US Army hopeful on Textron helicopter deal

WASHINGTON Nov 2 (Reuters) - The head of U.S. Army aviation voiced satisfaction Friday with fresh efforts by Textron Inc (TXT.N) to deliver on a multibillion-dollar Armed Reconnaissance Helicopter program, which has been over budget and behind schedule.

"We probably are in the best position we could be coming out of this," said Brig. Gen. Stephen Mundt, director of army aviation, referring to the restructured program of Textron's Bell Helicopter unit.

The Armed Reconnaissance Helicopter is to replace the army's fleet of aging Bell OH-58D Kiowa Warriors, which are being flown up to 10 times their planned number of hours.

The Army plans to buy 512 such aircraft and deploy them by the end of 2017 at a projected cost of about $9 million per unit, well over the initially projected price of $5.2 million.

If everything goes according to plan, the army aims to buy an initial batch of 16 in fiscal 2008, which began Oct. 1, for delivery in 2009, along with "long lead" items needed to build 10 more.

A second low-rate initial production batch would total 32 or 33 aircraft, Mundt said.

As part of its restructured deal, Bell is moving significant helicopter production from Canada to Fort Worth, Texas, and launching some production steps at its own risk.

Mundt said a high-level Defense Acquisition Board would consider the program next month. The Pentagon's chief weapons buyer is concerned over the program's rising costs and schedule slips.

"My confidence is very high that they (Bell Helicopter) don't want to lose this," he said. "They want to do the right thing ... and if they do all that, we're good."

A Bell Helicopter spokesman did not immediately return a call seeking comment.

On an unrelated matter, Mundt voiced hope the U.S. Air Force would request funds to keep Boeing Co (BA.N)'s C-17 production line open.

Earlier this year, Boeing made the decision to fund long lead work on 10 C-17s entirely on its own, based on what it has called strong bipartisan congressional support for keeping the line open. The decision put "hundreds of millions" of dollars at risk for Boeing, a company spokesman, Rick Sanford, said last month.

Mundt said the army had to rely on the C-17, along with the Air Force's C-5 and C-130 transports, to get it and its supplies to the battlefront .

"Losing lift is not a good thing to us," he said. "I see a need for all three of these platforms."