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Airbus eyes legal action against Japan over helicopter deal

Airbus Helicopter H160

Airbus is eyeing legal action against Japan's ministry of defence after losing out on a multibillion-dollar deal to supply helicopters to the country's ground self-defence forces, said people familiar with the situation.

There was industry-wide surprise in July when the defence ministry awarded a contract to a consortium of Bell Helicopter of the US and Japan's Fuji Heavy Industries to supply 150 military helicopters to the self-defence forces.

The deal — estimated to be worth $2 billion to the Bell-Fuji consortium — throws a lifeline to the Japanese group's helicopter operations, which have been struggling to secure orders since 2007. The Bell-Fuji helicopters will be delivered over a 20-year period from 2021.

Airbus teamed up with Kawasaki Heavy Industries to bid for the contract, known as the UH-X program.

Legal action by Airbus against Japan's defence ministry over the tender process is described by western diplomats and industry insiders as "one of several possible avenues of complaint" being considered by the European aerospace group. The Airbus-Kawasaki bid, which proposed a new version of the Airbus H160 helicopter, was seen as the strong favourite until just a few weeks before the defence ministry's decision was unveiled.

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Bell-Fuji offered a cheaper, modestly modified version of the Bell 412EPI — a derivative of a helicopter that has been in use since before the Vietnam war.

Airbus declined to comment on the possibility of taking legal action against the Japanese defence ministry.

However, some of its senior executives have alleged privately that the Japanese selection process was not transparent, may have come under political pressure and failed to give appropriate weighting to the future export potential of its proposed design, said people familiar with the situation.

It remains unclear whether Kawasaki plans to join Airbus in any complaint against the Japanese defence ministry and the company had no immediate comment.

Richard Thornley, managing director for Bell Helicopter in Japan, said the Bell-Fuji proposal would deliver a cost-effective, capable and reliable replacement for the ground self-defence forces' current fleet of ageing Bell-Fuji UH-1J aircraft.

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"The Fuji-Bell team offered the best value proposition for Japan based on the proven Bell 412EPI design, and the best opportunity to further Japan's economic and industrial advancement with the lowest amount of risk to cost and delivery schedule," he added.

A spokesman for the Japanese defence ministry declined to comment on any potential legal action by Airbus but said the selection process had been appropriate, fair and fully transparent.

One industry veteran familiar with Airbus said the company may have lost the helicopter contract after lobbying by the US government on Bell Helicopter's behalf. "When there is a US bidder involved there is always the feeling that pressure may have come directly from the US," he added.