AW Helicopter 360 Familiarisation

Marketing, Sales, Bidding, Offset

& Contract Process

Richard Luck

9th November 2009

Agenda

 Finmeccanica & AgustaWestland Key Facts &

Figures
 AgustaWestland – Key Facts and Figures

 Rotorcraft Markets
• Overview
• Military Helicopter Market Review
• Commercial Applications Market Review
 Selection of AgustaWestland Rotorcraft Solutions

 Supporting Business in AgustaWestland

• Marketing
• Sales
• Bids & Proposals
• Offset Management
 Outlook and Conclusions
Commercial in Confidence
Finmeccanica & AgustaWestland Key Facts &
Figures

Commercial in Confidence
 Finmeccanica today: the divisions
DETAILS
Helicopters Defence Electronics Aeronautics

2008 Revenues
€17.2Bn

100% FNM  AGUSTAWESTLAND  DRS TECHNOLOGIES  ALENIA AERONAUTICA

 SELEX SAS  ALENIA AERONAVALI
JVs  ALENIA AERMACCHI
 SELEX COMMUNICATIONS

40% FNM – 60% public  SELEX SISTEMI INTEGRATI  ATR

 SELEX SERVICE MANAGEMENT
 SEICOS
 ELSAG DATAMAT

Space Defence Systems Energy Transportation

 THALES ALENIA SPACE  OTO MELARA ANSALDO STS

 ANSALDO ENERGIA 
 TELESPAZIO  WASS  ANSALDO BREDA
 MBDA

Commercial in Confidence
 Finmeccanica Group Employees
Worldwide

People abroad: 29.8%

U.K.
9.691
ASIA
FRANCE 421
3.462
U.S.A.
13.012
EUROPE Other Countries
57.508 113
ITALY
42.666
BRASIL
59

ARGENTINA AUSTRALIA
21 614

FINMECCANICA ~72.748 units (*)

(*) JVs employees depend on the shareholding held by FNM Group
(MBDA, THALES ALENIA SPACE, TELESPAZIO, ATR)

Commercial in Confidence
AgustaWestland Consolidated Highlights
2008

2008 (€ min)

Revenues 3,035

EBIT 338

Order backlog 10,481

New orders 5,078

Headcount (n.) 10,289

Commercial in Confidence
 AgustaWestland - During 2008…

– NH90 deliveries to the Italian Army ongoing (60 NH90 TTH on order)
– Agreement for the joint manufacture of the new CH-47F for the Italian Army
– Agreement covers marketing and sales rights in several countries in Europe and the Middle East
– Italian Army order for 16 + 4 ICH-47, aimed at replacing remaining CH-47C
– UK MoD confirmed Future Lynx Programme (62 a/c for the Army and Navy)
– First flight of the VH-71 Presidential helicopter, US Navy testing for VH-71 begun in Maryland, USA
– Agreement with Oboronprom Corporation upon JV establishment including a commitment for 2008 of 10 helicopters
– Qatar Armed Forces ordered 18 AW139
– Grupo INAER ordered eighteen helicopters (6 Koala, 2 AW109, 7 Grand, 3 AW139)
– Red Cross AMS of South Africa ordered four AW119Ke
– Finnish Border Guard ordered three AW119Ke
– Ornge ordered ten AW139
– Korean Coast Guard ordered two AW139
– JSC Euro-Asia ordered two AW139
– New independent sales representatives: Solaire (Malaysia), Pacific Jet (Indonesia/Philippines), GME Aviation (Central America),
Helicopteros de Guatemala (Guatemala)

Commercial in Confidence
A Global Presence

Commercial in Confidence
International Partnership

Commercial in Confidence
Customer Driven
AW acknowledges its Customers as the key for success:

“Customer satisfaction the focus of our efforts”

Commercial in Confidence
 Product Range

(1-4 tonnes) (4-7 tonnes) (7-12 tonnes) (12-16 tonnes) (16+ tonnes)

Commercial in Confidence
 Customer Support

Accounts for an increasingly large share of AgustaWestland's activity.

