CT7 PRODUCTION SET TO BEGIN A LONG, GRADUAL DECLINE AS DEMAND FROM THE U.S. MILITARY DROPS
NEWTOWN, Conn. -- The T700 powers heavy military helicopters, including the popular H-60 Black Hawk/Seahawk models, the Bell AH-1Z/UH-1Y family, the Boeing AH-64E attack helicopter, and South Korea's KUH (Korean Utility Helicopter). The commercial CT7 version powers a variety of civil and military helicopters, including Bell's new Super Medium 525 helicopter.
This T700/CT7 is facing a long-term decline in demand. The family is on enough applications at this point that it is not dependent on any single program, but reduced defense spending on H-60 and H-1 rotorcraft by the U.S. Army and Navy, respectively, are bound to cut deeply into demand over time.
The U.S. Army and Navy are recapitalizing their respective fleets of Black Hawk and Seahawk helicopters, and the U.S. Marines are buying Bell AH-1Z helicopters. As these programs wind down, the production of T700 engines will inevitably decline. Demand from the rest of the world is significant, but not large enough to compensate for the reduced demand from the Pentagon.
The new rotorcraft that will replace these helicopters in the U.S. inventory are still in the early stages of development. These new models will feature different engines with more power than the T700 currently provides.
The U.S. Army is already looking at a 3,000-shp drop-in replacement for the T700 engine for its Improved Turbine Engine Program (ITEP). GE is working on a new engine designated the GE3000 as part of the program.
In the civil sector, the CT7 turboshaft models power medium to heavy rotorcraft. The decline in oil prices, which predates the economic impact of COVID-19, cratered demand from oil and gas support operators - the primary market for medium and heavy commercial helicopters. That will lead to reduced production of the CT7. Our forecast envisions a gradual recovery in the sector in the near term, but the segment may recover faster than we anticipate.
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