Things Not Lookin Good.

[Heli-Ops]

NEWS STORY

Kaman: Payment Snag Still Freezing Work On MD Helos

Defence Helicopter (Feb 04)

12 February

 

Kaman Aerospace continues to state that all work on behalf of MD Helicopters (MDHI) is at a standstill with orders from the Phoenix, Az., based company still running at ‘significantly lower levels than originally anticipated.’

 

Indications in Kaman’s 4th quarter earning statement – released this week – are that MD has made little, if any progress on the matter of the stalled work since last summer.

 

The report says receivables owed to Kaman on the project remain at the $20-million level, even though a payment of $4.4-million was made by MDHI during 2003.

 

However, there are optimistic words as well as negative ones in the report. Kaman hints it sees a turnaround in MDHI fortunes coming in the early part of 2004.

 

But it cautions this outcome is not certain and is based on MDHI working ‘ to improve its current financial and operational circumstances.’

 

A spokesman for MDHI said CEO Henk Schaeken was travelling and unable to comment.

 

The full text of the Kaman wording appears below:

 

‘These conditions, combined with the absence of new helicopter orders and the stop work mode for the MD Helicopters, Inc. (MDHI) subcontract program, have resulted in lower sales, which in turn has resulted in overhead and general and administrative expenditures being absorbed at higher rates by active aerospace programs.

 

‘This has led to generally lower profitability or losses for these programs. Kaman Aerospace continues to evaluate its cost structure including its manpower requirements, and is taking actions, as appropriate, to help bring its cost structure in line with the business base.

 

‘Helicopter subcontract work involves commercial and military programs. The company’s helicopter subcontracting group provides fuselages for the MD Helicopters 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. Total orders received from MDHI have run at significantly lower rates than originally anticipated due to lower than expected demand. The company’s investment in these contracts consists of $4.4 million in billed receivables and $16.4 million in recoverable costs not billed (including start-up costs and other program expenditures) as of December 31, 2003.

 

‘The company received payments in 2003 totaling $4.4 million. The recoverability of unbilled costs will depend to a significant extent upon MDHI’s future requirements. The company has stopped production on these programs while working closely with the customer to resolve overall payment issues and establish conditions under which production could be resumed, including the timing thereof. Based on their projected future requirements and inventory on hand at MDHI and Kaman, this could be as early as the second half of 2004. Although the outcome is not certain, the company understands that MDHI management is pursuing strategies to improve its current financial and operational circumstances.’

 

-David S. Harvey

 

CAN'T BUILD ANYTHING WITHOUT FUSELAGES -

[Flying Pig]

Hmmmm.....SO your saying my 5 day MD-500 course was a waste of money?

[Randy Greenhalgh]

Only if you plan on buying a new one from the factory.  You might have a bit of a wait.  No training is ever wasted. :thumb:   Besides, you got to fly one of the most fun helicopters. rotorheadsmiley

 

Cheers  :cheers:

[Flying Pig]

Im already having withdrawls.  I went back last week to fly a 300C, and sat in the 500, and did a "mental" start up just to stay familiar.