 Driver for the helicopter business, both in the military/government and civil
markets.
Supporting the product during its entire operational life:
- Total capability support programmes
- A Global Network of Service Centers
- "Power by the Hour Programs" with fixed guaranteed costs for main
operators
- Reliability and helicopter availability to achieve demanding operational
requirements and economic results
- Helicopter upgrade/modifications to adapt to new requirements and
technological evolution

Commercial in Confidence
 Total Training Capability

 Training solutions (ATIL, ROTORSIM) for both military and civil

customers
 From Flight Simulators to total "training system”
 Specialised training programmes:
- NVG
- Hoist operations
- Mountain flying
- SAR

Commercial in Confidence
 Fully Integrated Training Solutions

Classroom and CPT FFS

Multimedia Instruction

Training
DB

H/C
Training Management System

Classroom and
Multimedia Instruction
MTS - OJT
Commercial in Confidence AWM1975-14
Smarter Training Solutions...

Personnel Virtual Trainer

Rear Crew Virtual Trainer

Commercial in Confidence
 Rotorcraft Markets
Overview

Commercial in Confidence
 Turbine Helicopter Market in 2008

COMMERCIAL MARKET
Excluding Russian manufacturers

Units Delivered: around 970

by role by weight category

10% Corporate/VIP 4% Light Single

11%
2% EMS 17%
31% Light Long Single
Offshore
20% Light Twin
Law Enforcement 8%
Light Twin Plus
Utility 36%
Intermediate
11% 12% Financial/Dealer
24%
Medium/Heavy
14% Unknown

Source : AW Marketing

Commercial in Confidence
Turbine Helicopter Market in 2008

MILITARY MARKET
Excluding Russian manufacturers

Units Delivered: nearly 315

by role by weight category

1% 1% 6% Light Single
15% 13%
Light Twin
Multirole Transport 27%
Intermediate
Naval
Medium
Attack
43% 10%
Medium/Heavy
84%
Combat

Source : AW Marketing

Commercial in Confidence
 Rotorcraft Markets
Military Helicopter Market Review

Commercial in Confidence
Market Trends – Military Helicopters

• Increased number of peace support/enforcement

operations implies increased use of helicopters in
a wide variety of roles
• Reconnaissance/armed reconnaissance
• Logistic support
• Humanitarian aid, disaster relief
• Technological development still driven by the
requirements of the major user countries
• More countries want to join the “helicopter club”
• Increasing requirement for (general)
• COTS solutions
• Value for money/smart procurement
• “Turnkey” solutions for support
• Trend towards larger, higher value helicopters
when replacing older fleets

Commercial in Confidence
 Military Operational Environment

• Many designs flying today were built for

an operational environment which has
changed:
WAS…
• NATO high intensity war – Northern
Europe/Atlantic
• Relatively benign environmental
conditions “low and cold”
• Maritime warfare dominant
IS…
• Peace-support/enforcement typically
“Out of Area”
• Hot and high operating conditions
• Indeterminate and often “asymmetric”
threat
Commercial in Confidence
 Commercial Helicopters for Para-Military Roles

• In addition to traditional roles

(VIP/Corporate, EMS, Offshore, Utility)
– Increased involvement of
civil/commercial operators into non-
combatant roles “getting jobs out of
uniform”
– Law enforcement/Homeland Defense
– SAR/Humanitarian relief
– Training
• Implications
– Commitment to provide best value
solutions: Life Cycle Costs (LCC), PBH
programmes

Commercial in Confidence
AW for All Applications (military/government)

Commercial in Confidence
 2008 Governmental order intake

FINLAND
AW119

ESTONIA
AW139
GERMANY
NH90 FRANCE
BULGARIA
NH90
AW109
TURKEY KOREA
AW129 JAPAN
SPAIN PAKISTAN AW139
CYPRUS AW109
AW139 AW139 AW139
Grand
LIBYA QATAR AW101
MEXICO AW139 AW139
Grand ETHIOPIA
AW119 AW119
AW139 MALAYSIA
UGANDA
AW139
AW119

SOUTH AFRICA
Grand

NEW ZEALAND
AW109LUH

Commercial in Confidence
 Military & Parapublic Helicopters
Product Portfolio of Principal Players
24000 31000
MGW (1) (kg) 1500 3000 4500 6000 7500 9000 10500 12000 13500 15000 17500 19000 20500 27500 34100

