FLUG REVUE April 2005: Bell chief executive Redenbaugh outlines strategy

April 2005

VIP Interview

MIKE A. REDENBAUGH

CEO of Bell Helicopter, a Textron Company

FLUG REVUE: What is Bell's strategy to regain market share in the helicopter industry?

Mike A. Redenbaugh: The strategy of Bell Helicopter is to recognize the strength of our commercial and military business in combination, because they are complimentary to each other. We talk about insuring that there is a balance in products and technology. We also talk about the strategy being critical to think about not only new aircraft but the aircraft during their entire life cycle. In simplest terms: I look at Bell's strategy at being in a balance between mlitary and commercial, new and existing aircraft and making decisions, that bring the greatest value to our customers in all segments through that balanced decision making.

FR: What concrete steps have you taken on the civil side?

Redenbaugh: The short term plan is to perform retrofits, modifications and upgrades, what I call RMUs. We look at the existing fleet of aircraft and find a way to bring improvements to them, so that the users can find more productvity. And that has been done both militarily and commercialy. So for example our OH-58D product for the United States Army is undergoing a safety enhancement program to bring features into that aircraft that gives more performance and capability to the Army. On the commercial side, we have introduced more than 50 improvements for the Bell 407 that would allow the aircraft not only to have a greater capability but reduces its direct operating cost. Through those improvements, we reduce the direct operating cost by over 20 Dollars an hour.

Take care of the aircraft around you. Two more quick examples: Bell 206. I've had many customers walk up to me when I started to lead Bell. They said to me: Hey, there are thousands of us out there, what are you gonna do? So last year, we certified a ten percent payload increase. 150 pounds to the 206! So that's a way to provide an upgrade to an aicraft that is valuable. Or putting the Health Monitoring Unit on board.

The intermediate term is what we announced at Heli-Expo 2005: The unveiling of an aircraft, the Bell 429 that incorporates the MAPL technology, the modular, affordable product, everything from the open cabin, glass cockpit, digital air data system, fuel systems, bearingless tail rotor drive system, many things that were defined within the MAPL technology to create a an all new aircraft. The 429 is really a wonderful step in that direction.

We're also in the process of bringing other new aircraft to the market like Eagle Eye the first tiltrotor UAV in aviation history and then a product like the Bell 210. It'll be at 5000 lbs payload and will have direct operating cost at a little over 500 Dollars an hour, it'll have a great efficiency and it'll be a FAA-certified wonderful utility helicopter. Those are intermediate terms.

Then let's swtch to the very long route to horizons. Bell Helicopter has been an innovator in vertical aircraft over its 50+ years history. We see very insteresting new products out there like Quad tiltrotor, a vertical lift aircraft that can lift 25 tonnes. We are thinking about further advancements of UAVs like for example a kind of unmanned air ambulance. Also our proposed anti-torque system that was originally designed for the UCAR.

So short term: RMU, medium terms as I described and long term: we see continuesly through our technological advancements in our Bell X-Works ideas that will shape the rotorcraft industry for the next 50 years.

FR:Why should a customer buy a Bell 429 which enters a market segment that is already well served?

Redenbaugh: Because it'll be the most productive light twin out there. It has the largest cabin with over 220 ft³, it has the most versatile configuration – it has nine doors – it has great performance characteristics like 3.8 hours of operation with IFR reserves. It also has great speed, over 120 kts. So we're talking about right quality, endurance, cabin volume, glass cockpit, IFR capabilites and focus on the Bell reliablility. That's a great aircraft. And: You get the aircraft from a company, that has been number one in customer support in eleven years in a row. Because when you buy an aircraft, you buy an experience and you have to think about the value of the entire experience.

FR: Do you talk about the price?

Redenbaugh: You can get all that for less than four million dollars as a base price, 3.95 million exactly.

FR: Switching over to the military side. Do you see that the V-22 will be stable after the current budget decisions?

