Sikorsky sues Babcock over S-92 deliveries
07 Aug 2019 - Upstream Costs and Technology | Headline Analysis
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Amy GroeschelAmy GroeschelPrincipal Research Analyst

Sikorsky, a subsidiary of Lockheed Martin, is suing Babcock International for refusing to take delivery of two S-92s that were ordered in 2011. The helicopters were originally ordered by Bond Helicopters under an agreement to purchase 16 helicopters. Bond's parent company, Avincis, was acquired by Babcock in 2014. The first helicopters were slated for delivery in 2013 with Bond taking multiple deliveries over four years. However, with the fall in oil prices Babcock delayed deliveries. In the lawsuit, Sikorsky states that it worked with Babcock to both delay and defer payments storing the 11th and 12th helicopter for Babcock and continuing to amend the agreement. By early 2018, Babcock took delivery of the 14th helicopter and immediately put it into storage along with three others. Babcock informed Sikorsky that they did not want the final two but Sikorsky insisted that they must take delivery of the full order stating that Babcock had agreed to pay USD58 million for the final two which included the sale price plus several million to convert them for offshore missions. Shortly, after Sikorsky filed suit. Babcock insists that Sikorsky should have canceled the contract before that. The case is still pending.

All of the negotiations and legal drama indicate a continued over supply in the offshore market and the displacement of some large helicopters by newer, more capable and cost effective medium helicopters.