AGUSTAWESTLAND AW129
LYNX
NH90TTN NH90NFH

AW109 LUH AW149 AW 101 CH47

AW119
WAH-64D
AB412/B412
BELL
ARH

UH-1Y V-22

OH58/TH57 AH-1W/Z

EUROCOPTER EC145/UH145
EC635 AS532/EC725
AS555
AS550 TIGER

EC120 NH90TTH NH90NFH

AS565

SIKORSKY
H92
MH/UH-60 CH-53K
(38500 Kg)

BOEING
V-22
AH-64

CH47

1) – Max Gross Weight SINGLE-TURBINE TWIN-TURBINE MULTI-TURBINE NOT IN SERVICE

Commercial in Confidence
 Rotorcraft Markets
Commercial Applications Market Review

Commercial in Confidence
 Civil Market Trends

• Risk transfer from Operator to

Manufacturer
• Operators demanding innovative
financing
• Customers are demanding
reduced Time to Market for new
technology & designs
• Customers require specific role
kit equipment
• Growing importance of
environmental factors
• Increasing requirement for
“COMR” type arrangements
• Increasing levels of competition

Commercial in Confidence
Civil Market Trends

• In addition to traditional roles

(VIP/Corporate, EMS, Offshore,
Aerial Work)
– Increased involvement of
civil/commercial operators into
non-combat roles “getting jobs
out of uniform”
– Law enforcement/Homeland
defense
– SAR/Humanitarian relief
– Training

• Implications
– Commitment to provide best
value solutions

Commercial in Confidence
AW for All Applications (Commercial)

Commercial in Confidence
 2008 Commercial order intake

CANADA
NORWAY
AW139
AW139
FINLAND
UNITED KINGDOM
AW109 AW139
Grand Rusia
AW139
AW139
DENMARK
GERMANY AW139
Grand ROMANIA
FRANCE
Grand BULGARIA
Grand
USA AW139 AW109
ITALY TURKEY
AW119 PORTUGAL KOREA
Grand Grand AW119 JAPAN
AW109 GREECE AW139
AW139 SPAIN AW139 AW109 PAKISTAN
GRAND AW119
Grand AW119 Grand AW139
AW139 CHINA AW109
AW139 AW109
LIBYA INDIA AW119 Grand
VENEZUELA Grand QATAR
MEXICO AW139 AW139 AW109
AW139 AW109
AW119 AW119 Grand
GUINEA AW139 Grand
AW109 AW139
AW139 MALAYSIA
Grand
AW139 Grand
AW139
TANZANIA
Grand
BRAZIL
AW119
AW109
SOUTH AFRICA
Grand
AW119
AW139
Grand AUSTRALIA
AW139 AW119
AW109
NEW ZEALAND
Grand
AW139
AW139

Commercial in Confidence
 Civil Helicopters Market
Product Portfolio of Principal Players

MGW (1) (kg) 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500

Grand
AGUSTAWESTLAND
A109Power AB412 AW139

A119

B417
BELL B412
B407 B429 BA609
(7.800Kg)
B206L B427
B430
B206

EUROCOPTER AS355
EC145 EC155 EC175
AS350

EC135 AS365
EC120
AS332/EC225
EC130 BK117 (9.300/11000Kg)

SIKORSKY S330/333
S76C++/D S92
(12.020Kg)
MD MD902
HELICOPTERS MD600
MD500

SINGLE ENGINE TWIN ENGINE NOT IN SERVICE 1) – Max Gross Weight

Commercial in Confidence
 Selection of AgustaWestland
Rotorcraft Solutions

Commercial in Confidence
 Selection of AgustaWestland
Rotorcraft Solutions – Military Applications

Commercial in Confidence
 T129
5 Tonnes 8

Current Specification
Products

MAUM: 5000 kg
Useful Load – 2130kg
Engines: 2 x LHTEC T800 (2 x 1362 kW)
(SL ISA): HIGE 12,000 ft; HOGE: 9,100 ft
Max Cruise: 150 kts
Economy Cruise – 115kts
Range no reserve: 325 nm

