Bell says no deal done yet to sell Czechs 12 military helicopters

Bell says no deal done yet to sell Czechs 12 military helicopters
Bell’s UH-1Y is considerably more expensive than AgustaWestland’s AW139 aircraft
By Nicholas Watson in Prague June 19, 2017

Contrary to the opinion of some Czech MPs, the government tender to buy 12 multi-role helicopters is not a done deal for the US’ Bell Helicopter. In fact, with the country facing elections in October, there is no guarantee the tender won’t be derailed – as politics in this region has done to so many defence tenders in the past.

At a press conference on June 16, Rear Admiral Frank Morley from the US Department of the Navy, flanked by Bell's VP of international military business sales, Richard Harris, told reporters that the US helicopter maker will finalise and submit its bid to supply 12 UH-1Y ‘Yankee’ helicopters for the Czech armed forces at the end of the summer.

“We will provide the offer to the Czech government by the end of the summer,” said Morley. “This is in line with the timeline that the Czech government has set.”

The government-to-government tender, launched by Prague in 2016, pits Bell, a Texas-based division of the Textron aerospace and defence conglomerate, against AgustaWestland, a division of the Italy-based Leonardo, after it was reported in April that the Czech defence ministry had excluded Airbus Helicopters from the tender for not fulfilling certain requirements. Coming just seven months after Poland cancelled a $3.5bn helicopter deal with Airbus and instead handed orders to US rival Lockheed Martin apparently without a tender process, that left the French aerospace giant fuming over its treatment by Central European governments.

If reported comments in March by some MPs on the Czech Parliamentary Defence Committee are to be believed, then the Czech tender will also end up in American hands. “I am pleased that a decision has finally been made,” the Pravo daily quoted the deputy chairman of the defence committee, Bohuslav Chalupa, as saying on March 21. “These units [the UH-1Y] are not bad at all. And the American offer is very good as far as the prices and delivery terms are concerned."

Yet Bell was at pains to stress that this is not the case: “We’re certainly working very hard if a decision has already been made,” joked Morley.

Even so, Bell is confident that the Czechs will plump for their product, based on the fact that the UH-1Y is a combat-proven helicopter currently used extensively by the US Marine Corp. “The Yankee has had 12,000 combat flight hours… has been used extensively across the entire world since 2009… and is interoperable with the Marine, Army and Nato forces,” said Morley.

Needless to say, this doesn’t come cheap. It’s no secret that the price of Bell’s UH-1Y will be considerably more expensive than that for AgustaWestland’s AW139 aircraft, perhaps even double. The Czech government has estimated the tender to be worth around CZK8bn-10bn (€306mn-382mn), though the MPs on the Parliamentary Defence Committee told the paper the American offer is lower at about CZK500mn per unit, making the total cost about CZK6bn ($240mn).

Bell says this being a government-to-government deal, the US government will set the price package for the 12 helicopters – comprising support, training and maintenance as well as the aircraft themselves – and given the US Congress must approve it, this will become public knowledge. However, both Morley and Harris stressed that the total package Congress will approve is inflated to take into account adjustments such as potential orders for more product, so the final price to the Czech government will be much lower.

“I hope the press will not take that price and divide by the number of aircraft… and then say ‘this price is off the scale!’ That’s not the price that will be in the final contract,” said Harris.

Morley also noted that whenever a new product such as the UH-1Y comes onto the market, there is a cost curve as more of the machines are manufactured. “At this point in time this aircraft is right down there at the lowest point of the cost curve,” he said.

A shadow hanging over the whole tender is the upcoming Czech parliamentary elections on October 20-21, which is sure to delay any decision, as it will be a new government that has to choose the winner of a tender devised by a previous government. This is never an ideal situation and in the past has led to defence tenders being restarted. 

The latest opinion polls show the current coalition leading Czech Social Democratic Party (CSSD) trailing its junior partner in the coalition, the centrist ANO party of billionaire Andrej Babis, by around 20 percentage points. But the current defence minister, Martin Stropnicky, is from Babis’ ANO party.

“Our biggest issue with politics is making sure that the next tranche of politicians understand what this helicopter means, what it does and how it will support the Czech Republic,” said Harris. “Politics is everywhere – we just need to deal with it.”