Airbus refuses to extend commercial bids validity for 14 helicopters for coast guard

Coinciding with French President Emmanuel Macron’s visit in March, European aviation major Airbus has refused to extend commercial bids validity for 14 twin-engine EC725 helicopters, estimated to cost Rs 2,000 crore, for the Indian Coast Guard.

An Airbus company spokesperson confirmed to FE, “We confirm that the commercial bid pricing has not been extended for the helicopters.” The pricing for the twin-engine helicopters, which had been extended nine times earlier, expired on February 15, and the French company did not extend it for the 10th time. Sources told FE,

“The company was extending the pricing as the interest rates of the European Central Bank (ECB) at the time were low. This continuous extension also led to erosion.” The sources added, “The assumptions of inflation and interest rate hikes in the calculations of the company’s pricing for the helicopters have made the contract financially untenable at this time.”

The ECB has signalled that it would be ending its easy money policy by September 2018 and the anticipation is that ECB deposit rates could rise to 2% by 2019, explained industry sources. In anticipation of closing the deal soon, the company had even chosen chosen Goa to set up a maintenance, repair and overhaul ( MRO) facility for the EC725 helicopter. As a greenfield project, the MRO facility was expected to create jobs as well as get new military helicopter maintenance technologies to India. All 14 EC725 helicopters were to be re-assembled and flight-tested there.

The MRO was to enable a comprehensive performance-based logistic (PBL) support service that Airbus is offering to the Indian Coast Guard to ensure maximum fleet availability of its EC725s. And all 14 EC725 helicopters were expected to be integrated and flight-tested there. A senior naval officer said, “The coast guard has been looking for twin-engine helicopters that can help in making long trips in the sea.

The Chetak helicopters that are being operated are unable to go deep over the sea. The twin-engine helicopters can make longer trips.” Post 26/11, the coast guard, which currently uses ageing Chetaks as well as indigenous Advanced Light Choppers (ALH) for patrolling, search and rescue and casualty evacuation, raised the requirement for helicopters for enhancing its surveillance and interception capabilities. The Airbus EC725, which emerged as L1 in the competition against the Sikorsky S92 helicopter, has been in negotiations with the coast guard for over a year now.

By: Financial Express

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