Eurocopter sees military orders down in 2010

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Eurocopter, the world’s biggest civil helicopter manufacturer, expects a downturn in orders from the military sector from 2010 as the economic crisis cuts into budgets, the company’s chief executive said.

“2010 will be a difficult year for Eurocopter,” Lutz Bertling told journalists ahead of the Paris Air Show that opened this morning.

The subsidiary of European aerospace and defence group EADS gets just over a third of its orders from the military sector, for which it makes the NH90 and Tiger choppers.

But large orders to be finalised by the end of July will add some €2.5 billion ($3.5 billion) to the company’s backlog and help offset weak orders for civil helicopters in 2011 and 2012, he said.

“We are entering this gloomy tunnel of 2010, but we are already seeing a sunny end of the tunnel,” he said.

According to Eurocopter, in 2008 it delivered 45% of new helicopters coming onto the global market, making it the leading manufacturer ahead of rivals such as United Technologies Corp unit Sikorsky and Textron’s Bell.

In the civil sector, the global economic crisis had an “immediate” impact starting in September last year, Bertling said. Shortly after, demand from the public sector fell as governments had less tax income or suffered from low oil prices.

“There is a very significant impact on the civil side of the business in the bookings that we are seeing now,” Bertling said.

He said that while the company’s order backlog would remain largely stable in 2009 from last year, the economic crisis would start to bite in 2010 and 2011 if public groups, corporations and the super-rich kept a tight hold on their purse strings.

The company would cut production levels if necessary, depending on how demand in the civil sector, in which the company sells “Ecureuil” and EC135 helicopters, developed in 2010.

Like the commercial airplane sector, Eurocopter is seeing order cancellations, but the company has so far been able to reallocate most of the heklicopters with other customers.

“We have had roughly 70 cancellations, but the net booking on the civil helicopters is roughly 100 helicopters up to now,” Bertling said, adding Eurocopter’s market share has slightly increased as it stood its ground in a shrinking market.

Eurocopter booked a net 715 orders in 2008, down from a record 802 in the previous year which marked the peak of the aerospace cycle, due in part to a drop in big military tenders.

“There will clearly be lower production levels (in 2010) than we have now. But to predict how the market will behave is extremely difficult. We need to wait a bit longer in the year to get more precise figures,” Bertling said.

Eurocopter, which posted €4.5 billion of sales in 2008, will present its new EC175 civil helicopter at the Paris Air Show. It expects the chopper’s first flight to be at the end of 2009, Bertling said.