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Army drops Comanche program; it may boost other Boeing ventures

By Seattle Times staff and news services

	GETTY IMAGES Two Comanche helicopters are seen in flight in this Boeing photo. The Army yesterday announced cancellation of the multibillion-dollar program being developed by Boeing and United Technologies, saying the light reconnaissance-and attack chopper no longer met the military's needs.
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In a dramatic about-face, the Army yesterday canceled its Comanche helicopter program, a joint venture between Boeing and United Technologies.

The Pentagon had spent $6.9 billion over 21 years on the light reconnaissance-and attack chopper. In the end, the program produced two prototypes before new military needs and technologies overtook it.

The contract had been expected to give Boeing about $400 million in annual revenue in 2004 and in 2005. The impact will also be felt by the company's helicopter plant in Philadelphia, where about 600 people work on the program.

Yet at a Pentagon news conference, senior Army leaders said they would reallocate the $14.6 billion earmarked for Comanches between now and 2011 to other areas that will likely benefit Boeing.

These include upgrades to existing Apache heavy attack helicopters made by Boeing; development of unmanned drone reconnaissance aircraft, which Boeing is working on; and more money for the Future Combat Systems modernization program, for which Boeing is the prime contractor.

"I don't see this as being a big blow to Boeing; much of the money will end up going to Boeing in another form. It will probably have a relatively small net impact," said Loren Thompson, a defense analyst with the Lexington Institute.

"The most directly competing programs in the Army are Apache and Comanche," said Richard Aboulafia, an industry consultant with the Teal Group. "Which would you rather have: 100 percent of a proven machine with good profit, or 50 percent of a risky venture?"

The Comanche represents one of the biggest program cancellations in Army history and comes less than two years after the $11 billion Crusader artillery project was dropped after $2 billion had been spent.

The decision reflects a growing realization in the Pentagon that the military has more projects in the works than it can afford, even after its budget grow by tens of billions of dollars since 2001.

Defense Secretary Donald Rumsfeld is believed to favor killing off big-ticket projects conceived during the Cold War if they threaten funding of projects he sees as more essential to the military's modernization.
 
Rumsfeld has emphasized leap-ahead technologies like unmanned aircraft, which could potentially perform the Comanche's reconnaissance-and-attack role.

The Predator drone, for example, began as strictly a surveillance aircraft but was armed with Hellfire missiles and used to attack ground vehicles during the 2001 war in Afghanistan.

"The cancellation of this program saves a significant amount of money and reduces the odds of other major programs being scaled back or canceled," said David Giroux, an analyst at T. Rowe Price, mentioning specifically the threatened V-22 tiltrotor aircraft made by Boeing and Textron.

At yesterday's news conference, Army Chief of Staff Gen. Peter Schoomaker said the Comanche "made a lot of sense" when it started in the mid-1980s as a stealthy helicopter conceived to go deep behind Soviet lines.

"But it makes less sense today," he said, citing the need to put money toward protecting the existing helicopter fleet against new threats, including sophisticated shoulder-fired missiles.

"It's a big decision, but we know it's the right decision," said Schoomaker.

The RAH-66 Comanche helicopter project was launched in 1983 and was eventually to have cost more than $39 billion. The idea was to produce a lighter, stealthier, versatile chopper that could double as both a scouting vehicle and an attack machine.

The program has been overhauled six times, and the cost per aircraft grew to $59 million. The Army was ordered in 2002 to cut the number of Comanches it planned to buy to 650 from 1,207.

The latest timetable had specified full-rate production to have begun in 2010.

Dropping the Comanche is unlikely to stir the kind of controversy sparked by Rumsfeld's decision in 2002 to kill the Crusader.

Army leaders openly opposed that decision, but Schoomaker stressed the Comanche cancellation is an Army initiative.

The Sikorsky plant in Bridgeport, Conn., where the Comanche is being built for United Technologies, opened last year and employs about 400 workers.

"The blow is obviously going to be devastating," said Harvey Jackson, president of Teamsters Local 1150, which represents 3,600 Sikorsky workers.

"We are surprised and disappointed by the Army's announcement," Boeing and Sikorsky said in a joint statement.

Shares of Hartford, Conn.-based United Technologies fell $2.82, or 2.9 percent, to $93.80. Chicago-based Boeing fell 72 cents, or 1.6 percent, to $43.62.

Information from Seattle Times aerospace reporter Dominic Gates, The Associated Press and Bloomberg News is included in this report.

Copyright © 2004 The Seattle Times Company