Market Prospects (1-5 Years) Product Developments

Turkey •Significant hot & high including

Pakistan or India weapon payload performance with new
Korea T800 engine
Jordan • New Pilot Night Vision System
Nigeria • Improved air to air weapon capability
• New precision guided missile
• New DAS
Commercial in Confidence
T129 Maiden Flight – 29.09.09

Commercial in Confidence
 AW149
5 Tonnes 8+

Current Specification
Products

MAUM: 8100 kg
Useful load: 3765 kg
Engines: 2 x CT7-2E1 (2 x 1900shp)
(SL ISA) HIGE: 10,500 ft; HOGE: 3,100 ft
Max Cruise: 152 kts
Economy Cruise – 131nm
Range no reserve: 398 - 525 nm

Market Prospects Product Developments

Candidate for the Turkish Utility •Larger cabin area than AW139M
Helicopter Programme (TUHP) • Tailored mission equipment fit
• Superior Hot & high performance
Extensive military market prospect
maintained
due to exceptional hot & high
• Due into service 2013
performance with full load
capability
Commercial in Confidence
 AW149 – Key Roles

Special Forces

AW 149
 Troop Transport Escort
 CSAR
 Reconnaissance, Surveillance,
Engagement of Targets
 Support & Logistic Operations
(Material & Supply Transport) CSAR
 Fire Support/ Ground Suppression
Fire
 CASEVAC / MEDEVAC
 Special Forces Operations/ Boarding
Operations
 Command, Control &
Communication
 External load lift/ Firefighting
 Head of State/VVIP Military CASEVAC
Transport Troop Transport / Patrolling
 Paramilitary operations
Commercial in Confidence
 AW159
5 Tonnes 8

Current Specification
Products

MAUM: 6000 - 6250 kg

Ueful Load – 2300kgs
Engines: 2 x LHTEC T800 (2 x 1362 shp)
(SL ISA) – HIGE – 8500ft, HOGE – 6000ft
Max Cruise: 155 kts
Economy Cruise – 120kts
Range no reserve: 266 nm

Market Prospects (1-5 Years) Product Developments

Korea
Denmark •New options for EO devices and
Malaysia Airborne Dipping Sonar
Indonesia • Potential for new radar options
Brazil using AESA technology
New Zealand • New export weapons options
South Africa with demise of Sea Skua missile
Commercial in Confidence
Roles
AW159 ROLES External Load Lift
 Anti-Submarine and Anti-Surface warfare
 Littoral operations
 Reconnaissance tasks & Manned airborne surveillance
 Over the horizon targeting
 Boarding parties and Maritime Counter Terrorism
 Escort and over-watch duties
 Global Counter Terrorism, Piracy and Narcotics
 Specialist movement of men and materiel
 CSAR
 Humanitarian Relief
 CASEVAC / MEDEVAC

Anti-Submarine Warfare Active Dipping Sonar Anti-Surface Warfare

Commercial in Confidence
 AW101
13 Tonnes 16 +

Current Specification
Products

MAUM: 15,600 kg
Useful load: 6,013 kg
Engines: 3 x GE CT7-8E (3 x 2527shp)
(SL ISA): HIGE: 11,600 ft; HOGE: 2,400 ft
Max Cruise speed: 150 kts
Economy Cruise: 130 kts
Range no reserve: 662 nm

Market Prospects (1-5 yrs) Product Developments

Denmark USA
Taiwan Algeria 2500shp engines
Korea BERP IV blades + new tail rotor
India MAUM increased to 16500kg
Thailand 7000kg max useful load
Indonesia New AMMC & 10x8 displays
20G structure
Malaysia
Update Civil Certification
Commercial in Confidence
 Technical Progress –
AW101 is now in full production
• The AW101 is in full production for two export customers
– First flight late 2009 (Algeria – 6)
– Saudi (2) Production commences 05.10.09
– AW101 is very similar to the nine VH-71s delivered to USA
• The main enhancements from previous EH101 are:
New higher performance
BERP IV blades &
Articulated Tail Rotor

2527shp engines
Upgraded
AMS & 10x8
Upgraded structure for 20G Instruments
crashworthiness & higher MGW

