Bell Helicopters' upgraded H-1 generates foreign interest

As U.S. budget pressures mount, the U.S. Marine Corps says growing foreign demand could help drive down the unit cost of its new upgraded H-1 utility and attack helicopters built by Bell Helicopter, a unit of Textron Inc .

Major General John Croley, assistant deputy commandant for aviation, said the new helicopters had greater range and capabilities that would enhance the Marines' ability to work with allies across the Asia-Pacific region.

He said increased interest from countries in Asia and the Middle East could help lower the cost of the new helicopters as U.S. defense budgets come under increasing pressure.

"Foreign military sales are a good thing for the taxpayers' investment in our military systems," Croley told Reuters in a telephone interview, noting that the Marine Corps was also hoping the U.S. government would back the sale of the V-22 Osprey, which is built by Bell Helicopter and Boeing Co , overseas soon.

Bell Helicopter is one of three industry teams competing for a multibillion-dollar order from South Korea for 36 new attack helicopters, with a contract award due this spring, said Bell Helicopter spokesman Greg Hubbard. Boeing and AgustWestland, a unit of Italy's Finmeccanica SpA , are also bidding for the order.

In the Middle East, Iraq and Bahrain have requested pricing and availability data for the upgraded versions of the H-1 helicopters, said two sources familiar with the program who were not authorized to speak publicly.

Iraq is looking at a possible purchase of 24 AH-1Z helicopters for the Iraqi Army and 6-8 UH-1Y Maritime Utility helicopters for its Navy. Bahrain is eyeing a possible purchase of 14 AH-1Z attack helicopters, said the sources.

Many other countries are also interested in buying older H-1 model helicopters from the Marines. The corps plans to buy 349 of the new helicopters from Bell, which signed a contract in December to build 53 more helicopters.

"We are seeing increasing international interest as more and more people become aware of the multi-role capabilities of these aircraft, particularly in regions where operators are looking for an affordable alternative to the legacy technologies of the 1980s," Hubbard said in an e-mailed statement.

Croley, who said he has flown three of the four H-1 variants produced by Bell Helicopter since the introduction of the "Huey" in the 1960s, said the program was unusual because it was running ahead of schedule and on budget at a time when many other programs had seen delivery delays and rising costs.

"They've been ahead of need, averaging deliveries 34 days ahead of schedule. That's unheard of," he said.

Croley also lauded the company's good relationship with the community in Amarillo, Texas, and its commitment to hiring veterans. About 40 percent of the workers at the Amarillo plant are veterans, he said.

Marine Corps Colonel Jeff Mosher, deputy branch head at Marine Corps aviation headquarters, said the UH-1Y or "Yankee" and AH-Z or "Zulu" models offered the service enhanced intelligence and surveillance capabilities, better targeting, precision fires, more lift and greater operational reach.

He said helping U.S. regional partners to buy and use the helicopters would reinforce Washington's strong alliances while expanding the capability to the combined forces.

Croley said the two upgraded H-1 models were 85 percent common, which helped reduce the cost of sustaining the aircraft and made it easier to deploy because they needed fewer spare parts and other equipment.

(Reporting by Andrea Shalal-Esa; Editing by Dan Grebler)