DUBAI (Reuters) - The head of Bell Helicopter said on Tuesday he was encouraged by foreign interest in the V-22 tilt-rotor aircraft that his company builds with Boeing Co (BA.N), but Bell may face additional layoffs if not enough orders emerge.
John Garrison, president and chief executive of Bell Helicopter, a unit of Textron Inc (TXT.N), said the U.S. Marine Corps’ use of the V-22 to provide disaster relief in the Philippines illustrated the capabilities of the aircraft, which can fly as fast as a plane but land like a helicopter.
“I think the world continues to stand up and take notice of the capabilities of the V-22 Osprey,” Garrison told Reuters in an interview at the Dubai Airshow, where the Marine Corps has been providing demonstration flights to dozens of military officials from the Gulf region and other countries.
“We’re encouraged,” Garrison said, citing strong interest in the aircraft at the air show and solid support from the U.S. Marine Corps for the international sales drive.
“In this age of sequestration, and from a policy standpoint, international sales of our defense articles are important, both for U.S. military and the defense industry,” Garrison said.
The U.S. Marine Corps and Air Force have a combined fleet of 250 aircraft, and military officials see potential sales of up to 250 more aircraft in coming decades.
The tilt-rotor aircraft is getting good reviews for its performance in combat after a rocky start that saw 23 Marines killed during flight testing in 2000. Two more Marines were killed during a training exercise in Morocco last year.
U.S. officials are finalizing details for an initial sale of six aircraft to Israel - the initial foreign buyer of the plane - at an estimated price of $70 million each, although it may buy twice as many over the longer term.
U.S. officials have also provided briefings on the V-22 to the United Arab Emirates, Japan, Canada, Saudi Arabia, Qatar, Italy, Brazil, Colombia, Singapore, and Australia.
In addition to military uses, some countries have expressed interest in using the V-22 for VIP transport.
Marine Corps Colonel Dan Robinson said several countries were interested in what he described as the “game-changing” capabilities of the aircraft, and orders could emerge in coming years. Robinson said this week that foreign sales could grow significantly in “the very near future”.
He said a $6.3 billion, 99-aircraft contract signed by the Pentagon and the Bell-Boeing venture in June included options that would allow foreign buyers to benefit from the reduced cost negotiated in the five-year agreement.
Garrison said he expected Pentagon officials to protect the agreement through 2019, because the cost of breaking the contract would be so high.
But mounting budget pressures on U.S. military spending had made the outlook for additional orders uncertain.
Garrison noted that Navy officials had delayed a request for proposals for a competition for new aircraft to supply carriers, a job for which he said the V-22 was ideally suited, and it was uncertain when the competition would kick off.
Current Navy plans call for it to buy 48 V-22s, potentially for use as carrier resupply aircraft, but no funding has been dedicated to the “carrier on-board delivery” or COD program.
Garrison said Bell Helicopter needed additional U.S. orders or foreign purchases to sustain its current workforce. The company laid off 1,200 people over the past year, and faced further cuts unless it generated more V-22 orders since U.S. production levels are set to start declining, Garrison said.
Garrison said V-22 production was slated to drop from 40 to 24 aircraft over the next 48 months.
The V-22 is the company’s largest single program.
In addition to looking for foreign orders, Garrison said Bell was continuing to invest to develop new capabilities or uses for the aircraft, including the ability to refuel other aircraft, like the F-35B fighter jet being built for the Marine Corps by Lockheed Martin Corp (LMT.N).
Reporting by Andrea Shalal-Esa; editing by David Evans