United Technologies (NYSE:UTX) was awarded a $1.28 billion contract to develop new combat search and rescue helicopters for the U.S. Air Force.
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United Tech, the lone bidder for the contract, said its Sikorsky Aircraft unit will base the new helicopter on its UH-60 Black Hawk. The agreement includes the delivery of four Combat Rescue Helicopters to replace the aging HH-60G Pave Hawk, which was also made by Sikorsky.
Sikorsky could be called upon to build up to a total of 112 aircraft with a potential value of $7.9 billion. The Air Force said the deal allows for fluctuating quantities and was $700 million below its affordability target.
Lockheed Martin (NYSE:LMT) will be a major subsystems supplier for the new helicopter, called CRH-60. Stratford, Conn.-based Sikorsky said it will feature increased internal cabin space and fuel capacity, giving the helicopter a longer range.
“Since 1943, Sikorsky has proudly provided the combat rescue helicopter platform to enable the Air Force to perform one of its most important and sacred missions -- bringing our downed service members home safely,” Sikorsky president Mick Maurer said in a statement.
The Air Force hopes to make room for the search and rescue helicopter through cost savings elsewhere, such as retiring its fleet of A-10 Thunderbolts. The plan has been met with some criticism in Congress, which must approve the Pentagon’s latest budget.
The Pentagon originally left the CRH-60 out of its budget proposal but quickly put the program back on the table in response to pressure from lawmakers.
In 2006, aircraft giant Boeing (NYSE:BA) won a contract to build rescue helicopters based on its CH-47 Chinook. However, former Defense Secretary Robert Gates scrapped the deal after Sikorsky and Lockheed Martin protested the decision.
The Air Force got the green light to revisit a Pave Hawk replacement in 2012. The program was delayed further when Boeing, Northrop Grumman (NYSE:NOC) and European jet maker Airbus dropped their efforts to win the contract.
Shares of United Tech closed Thursday at $115.75, up 1.7% since the start of the year. The stock was flat at the start of trading on Friday.