Lockheed Martin projects that Sikorsky’s commercial helicopter sales of the S-92 and S-76D this year will be just a quarter of what they were in 2014. Ted Carlson Photo

Lockheed Martin projects that Sikorsky’s commercial helicopter sales this year will be just a quarter of what they were in 2014, the result of a steep and sustained drop in oil prices.


In Lockheed Martin’s 2015 earnings results conference call on Jan. 26, chief financial officer Bruce Tanner said that the company expects Sikorsky to do around US$375 million in commercial helicopter sales in 2016. That’s half of what he projected last July — before Lockheed Martin closed its $9 billion acquisition of Sikorsky — and far less than the approximately $1.5 billion in commercial helicopter sales that Sikorsky saw in 2014.

“I think the biggest change that we are seeing from when we announced this deal is the changes in sort of the OEM helicopter sales in the commercial marketplace, obviously driven by the oil-and-gas marketplace as we sit here today,” said Tanner.

In Lockheed Martin’s second quarter 2015 earnings call last year, Tanner had noted that the commercial helicopter market associated with the oil-and-gas industry “has really gone down quite a bit.” At the time, he projected that Sikorsky would do around $750 million in commercial helicopter sales in the year ahead.

But in the latest earnings call, he told investors, “As it turns out, our current outlook is probably half of that number. So think of that as roughly $375 million or so of commercial helo sales in the year 2016 . . . that’s some of the pressure that we are seeing.”

Oil prices are currently around $30 a barrel, about a third of what they were in 2014. The downturn is particularly significant for Sikorsky, whose primary commercial products — the S-92 and S-76 — are largely targeted toward the offshore market.

Tanner noted that Sikorsky has promising prospects for “paramilitary” helicopter sales, such as coast guard and search-and-rescue fleets.

“But those prospects won’t impact 2016 and won’t frankly have much impact even in 2017 if we are successful in closing on those.”


While Sikorsky’s commercial business is unlikely to recover until oil prices rebound, its military business should yield improved cash prospects in the years ahead as key programs transition from development to production phases, Tanner said.

Lockheed Martin CEO Marillyn Hewson was also optimistic about the United States Department of Defense’s fiscal year 2016 budget, which includes a double-digit annual percentage increase in the investment accounts to fund new equipment procurement and research and development activities.

“We believe our portfolio of products and new technologies will line up very well with essential recapitalization actions in the areas of ballistic missile defense, tactical missiles, and rotary aircrafts,” said Hewson.