Commercial in Confidence
 AW101 – Multi Role Examples

Air to Air Refuelling Combat SAR

VERTREP

Airborne Mine Counter Measures

Commercial in Confidence
 Selection of AgustaWestland
Rotorcraft Solutions – Commercial Applications

Commercial in Confidence
 Main Competitors:

EC155 Main characteristics

Eurocopter

 MTOW: 4,920 Kg
 Useful Load : 2,301 Kg
 Engine: 2x Arriel 2C2
 Crew: 1 pilot + 14 pax

S76 Main characteristics

Sikorsky

 MTOW: 5,306 Kg
 Useful Load : 1,575 Kg
 Engine: 2x Arriel 2S1
 Crew: 1 pilot + 13 pax

B412 Main characteristics

EC175 EC175 Main MTOW: 5,398 Kg
Bell
Eurocopter

Characteristics Useful Load : 2,252 Kg

Engine: 2x PT6T-3D
 MTOW: ~ 7,500 Kg Crew: 1 pilot + 14 pax
Engine: 2x PT6B- 67A
 Crew: 1 pilot + 17 pax
Certification: 2011

Commercial in Confidence
Supporting Business in AgustaWestland
Marketing, Sales, Bids & Proposals, Offset Management

Commercial in Confidence
AW Organisation

Commercial in Confidence
 Business Organisation

International Commercial
Government Business Unit US Government
Italian Government Business Unit Business
Business Unit

UK Government
Business Unit NH90 Programmes

Marketing

Business
Management

Training
Heads of Region

Commercial in Confidence
 Characteristics of Rotorcraft Business

• Product development is capital intensive, with returns years away from original
investment
• Technology key to success
• The most fragmented in OEM aerospace manufacturing:
– civil/government-military
– multiple applications
– geography/environment-dependent requirements
• Cyclical, but marginally less than in other aerospace sectors  the rotorcraft
market has enjoyed strong growth during most of this decade
• Global and very competitive  “captive” market is an obsolete concept
• Increasingly “value and capability driven” as products and market mature:
– growing number of “revenue generating” operations
– “value for money” as the government/military approach to rotary wing operations
• Strong relationship with customers, for the entire service life of a product:
– Customers increasingly look at effective solutions to their “vertical lift”
requirements:
• Product capability
• Training and support  “turn-key” solutions

Customer driven approach key to enduring success

Commercial in Confidence
Customer Driven
AW acknowledges its Customers as the key for success:

“Customer satisfaction the focus of our efforts”

Commercial in Confidence
Customer Satisfaction – Why?

• Customers ultimately pay our salary!

• Satisfied Customers are valuable assets
– satisfied customers tend to be loyal and to generate business
over long time
• Loyal Customers are more Profiatable
– They buy more, it takes less time, they are less sensitive to
price
• Winning New Customers is Costly
– It takes time, it is expensive, you don‟t always succeed
• Satisifed and (especially) dissatisfied Customers tell others
– It has always been true  the web ensures news spread
worldwide in instants!
Customer Satisfaction is key to AW success and involves all
Company Functions: it starts with the right approach from the
drawing board and ends when the helicopter is retired and
ready to be replaced by another AW product!
Commercial in Confidence
 Generic Marketing Process (1)

Long Term Positioning

Opportunity Capture
Campaign Pursuit

Prospects
Opportunities
MARKETPLACE

Opportunity Pursuit
Campaigns

Contract Negotiation
•Win strategy developed Delivery
•Analysis
Campaign Pursuit

•Customer Interface •Win Strategy decided Campaign Capture

•Customer Influence •Bid/No Bid •Campaign Launch

•RFI
•Aircraft Configuration •RFP CED
Options •RFQ

•Through Life Support

Bids & Commercial Operations/ Prog

Marketing (Sales) Sales (Marketing) Bids (Marketing) (Marketing) Delivery (Marketing)

Commercial in Confidence
Generic Marketing Process (2)

In Service Life
D
Out of Service
Delivery

•Training I
•Capability Support •New Product Offering S
•Capability Sustainment P
•Life Extensions
•Customer Satisfaction
O
•Maintain levels of agreed performance S
•Deliver the solution A
L

