Exclusive: Sikorsky Sues Babcock in S92 Helicopter Dispute

Graphic for News Item: Exclusive: Sikorsky Sues Babcock in S92 Helicopter Dispute

Sikorsky is suing UK based Babcock International for failing to take delivery of two S-92 helicopters worth £48 million that were ordered in 2011.

In a court filing, Sikorsky asks for: “compensatory damages, incidental damages, and other such relief that the Court deems just and proper to redress damage Sikorsky has suffered from Babcock’s breach of its contractual obligation to pay amounts owed pursuant to its agreement to purchase the helicopters.”

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Bond Helicopters signed a contract to buy 16 Sikorsky S-92s in December 2011. The order was announced at the 2012 Heli Expo Convention. At the time it was the largest single order of S-92s. When Bond’s parent Avincis was acquired by Babcock International in 2014 the contract was formally transferred to Babcock.

The first helicopter was scheduled to be delivered in 2013 with Bond expected to take four of five helicopters each year for the next four years. However, when oil prices fell in the summer 2014 off-shore energy companies cut costs – including helicopter services. Babcock asked Sikorsky to delay deliveries.

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Sikorsky says that it had worked with Babcock to do this and also agreed to defer payments. In March 2015 it agreed to defer payments on the 11th helicopter and it later stored both the 11th and 12th helicopter for the operator. Sikorsky also agreed to delay the delivery of the 13th, 14th, 15th and 16th helicopters in March 2016. In total the two sides amended the agreement 16 times.

Babcock took delivery of 14 helicopters although in January 2018 the 11th, 12th, and 13th helicopters from the order were in storage. Helicopter 14 was grounded with no contract from an energy company.

The operator says that it started telling Sikorsy that it did not want the last two helicopters from the order as early as November 2017. After this it met with the manufacturer several times to explain that it had no role for these helicopters.

Sikorsky argues that the amendments it had agreed were based on Babcock taking delivery of the full order. It accuses the operator of: “encouraging Sikorsky to enter into various amendments to the Agreement with the promise that if Sikorsky agreed to the amended terms it would ultimately obtain full payment for helicopters 15 and 16”

The operator had agreed to pay $29,062,784 for helicopter 15 and the same for helicopter 16 plus $2.9 million to convert each of them to offshore missions. In total Sikorsky says that it is owed $58,125,568.

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Sikorsky wrote to Babcock in September 2018 saying that helicopters would be ready for delivery the next month. Babcock says that Sikorsky should have cancelled the contract before then.

“Sikorsky should have mitigated its damages by availing itself of its own contractual rights, but knowingly failed to do so in order to extract greater payments from Babcock and/or to ensure that Babcock would not recoup any excess pre-delivery payments, even though Sikorsky knew Babcock had no need for helicopters 15 and 16,” says Babcock in a court filing replying to Sikorsky’s first claim.

Sikorsky has requested a jury trial. Babcock says both sides had waived the right to a jury trial in an earlier agreement.

Babcock has not listed the case as being material in its latest medium-term note (MTN) programme prospectus.

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