in French) is calling for at least 500 units and could be worth up to €700 million ($804.3 million). The MHT is a variant of the French mid-range missile (MMP), all designed and produced by MBDA.


According to the Indian newspaper Hindustan Times, Prime Minister Narendra Modi and Philippine President Rodrigo Duterte are working to finalize a deal that would see the Philippines procure the BrahMos missile systems in 2021. The two leaders are set to meet at a planned summit in the coming months, where BrahMos Aerospace officials are hoping to ink the agreement. The Philippine Army has been on the market for such a missile system amid rising tensions with China, which have placed an emphasis on strengthening coastal defense. Should the transaction proceed as scheduled, the Philippines would be the first nation, aside from co-manufacturers Russia and India, to receive and operate the missile system.


Hungary has signed a contract with Embraer for the procurement of two C-390 transport aircraft. The aircraft will be delivered by 2024 and will be replacing the An-26s that were retired this year. The sale marks the second European sale for the aircraft, following a long-agreed-to deal for 5 Portuguese aircraft where it will be replacing Portugal’s C-130s.

The C-390s entry into the military heavy lift market comes as many countries worldwide begin to consider the replacement of their aging C-130H and An-26 fleets. The Western market has long been dominated by the Lockheed Martin’s C-130 family which has been able to successfully leverage its venerable nature along with economies of scale from US production to lead the market. However, as major C-130J production wraps up, and the A400M finally reaches full operational capability, the heavy airlift market will be much more competitive than in years past.


Lithuanian Defense Minister Raimundas Karoblis signed a contract worth $213 million to purchase four UH-60M Black Hawk helicopters, along with associated equipment, spares, training, and logistics support. Options for two more aircraft are available. Lithuania’s small air force currently relies on two Mi-8Ts for the utility role. The sale also came alongside a statement by Defense Minister Karoblis wishing the US to consider a permanent deployment of forces in the country. To that end, Lithuania has been investing in its defense infrastructure through its own funding, as well as funds from the European Deterrence Initiative.

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