Operations/ Programme Delivery (Marketing)

Commercial in Confidence
 Proposal Management – Gov’t/Military

• Many types of bids and proposals are required in response to:

– Request for Information (RFI): response not binding, generally
requiring technical information, procurement schemes, rough order
magnitude (ROM) pricing- to help customer formulate procurement
strategy/prepare RFPs
– Request for Quotation (RFQ): usually just requiring quotation with
limited technical information supplied
– Request for Proposal (RFP): response can vary from a standard
proposal to a full „bespoke‟ proposal for a major program
• Response times can vary from a few days to up 6 months, and time
from start of process to contract effective can range from a matter of
weeks to 5 years (in exceptional circumstances)
• Proposal can either be binding (ie with fixed prices and contracting
terms/specifications) and be contractible or non binding (eg with ROM
or indicative/budgetary prices or without contractible terms)
• Often to win major programs AW will enter into teaming agreements
with other industrial partners
Commercial in Confidence
Marketing Structure

VP Marketing
-
R Garavaglia

Marketing Tools

Market Planning & Market Research Product Marketing Product Marketing

Development & Analysis Specialised Aircraft Dual Use Aircraft

Resources based in Farnborough (main place),

Cascina Costa and Yeovil

Commercial in Confidence
 Marketing in AgustaWestland

• Main Activities

– Product Marketing (dual use and specialised rotorcraft)

 primary link between the Company and the marketplace on product
capability information: ensuring a two-way communication
 support to bid response for product capability aspects
 commercial product literature  general & specific
– Market Planning and Development
 Plan the Company‟s right offering in the marketplace  exisitng and
new
 Market plans and forecast, competitive analysis, “black-teaming”
– Market Research and Analysis
 Broad market reasearch and analysis
 Data management
– Marketing tools
 Production of general marketing literature/multimedia
• Interface with Customers
- Participation to airshows, specific visits, organisation of dedicated events

Commercial in Confidence
 Product Marketing – Specialised Aircraft
Organisation
Market Planning &
Development

•Annual Market Review Customer /Product Spec

•Regional Market reviews Intelligence
•Product Marketing Plans O
•Product Briefs
Product Engineering
Product Plans
F •Competitor Analysis F
F
E E
Training A Product R Business Unit
Training Options E
S Marketing D
IGBU
HOR,B&P,Commercial
etc

R&D A & UK GBU

Campaigns,RWSP,JM
Operations/
R & D Plan
B Specialised S S
Programme
O US BU Delivery

Procurement Marketing I Aircraft L

(Marketing)
(All platforms) CBU
Equipment Plans
L U Regional Sales, B&P
•Capability
•Shaping offering
T etc

Customer/Prod Support
I •Influencing I
IT BU

•Customer Management
Product Improvement
& Sustainment plans
T •Competitor Analysis
O
•Market place knowledge N
Y
Commercial in Confidence
Product Marketing Scope
• Actively market and promote the following AW military products and capabilities:
– AW159 / Wildcat Primary AW (Yeovil) focus
– AW101

– NH90
– CH47 In conjunction with AW (Italy)
– T129
– AW149

• Act as primary liaison between the Company and the Marketplace in providing
product and capability information
• Act as the primary Business Directorates interface with the Product Engineering
organisation and the Operations Directorate for all specialised aircraft product
development activities
• Support the various Business Units as required in coordination with the Market
Planning and Development teams in managing:
– a) technical queries
– b) generating technical briefs
– c) providing technical advice
– d) preparing/presenting build statements to customers etc

Commercial in Confidence
Scope (cont’d)

• In addition to interfacing with Product Engineering, also interface with the

following SME areas namely:
– Research & Development (Technology Insertion)
– Product Improvement & Sustainment Marketing
– Training & Support
– Procurement Marketing
• Provide specialised aircraft technical instructions both general and specific
relating to the product and the associated capability
• Team to be responsible for all AW Marketing activities on the AW (Yeovil)
site
• Effectively establish robust two-way communications between the
Company and the market place through:
– Specific visits to organisations/potential customers/suppliers
– Airshows & Exhibitions
– Trade events
– Dedicated events/presentations

