Australia Cancels Contract To Buy Kaman Helicopters | The deal for Kaman's Seasprite helicopter has encountered numerous problems
Australia has canceled its $1.2 billion contract to buy 11 navy Seasprite helicopters from Bloomfield-based Kaman Corp., claiming the aircraft are unsafe.
The cancellation came amid a review of defense contracts ordered since Prime Minister Kevin Rudd’s new government came to power in elections last November. The contract was due to be completed by 2002 but has been plagued by technical problems, and only nine helicopters have been delivered.
The Australian navy grounded the Seasprites in April 2006 because of safety concerns during test flights.
“The project had to be canceled on safety grounds alone,” Defense Minister Joel Fitzgibbon told reporters, despite Australia already investing $1.2 billion in the deal.
“The airworthiness and crashworthiness of the aircraft was not up to 21st-century standards, and it was pretty clear the capability was not likely to be delivered in full,” Fitzgibbon said.
Kaman officials referred questions to Jacquelynne Willcox, a Sydney-based spokeswoman for the company. She declined to discuss the contract and safety issues.
Not In Service
Kaman’s Chairman, President and CEO Neal Keating said in a written statement that his company would try to negotiate a mutually agreeable conclusion to the contract.
“Although we have created a highly capable aircraft for the Royal Australian Navy and continue to fulfill our obligations to the Commonwealth under our contract, we appreciate the thoughtful approach and time invested by the current government in addressing our program, and we will work with them toward arriving at a satisfactory arrangement,” Keating said.
Defense officials told an Australian Senate committee last month that the helicopters were still three years from service and might never meet aviation safety standards.
Neil James, executive director of the Australian Defense Association independent think tank, said its navy air crews were “not comfortable flying it in all conditions” and would be relieved the helicopter was scrapped.
The helicopter’s problems included the amount of modern technology the manufacturers attempted to integrate into a 1960s-era airframe, James said.
Fitzgibbon did not say how much it would cost the government to break the contract, as the legalities haven’t been negotiated yet.
“The government will announce the details of arrangements with the contractor once mutual agreement on these matters has been reached, subject to any confidentiality issues,” Fitzgibbon said in the statement.
Analyst Stephen E. Levenson of Stifel Nicolaus said in an investors note that Australia’s action is “largely a political move as Kaman management has maintained its stance that it has performed under the contract, which was initiated in 1997.”
“We do not believe that the termination of the contract will result in any impact to Kaman’s earnings going forward as reserves have been established over the last several years,” he wrote. “Kaman has a receivable outstanding due from Australia and a letter of credit established to guarantee performance under the contract.”
What happens to the nine helicopters already in Australia’s possession will be a matter for negotiation, said Defense Ministry spokesman Christian Taubenschlag.
Opposition defense spokesman Nick Minchin agreed with the government’s decision to scrap the contract but questioned how much the cancellation would cost and how the naval air capability would be replaced.
WBJ Web Partners
Most Recent
Most Recent
0 Comments