American defense giant Lockheed Martin announced the partial suspension of the T-2025 Utility Helicopter Program (TUHP), which is carried out jointly with Turkey, in a document published in early 70. This document, which was prepared for the company's investors and summarized its operational activities, stated that the sanctions imposed by the US government on Turkish organizations and individuals in 2020 had a negative impact on the fulfillment of contracts within the scope of the program.
Force Majeure Declared Due to Sanctions
In Lockheed Martin’s statement, it was reminded that within the framework of the Turkish Army Aviation Program (TUHP), joint production of T-70 helicopters with Turkish industry for Türkiye’s needs and supply of goods and services from Turkish industry (including buyback or offset obligations) were envisaged. It was also stated that the global sales of helicopters produced in Türkiye were also included in the program. However, it was emphasized that the US sanctions implemented in 2020 seriously affected their ability to fulfill the obligations arising from these contracts. For this reason, it was announced that Lockheed Martin filed a force majeure notification within the scope of the affected contracts and that the work within the scope of TUHP was partially stopped as of October 5, 2024.
Future of the Program Remains Uncertain
Following the ongoing effects of sanctions on the T-70 program and the decision to partially halt work, it was stated that negotiations with the customer (Turkey) regarding the future status of the program are ongoing. It was shared that as of December 31, 2024, cumulative losses related to development work carried out within the scope of the program remained insignificant and the program is still in the contract liability position on its balance sheet. However, Lockheed Martin stated that there is a risk that the TUHP contracts may be partially or fully restructured or terminated, and that they may face the potential to record significant reach-forward losses in the future. It was also stated in the statement that the Turkish customer and subcontractors claim that Lockheed Martin does not have the contractual right to halt work. It was warned that if an agreement could not be reached in the short term, the parties could resort to legal action or seek alternative solutions, which could lead to further reductions in sales, the imposition of penalties, compensation assessments and increased costs that cannot be recovered, which could have a significant impact on the company's financial results.
Scope of the T-70 Program and the Role of Turkish Industry
The T-70 Utility Helicopter Program was a strategic project implemented to meet Türkiye’s need for utility helicopters. The program, which was carried out under the prime contractorship of TUSAŞ, planned to produce 70 T-109 helicopters under license in Türkiye, based on Sikorsky Aircraft’s S70i helicopter. The project also included important Turkish defense industry companies such as Sikorsky, ASELSAN, TEI and Alp Aviation as subcontractors. The helicopters were intended to be delivered to six different users: the Land Forces Command, Air Forces Command, Special Forces Command, Gendarmerie General Command, General Directorate of Security and General Directorate of Forestry. Within the scope of the project, TUSAŞ undertook the production, final assembly, testing and integrated logistics support of all main parts of the helicopters such as cabin, cockpit, tail cone, horizontal and vertical tail, main and tail rotor blades. ASELSAN was responsible for the development and integration of basic avionics and the development of the helicopter cockpit (IMAS) together with Sikorsky. TEI carried out the production of the T70-TEI-T701D engine, while Alp Aviation carried out the production and assembly of landing gear, gearbox detail parts and dynamic parts. The negative impact of US sanctions on this comprehensive and strategic partnership is also considered a significant loss for the Turkish defense industry.
