Canada presses Sikorsky over helicopter contract

Wed Apr 30, 2008 2:29pm EDT
 
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OTTAWA (Reuters) - Canada is pressing Sikorsky Inc. to fulfill a C$5 billion ($4.95 billion) contract for 28 helicopters amid reports the U.S. firm wants more money, Defense Minister Peter MacKay said on Wednesday.

The Globe and Mail newspaper said the Conservative government could scrap the deal with Sikorsky -- a unit of United Technologies Corp -- because the company was seeking up to C$500 million in extra funds.

"We are going to continue to have very explicit and specific discussions with Sikorsky to find out whether they can live up to their contractual obligations," MacKay told reporters.

Asked if he was threatening to cancel the order, MacKay said: "We're not threatening anything until we have an opportunity to sit down and have a detailed discussion with Sikorsky about when these aircraft are going to be delivered."

Under the terms of the 2004 deal, Sikorsky is supposed to hand over the first of the H-92 helicopters early next year. The aircraft will replace Canada's aging fleet of Sea Kings.

"We are continuing discussions with the government and remain hopeful of reaching a mutually agreeable delivery plan," said Sikorsky spokesman Paul Jackson. He declined to give more details.

The opposition Liberals said the government had mishandled the matter.

"If their plan is in fact to cancel the contract ... then we're back to square one," said defense spokesman Bryon Wilfert. "If you're going to do hardball with Sikorsky, I would suggest that doing it in the media is probably not the best place to do it."

($1=$1.01 Canadian)

(Reporting by David Ljunggren and Randall Palmer in Ottawa and Scott Malone in Boston; editing by Janet Guttsman)