Redenbaugh: We all at Bell, Boeing and the customer have high confidence, that the aircraft is ready to enter into operation and we're looking forward to the next several months where the aircraft performs its operational evaluation and we come up to the full rate production decision. There isn't a question at anyones mind about the transformation of the V-22 and we have made many improvements in the aircraft, so that we can further capitalize on the unique capability of the V-22.

Thinking about the kinds of conflicts that there are around the world or that kinds of desasters. Think about what an aircraft like the V-22 could have done to help the victims of the tsunami. That aircraft will fly and that tiltrotor technology provides capabilities no other aircraft can offer.

Concerning the timing: The United States is at war. We need to recognize that budget decisions have to be made. We're pleased that there's not a discussion about reducing the number of aircraft. We're prepared to support any schedule change that might be necessary. But at that point of time there's no change for deliveries in 2005, 06 or 07.

FR: Is the V-22 a good weapon in the war on terror?

Redenbaugh: Vertical lift is the otpimum aircraft for war on terror. Even as a UAV you got real advancements with vertical lift. You can take-off out of anywhere. Especially in the war on terror the speed and range capability of the tiltrotor is an advantage. The flexibility of vertical lift and the tiltrotor are very powerful weapons.

FR: With the other military programs now coming in fruition like the UH-1Y and AH-1Z, will you offer them internationally?

Redenbaugh: Yes, as we have done in the past. The pace of the international interest has continued to move and our intent is to share with various potential customers the capability and the transformation of an AH-1Z/UH-1Y mix. 84 percent of the parts, maintenance and tooling are common. If you buy these aircraft and one gets damaged, if you have an immediate need, you can exchange the parts. And think about the logistics, how much smaller that is. That brings value.

There are some competitions around the world where there is an interest in an utlity and an attack aircraft and where we are offering our aircraft. Our military offerings are also going into the armed reconaissance helicopter. They also extend then into light utility missions. We've also seen increasing interest in Eagle Eye. We see these as growth prospects for Bell helicopter.

FR: Will you re-enter the competition with the AH-1Z in Turkey or not?

Redenbaugh: We are still waiting to see the details and analyze any request for proposal before we make our decision.

FLUG REVUE: On a more general term: Bell Helicopter is owned by Textron. Has the company set some profitability and revenue targets?

Redenbaugh: We're a publicly traded company and there's goals that are set. The Textron goal setting is really healthy and very encouraging.

FR: How does the cooperation with Agusta works?

Redenbaugh: Bell and Agusta have a 50 year relationship and I think the partnership is working in a manner that is comparable to all partnerships. We have some very common objectives and we're working on a number of projects together that we're very focused on and that's positive.

FLUG REVUE: If you introduce new models to the civil market, do you have to produce them with Agusta?

Redenbaugh: We're looking at all options with new programs and new activities. But right now we've a lot of programs with AgustaWestland. One is going into service, the AB139, we've an aircraft that is in the test and evaluation phase, the 609 and we've an aircraft that is before its production phase, the Marine One. We continue to monitor the marketplace and making the appropriate decisions along the way.

FR: The next new product in the civil market after the 429. In what size category do you think is the most urgent need?

Redenbaugh: That gets to the strategic level and that's a question that's too precise to answer.

FR: Is there still room for helicopters which are only made by one nation alone?

Redenbaugh: The aerospace industry is a global one and the relationsships on components, on materials and technologies is reaching around the globe. And on each particular opportunity we try to get a combination that brings us the best value. That's a global business that happens to be in th U.S. and that's about bringing the maximum value to the customer. So, let's compete on a maximum value to see how that's best achieved. And value is defined as the aircraft, its performance, its service and the support network around it.

FR: How is the funding for Bell X-Works planned?

Redenbaugh: X-Works is managed like the rest of Bell Helicopter. It's driven by what the customer wants. We listen to our customers. We determine the priority of X-Works and adjust pace and activity depending on what's coming in from the outside. So, we're right now very busy on the 609, the 429, Eagle Eye and some other projects with no predefined mindset.

From FLUG REVUE 4/2005

Last updated 15 March 2005

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