Is MDHI going to make it?

Vygg,

The Army is requesting that the ARH have civil certification and is
funding the FAA costs to obtain it. They are requesting FAA
certification to improve the resale value of aircraft when they divest
them.

You are partially correct in your statement that the specification for
the ARH has become "midget Apache". In a bizzare deviation from
conventional military specifications, the ARH specification
requirements are not all manditory. Requirements are broken down into
catagories ranging from must have to not required but would be nice to
have. Very different.

Still, having both qualified military hardware and FAA certified
civilian aircraft, I will take military hardware any day. Life is
easier when the certifying agency and the customer are one and the
same.

Take care,

CTR

CTR wrote:

Vygg,

The Army is requesting that the ARH have civil certification and is
funding the FAA costs to obtain it. They are requesting FAA
certification to improve the resale value of aircraft when they divest
them.

You are partially correct in your statement that the specification for
the ARH has become "midget Apache". In a bizzare deviation from
conventional military specifications, the ARH specification
requirements are not all manditory. Requirements are broken down into
catagories ranging from must have to not required but would be nice to
have. Very different.

Still, having both qualified military hardware and FAA certified
civilian aircraft, I will take military hardware any day. Life is
easier when the certifying agency and the customer are one and the
same.

Take care,

CTR

Yeah. Makes it a real pain in the tookas to try to bid, too. Instead of
just sending out an RFP stating "Based on an existing civil airframe,
build a helicopter that does this . . . ", the AMCOM guys have muddied
the waters to the point that the bidders are left guessing at what the
Army really wants in this thing. They want something that's just like
the SOF MELB only different - and cheap. The winner of this competition
could wind up wishing they'd lost it.

The user community has been telling us for years that they want more
weapons, more armor and more fuel. AMCOM instead gives them more Comm
gear. What an attack helicopter needs with an HF radio is beyond what
anyone that flies it has been able to figure out. Maybe the boys in
Huntsville want to be able to tune in to the action in Iraq. Rumor has
it that the Block III Longbow is going to drop the HF radio.

It will be interesting to see what happens in July - or maybe September
- or maybe next January - or whenever AMCOM actually decides to pick a
winner.

Vygg

Of course the military and civil businesses are connected -- in the
design, engineering, and manufacturing technology. The military OH-6
gave Hughes/McD/MDHI a still-viable civil product line. The Sikorsky
HSS-2 launched the civil '61s. Take another look at the Eurocopter
military product line derived from their civil products -- their
military and civil business is now split about 50-50 thanks to
Puma/Cougar, Dauphin/Panther, etc.

If the commercial side of MHDI could never show a profit, the smart
thing to do was improve the bookeeping, not dump the product line and
deal yourself out of light helicopters. That's how Boeing got into this
position of buying back a shot at ARH.

HW

Helowriter wrote:
Of course the military and civil businesses are connected -- in the
design, engineering, and manufacturing technology. The military OH-6
gave Hughes/McD/MDHI a still-viable civil product line. The Sikorsky
HSS-2 launched the civil '61s. Take another look at the Eurocopter
military product line derived from their civil products -- their
military and civil business is now split about 50-50 thanks to
Puma/Cougar, Dauphin/Panther, etc.

If the commercial side of MHDI could never show a profit, the smart
thing to do was improve the bookeeping, not dump the product line and
deal yourself out of light helicopters. That's how Boeing got into this
position of buying back a shot at ARH.

HW

How many new OH-6s have been purchased in the last five years? The
European governments have had a vested interest in building up their
helicopter production capability for years and have been willing to
support it at any cost.

Straightening out the accounting was why the commercial side of MD was
given three years to turn a profit - they couldn't do it, even from a
clean slate. There were no military derivatives of any of the commercial
products that anyone was willing to buy. The U.S. Army had pinned its
hopes on Commanche and weren't about to go buy a passle of cheap
competitors to its sinkiing ship. Commanche was in enough hot water
without the Army asking someone to develop an alternative that Congress
could use against them.

The Europeans were buying militarized versions of their own civil
aircraft to reduce the red ink on their development. They certainly
weren't about to buy a bunch of militarized versions of MD commercial
helicopters. There was no market.

MDHI got a smokin' deal on the commercial business and still haven't
been able to make a go of it. I fail to see how holding on to a
money-losing operation with no potential for the future would be a smart
move. Sikorsky and Bell had most of the civil market wrapped up - MD was
a distant third, bleeding cash and losing steam.

Vygg

The MD500/M530/600 series share the OH-6 lineage. At least a few of
those have been sold commercially since the MDHI split. MDHI sold some
MDExplorers to the Mexican Navy, and some paramilitary versions in
Europe. The rotor system on the MELB was developed for the commercial
MD530F. That's the point - the civil and military markets and
technologies are complementary.

The Europeans didn't just buy militarized versions of civil aircraft to
improve their balance sheet. They developed dual-use aircraft to fill
their requirements from a domestic source. With a full product line,
Eurocopter can sell military or commercial as the markets shift. No, I
don't expect a commercial Tiger derivative, but giving Australia a
commercial helicopter assembly factory helped get that country to buy
the Tiger.

Technology development in military and civil helicopters is
interdependent. Rotor, transmission, HUMS, and other advancess carry
over from one market to the other. The flaw tolerance in the
commercial S-92 makes a very safe, crashworthy military helicopter (The
VXX competition chose to ignore that.) Commercial innovations -- HUMS,
on-condition maintenance -- can cut O&S costs for military operators.