Commercial in Confidence
Product Marketing Deliverables

• Product Plans – initially for AW101 and AW159 (in association with
document owners Product Engineering – coherent Marketing input
provided)

• Technical Helicopters Feature (THF) } Style/layout modelled on

• Technical Description Helicopter (TDH) } format currently established
for AW Commercial products

• Product Marketing Plans (PMP‟s) } initially for AW101 & AW159

• Customer Build Standard Statements

• Preparation of Technical Briefs

• Various customised Presentation Briefs

• Single point Aircraft Performance Charts/Performance Tables

Commercial in Confidence
 Marketing Tools - Summary

Sales Support Materials

Guides, Bid Graphics, Presentations, Web Brochures/ DVDs/ Logos

Events
Nomadics/ Totems/ Images
booklets/ Videos
*in conjunction with External Affairs

Commercial in Confidence
 AW R&D Enabling Technology Stakeholders

Customers

HUMS/CSM Manufacturing
Supply Chain Marketing Technology

Business Strategy Product Teams

Service Centre

Competitive
Other Helicopter Analysis Workshops
Companies C
O T
L R
L A Guest
Universities & AW R&D I Lectures
A
Research Centers N
B
O I
R N Conferences,
Partners A G Associations
I
O
N
Papers
OEM Suppliers Human
Engineering
Resources

Think Tank and

Benchmarking
Government Agencies Intelligence Gathering
Euro Comm., MoD, TSB, etc.

Commercial in Confidence
 Towards the Future

 Rotary wing maturing as a safe, reliable

transportation system
- new generation rotorcraft a dramatic improvement
from older models
- evolution to integrate vertical flight into affordable
mobility solutions, with widespread accessibility
 Air Vehicle issues
- Speed  conventional and new architectures
- Size how much do we want to lift?
 New Ways of Flying
- Technology available to manage the intrinsically
challenging vertical flight requirements
• operational safety enhancing systems:
TAWS, synthetic vision, NVG, etc.
• satellite-based navigation, instrumental to
increase operational dependability of rotary
wing systems
• all weather capability of vertical flight  ice
protection systems

Commercial in Confidence
BUSINESS UNITS

Commercial in Confidence
Bids & Proposals
Key Process and Deliverables leading up to Contract award

Proposal Management

Negotiating a Contract

Commercial in Confidence
 Contracts Management – Gov’t/Military

• In order to make a contract there must be an offer (proposal), acceptance

of the offer (agreeing and signing the contract) and consideration
(payment)
• The Contract will always have terms and conditions providing rights
obligations and warranties to each party. The most significant terms are:
– Scope of the contract (what the deliverables must be)-these are often attached
in separate specifications
– Acceptance (how items are delivered and accepted)
– Price and Payment (most important for the Contract Manager!)
– Warranty (providing remedies if items fail after delivery)
– Damages and liabilities (we must always limit/cap them in all our contracts)
– Force majeure, law, disputes, etc, etc
• Usually all (Government) contracts require bonding (letter of credit) to be
provided by banks:
– Performance bond ( a small ~5% of contract price that can be called if AW is
in default of the contract
– Advance/Progress payment guarantees, allowing customer to recover its
payments if Aw is in default
Commercial in Confidence
 Offset Management

• Offset or counter trade proposals are normally required in order to win

Government contracts. Offset is usually a significant influence in winning
a contract
• Many countries have offset rules which mandate that before a contract
can be placed with a foreign company, that that company must commit to
perform offset obligations (captured in an offset contract) that places work
or „value‟ into the country, thus offsetting the import
• Offset can be either direct-work package associated with the contract (eg
order of a structure) or Indirect (e.g. placement of work unrelated to the
contract), often offset requires technology transfer and technical training
to be given so as to develop an indigenous capability
• Once an offset contract is in place the offset credits will be reported and
approved against set criterion; failure to achieve a commitment would
usually result in liquidated damages

Commercial in Confidence
 Enlarging global presence

RUSSIA
Industrial partnerships with
NORTH AMERICA Oboronprom (AW139) and
Strengthen manufacturing expand footprint in civil
capability in Philadelphia market
and leveraging on Bell, CHINA
Boeing and Lockheed Martin Strengthen manufacturing
partnerships capability to target growing
commercial market through
MIDDLE CAH
EAST

INDIA

Expansion of presence in
both government and
commercial market Industrial partnership with TATA
for AW119 production and
expanded footprint in the market

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 Outlook and Conclusions

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Market Factors 2009

US / Barack
Obama

Oil price

Wall Street /
NASDAQ

Commercial in Confidence
 Factors Affecting the Helicopter Market
Who Is Going To Take The Lead?

