Textron executives confident in profitability of FLRAA despite looming protest

By Dan Schere  / January 25, 2023

In spite of a recent bid protest, Textron executives said during a fourth-quarter earnings call Wednesday that they believe the Future Long-Range Assault Aircraft contract award will be a “terrific boon for the business” over the next few years.

Bell, which is owned by Textron, was awarded the FLRAA contract in early December for its V-280 Valor aircraft, which will eventually replace the UH-60 Black Hawk in 2030. The contract’s initial award was for $232 million, but the Army said it could be worth as much as $1.3 billion.

Sikorsky, owned by Lockheed Martin, filed a bid protest with the Government Accountability Office later in December, stating that “the data and discussions” lead them to believe that their proposal and Bell’s were “not consistently evaluated to deliver the best value in the interest of the Army.” The GAO must issue its ruling by April 7.

In projecting $3.3 billion in revenue for Bell in 2023, Textron CEO Scott Donnelly said the company has accounted for the delay stemming from the protest. That projection is up from recast revenues of $3.1 billion in 2022.

“The protest period ends the first week in April, so we’ve baked that into our estimates, assuming that will be resolved by that period of time,” he said. “Obviously the dynamics in terms of the margins are that we’ll continue to see a decline on the military revenue side. They’ll be some offset on the commercial revenue side. We’ve had a good year in terms of bookings and expect to see nice growth on the commercial side. And obviously we’ll have three quarters of FLRAA program [revenue] coming in, which is good. But that is a lower-margin business.”

When Donnelly was asked how much revenue will be generated from FLRAA, he declined to provide a specific number.

“But clearly it will ramp as we go into 24-25, and I think for quite some time. I think this program will be a terrific boon for the business,” he said.

When asked by analysts about the basis for Sikorsky’s protest, Donnelly deferred to the Army and Lockheed Martin.

“As you all know this process has been going on for a decade. There’s been an enormous amount of work between both suppliers and the Army from design, development, tests, flight . . . it’s been an unbelievably robust process. And so, it’s hard for me to understand what flaw would have been in the process. It’s kind of inconceivable to me, but we’ll leave that to the Army and Lockheed,” he said.

Bell revenues down in 4th quarter from a year ago

Bell generated revenues of $816 million in the fourth quarter of 2022, which was down $42 million from the fourth quarter of 2021, according to a company statement. The decline resulted from lower military revenues mainly in the Marine Corps’ H-1 program due to lower aircraft and spares volume.

However, Bell delivered 71 commercial helicopters in the fourth quarter, which was up from 59 in the fourth quarter of 2021, according to the company. Bell finished the quarter with a backlog of $4.8 billion.

Textron Aviation’s revenues were $1.6 billion in the fourth quarter, which was up $223 million from the fourth quarter of 2021. According to the company, this reflects a higher volume and mix due to higher Citation jet and defense volume.

Textron Aviation delivered 52 jets in the fourth quarter, which was up from 46 in the fourth quarter of 2021, and ended the quarter with a backlog of $6.4 billion.