Light helicopers have no future? Boeing abandoned the product line it
now needs to compete for a sizeable US Army order. It may have also
pushed itself out of the LUH contest. Tell me how that was smart
business.

HW

Helowriter wrote:
The MD500/M530/600 series share the OH-6 lineage. At least a few of
those have been sold commercially since the MDHI split. MDHI sold some
MDExplorers to the Mexican Navy, and some paramilitary versions in
Europe. The rotor system on the MELB was developed for the commercial
MD530F. That's the point - the civil and military markets and
technologies are complementary.

The Europeans didn't just buy militarized versions of civil aircraft to
improve their balance sheet. They developed dual-use aircraft to fill
their requirements from a domestic source. With a full product line,
Eurocopter can sell military or commercial as the markets shift. No, I
don't expect a commercial Tiger derivative, but giving Australia a
commercial helicopter assembly factory helped get that country to buy
the Tiger.

Technology development in military and civil helicopters is
interdependent. Rotor, transmission, HUMS, and other advancess carry
over from one market to the other. The flaw tolerance in the
commercial S-92 makes a very safe, crashworthy military helicopter (The
VXX competition chose to ignore that.) Commercial innovations -- HUMS,
on-condition maintenance -- can cut O&S costs for military operators.


Light helicopers have no future? Boeing abandoned the product line it
now needs to compete for a sizeable US Army order. It may have also
pushed itself out of the LUH contest. Tell me how that was smart
business.

HW

Monday morning quarterbacking is easy. Again, at the time that Boeing
divested itself of the commercial business there was no market for the
aircraft, it was losing money (a lot of money) and was in a distant
third place to Bell and Sikorsky with no hope of catching up.

You're assuming that Boeing is going to win the ARH. What if it doesn't
and they've already bought back MDHI? Boeing is in the same boat that it
was in when it first dumped the enterprise. No market, unsustainable
sales and heavy negative cashflow. Selling "some" Explorers to the
Mexican Navy every few years isn't going to keep the business viable.

A few months ago the conditions at MDHI were so bad that the mechanics
were taking their toolboxes home with them every night because they
didn't know if the doors would be chained shut when they came in the
next morning. Their only hope for the future is if Boeing wins the ARH.
If Bell wins - bye, bye MDHI.

The vast majority of rotary wing innovations are military shifted over
to civil. Not the other way around. A civilian aircraft doesn't have to
be built to continue to operate after taking a half-dozen 7.62mm rounds
through major wire bundles. Having a crashworthy civilian airframe is
nice - having an airframe that's difficult to bring down is even better.
The civilian market is for inexpensive aircraft that can be operated and
maintained at a profit - not an aircraft that has to be rugged enough to
handle abusive and hostile treatment. A couple of civilian innovations
that can be migrated over to military (with modification) is hardly a
reason to continue to pour cash into a limited opportunity.

HUMS was based on military innovations like LIMMSS. On-condition
maintenance is great as long as you have a regular flying schedule with
plenty of logistics support handy. In any case, those are support
technologies - you don't have to be in the business of building
helicopters to develop support technologies for them.

If Boeing hadn't sold the commercial side and ARH hadn't come along
you'd be criticizing them for making a bad business decision for holding
onto a losing proposition. It comes down to a basic question of business
- how much of your profitable operation do you sacrifice to shore up a
money pit, on the off chance that someday it may get better?

MD did that for years with its commercial aircraft business and it came
close to sinking the whole company. The end result was that it got
bought out by Boeing.

A lot of stars had to line up in order to get to the situation that
we're in today - the sudden cancellation of Commanche, a MELB based on a
highly modified existing civil airframe and the Army's insistence that
its next scout helicopter be based on an existing civil airframe as a
result. That's a lot to hope for when you're holding a money-losing
civilian helicopter operation that has a bleak future ahead of it
otherwise.

Vygg

Yep, that's me, Monday morning quarterback, Tuesday afternoon 'told you
so.' And now that ARH and LUH are here, I'm telling you it was a
mistake for Boeing to take itself out of the light helicopter business.
Now they have to buy the airframe from a shaky partner, and may lose
the ARH because of that. They also dealt themselves out of the
light/commerical tilt rotor business - and ancillary
government/military sales. (I know -- it's a fad, and Bell will never
sell more than a handful of 609s and derivatives.)

Salesmen make business -- if Eurocopter and Bell could sustain
commercial product lines in tough times, I suspect Boeing could have
too. Do you blame people for not buying MD600s and Exploriers from a
Dutch holding company when the two major suppliers have stable support
networks? That doesn't mean the product lines were losers. And it
doesn't mean the technology in them is worthless.

The composite blades finally in test for the AH-64 are made like those
already on the 530F (same autoclaves, too). Bell 430s were using that
four-bladed composite rotor head and blade technology way in advance of
the AH-1Z/UH-1Y go-ahead. A lot of that flaw-tolerant S-92 technology
makes good sense for a military operator who has to fly alot, take
battle damage, and stay within a budget. HUMS and lot of this dual-use
stuff evolves in parallel.

Commercial utilization rates are typically higher than military, and
commercial operators get real mad when they can't fly -- that gives you
RAM technologies directly applicable to military helicopters. I'm told
some of the latest FARs are tougher than MILSPEC.

Boeing figured 20-year sole-source military contracts like Chinook and
Apache modernization and V-22 and Comanche were sure bets -- ooops
Comanche wasn't a sure bet. Now, DoD has no problem going offshore for
helicopters. I don't think we should just surrender the market and the
industry to Europe. Monday morning, that might be good for business,
and Tuesday afternoon bad for the country.

HW