• Financial/economical turmoil worldwide

• General economic situation stabilizing  outlook for helicopter market still
uncertain
• First signs of recovery expected from 2010

• Helicopter OEMs
• Consolidation? Sikorsky – Bell?
• US positioning
• Eurocopter – Lockheed Martin tie-up for ARH
• AW?
• Industry backlogs still at record levels. but...all solid?
• Helicopters are still the strongest growth market in the aviation sector
• Managing AW domestic markets (Italy, UK), presence in Europe/EDA/Nato
• Developing a value-driven technological edge  efforts to continue

Commercial in Confidence
Military Markets

• US spending to reduce (Currently between $500 - $600Bn (Yr))

– VH-71 aside, helicopters still seen central by US military
– V-22 now beyond point of no-return after seemingly good proof in Iraq.
– Sikorsky and Boeing to benefit from long term re-equipment
programmes

• Europe and RoW

– EC and AW fighting for favourable poistioning in EU, NATO, EDA
– Some large programmes still on (India, etc), but economical situation
will likely delay acquisition programmes
– Opportunities in upgrade programmes (e.g. Malaysia S-61s)  need to
explore all opportunities

• Helicopter case still very strong

– For both armed forces and government roles

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 Commercial Market

• Orders down 30% - 50% from last year

– Most sectors affected, especially VIP Corporate market
– Offshore sector affected, but activities continues and service prices are
maintained. Less speculative acquisition, but new helicopter sales to
serve new markets are expected. Growth areas: Brazil, Australia, Asia. Oil
price recovering
– Public service sector only slightly down so far; situation could worsen if
less public money is going to be available due to lower income and
interventions in other sectors

• Competition will increase in a narrower market

• ..but the “Helicopter case” remains strong
– We need to continue to develop our offering

Commercial in Confidence
 Civil Market: Outlook(s)

Commercial Deliveries and Forecast Trend

1,400

Mild
1,200 Average
Hard
1,000
Units shipped

Pre-crisis
projection
800

600

400

200

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DEMAND Helicopters
New Turbine Helicopters (excluding military upgrades)

Helicopter Forecast Production (2009/2018) - Units

Source : Forecast Int. – Jan 2009

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DEMAND Helicopters
New Turbine Helicopters (excluding military upgrades)

Helicopter Forecast Production (2009/2018) – Value in US $ m

Source : Forecast Int. – Jan 2009

Commercial in Confidence
 Conclusions

Vertical Flight is the Future\Helicopter Case Still

Very Strong
 Unique capabilities and potential of vertical
flight are now accepted and market demand
for it is growing worldwide
 Helicopters are still the strongest growth
market in the aviation sector.
 Military Helicopters continue to be the relative
winners in the fight for defence expenditure

AW vision for the Future

 Ensure safe, comfortable, affordable vertical
flight anywhere, anytime, in any weather
condition
 AW must continue to push/encourage
increased involvement of civil/commercial
operations into non combatant roles “ getting
jobs out of uniform”

Commercial in Confidence
 Conclusions

Future is bright, economic slowdown is

temporary
 Industry must use this time to gear up and
respond to new market requirements
 AW must recognise competition in the
Commercial markets will increase albeit in a
narrower market
 First real signs of recovery expected from
2010

AW must remain ever mindful of the competition

 Eurocopter and AW fighting for favourable
positioning in EU/NATO/EDA

Commercial in Confidence
 Conclusions

Customers urgently demand of industry

 COTS Solutions
 Value for money
 “Turnkey” solutions for support

Invest for the Future

 Continue to be market-driven with a forward
looking R&D approach
 Invest in training and safety of operations
 Remain totally customer focused

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Any Questions?

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