Photographer: Krisztian Bocsi/Bloomberg

Airbus Left Fuming as Poland Hands Helicopter Deal to Lockheed

  • European company stripped of contract by new government
  • CEO Enders seeks remedy, France to review defense accords

Airbus Group SE lashed out at Poland for scrapping a 13.5 billion-zloty ($3.5 billion) helicopter deal and handing orders to rivals apparently without a tender process, saying it will seek remedies in a dispute that’s boiled over into an international diplomatic incident.

Airbus Chief Executive Officer Tom Enders said Tuesday that the Polish government had “slammed the door” on his company, which appeared to have “been misled for months,” adding that it has expended huge amounts of effort and cash on the bid and “will of course seek remedies.”

“Never have we been treated by any government customer the way this government has treated us,”  Enders said in a statement hours after Polish Defense Minister Antoni Macierewicz revealed that a batch of helicopters would be bought from U.S. defense giant Lockheed Martin Corp. and that Leonardo-Finmeccanica SpA of Italy could also expect orders.

Toulouse, France-based Airbus is fuming after an April 2015 outline deal to supply 50 H225M Caracal multi-role helicopters in Poland’s second-biggest military order ever was scrapped on Oct. 4, with Prime Minister Beata Szydlo saying it represented poor value in terms of the so-called offset work granted to the country for placing the order.

Hollande Rift

French President Francois Hollande postponed an Oct. 13 visit to Poland following the decision and will review the continuation of military pacts between the nations, according to French Defense Ministry advisers.

Airbus followed up Tuesday with an open letter to Szydlo saying the Caracal deal would have provided more offset revenue than the helicopters are worth, creating 1,250 new jobs plus 2,500 in the wider economy and transforming a maintenance plant in Lodz into a “world-class” production facility.

Airbus -- which is already reviewing helicopter output as part of a broader restructuring as demand shrinks -- had also agreed to extend the validity of its pitch until Nov. 30 and made further concessions the day before the deal fell apart, it said.

Poland said that Lockheed Martin and Leonardo, which lost out to Airbus in the original bidding, will now be asked to supply helicopters from their existing plants in Poland, with the U.S. company producing two Black Hawk models this year followed by eight more in 2017. A further 11 machines are likely to be purchased for 2018, it said.

Defense Drive

The deal with Airbus, part of Poland’s plan to boost defense spending amid conflict in neighboring Ukraine, was signed by the former government and opposed by Szydlo’s Law & Justice party at the time. The prime minister said this week that the award had ignored the capabilities of Lockheed’s Sikorsky plant in Mielec and the Swidnik facility of Leonardo’s AgustaWestland.

While Szydlo stressed that equipment for the Polish army should be “produced in Poland,” Airbus said its offer was the only one that would have created new jobs in the country, guaranteeing production of at least 50 Caracals there and creating a new state-owned business with export potential.

Airbus said the Caracals themselves would have cost 10.8 billion zloty, whereas Poland had sought an offset value of 13.4 billion zloty that included value added tax, something which while “not standard practice” it accepted. Poland has said the helicopters alone would have cost 13.5 billion zloty and that the offset sum would have been less than that.

Unspecified new offsets sought by Poland in August would have broken European Union rules, Airbus added

Dominika Bochnak, a spokeswoman for Lockheed Martin’s Polish unit, declined to comment or elaborate on the status of the Black Hawk orders. Defense Ministry spokeswoman Dagmara Jaroslawska said she couldn’t comment beyond Macierewicz’s remarks.

— With assistance by Marek Strzelecki

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