Daily Management Review

Boeing Set to be Awarded £2bn Apache deal by UK MoD


Boeing Set to be Awarded £2bn Apache deal by UK MoD
With a £2bn contract for new Apache helicopters set to be awarded to Boeing, the UK’s Ministry of Defence is poised to hand another major deal to a US company.
The deal has been at the centre of efforts for  anumber of companies. one such company is Leonardo, the Italian aerospace manufacturer until recently known as Finmeccanica. It had been battling to land the deal. Had the deal gone through, it would have seen the refitted helicopters produced at its base in Yeovil, Somerset, where 3,700 staff are employed. Analysts say that a significant long-term boost to UK jobs and skills would have been provided by such an agreement.
However, Boeing is believed will be awarded the deal that is worth £2bn over its lifetime when servicing is included for the 50-aircraft contract by the MoD which has already believed to have decided on the deal.
An announcement could come as soon as early July at the Royal International Air Tattoo or Farnborough air show.
There was a problem with the original fleet of 67 British Apaches. These were produced by Westland in Yeovil and the prices of the helicopters more than doubled to about £44m per helicopter after the company added UK modifications after it had began with assembling US-built components in 1995. Westland is now part of Italian state-backed Leonardo.
By tacking them on the end of a much larger Apache order for the US military, Boeing is offering the new helicopters at a far lower price.
With the Yeovil plant, the nation’s only helicopter manufacturer, set to deliver its last Wildcat model to the MoD next year, the Boeing deal throws into doubt Britain’s future ability to build combat helicopters.
While it is thought the MoD will hand the business support contracts for the new Apaches to Leonardo, the company has enough work to support its Yeovil staff until 2018 without winning further orders.
“Despite concerns about the loss of expertise from not producing the Apaches, servicing them may even work out better for Yeovil. Buying the Apaches will be about 30pc of the total price, with the balance coming from supporting them during their 25-year service lives,” one defense source said.
Controversy has shrouded the purchase of the Apaches. Buying from Boeing was “the only sensible option”, said Lt Gen Gary Coward, a former head of the Joint Helicopter Command last year.
There were fears that the purchasing was being delayed due to lobbying to keep the work in the UK.
“We are not aware of any decision. Certainly if this is the case it would have an impact on our production in the UK, which would not exclude consequences,” a spokesman for Leonardo said.
“The Apache programme is currently in its assessment phase, and we expect to make a decision by Summer 2016,”  said an MoD spokesman.

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