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UAVs: A Military Bargain?

Defense Cuts May Draw Customers to Swedish Maker

Dec. 6, 2010 - 03:45AM   |  
By GERARD O'DWYER   |   Comments
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HELSINKI - The recent trend among governments in Europe and the U.S. to firm up spending on unmanned aerial vehicles is a boost for CybAero, Scandinavia's big-gest military UAV company.

While defense spending among European Union (EU) countries is expected to decline by an average of 5 percent in 2011, investments in UAVs are anticipated to increase by an average of 25 percent across the region.

For CybAero, the heightened focus on UAV capabilities by the militaries of Europe, and elsewhere, means the Swedish company will rapidly expand its operations over the next two to five years. CybAero recently signed major agreements with EADS and Indra Sistemas, the Spanish electronics group, for the development and supply of helicopter UAVs.

"The increased military focus and spending on UAVs is not only exciting, but it also represents a big change in thinking," said Leif Erlandsson, CybAero's CEO.

"Fixed wings have been around for some time, but the vertical takeoff-and-landing UAVs are more of a new phenomenon on the market," he said. "There are only a handful of companies who work in this field, and most of them, like us, are small, specialized companies."

CybAero reached a partnership agreement in October with aerospace giant EADS to develop a larger, autonomous version of its APID 60 helicopter UAV.

The first phase of the partnership will include the delivery of an APID 60 with a ground station. Due to be delivered this month, it will be used as a demonstration unit and test platform to develop a new 300-kilogram helicopter for EADS' ALCA autonomous heli-UAV project.

CybAero has the potential to position itself as a global leader in the heli-UAV market, said Tomas Mueller, an industry analyst based in Frankfurt, Germany.

"The company is just a minnow right now, but its size reflects what an early stage Europe's armed forces are at in terms of building UAV units with both fixed-wing and helicopter UAV capability," Mueller said. "One significant factor working in CybAero's favor is that it is publicly listed and will have a ready means to raise new capital to finance its growth."

CybAero, which started up in 2003, may decide to add a fixed-wing UAV segment to its business at some later stage, Mueller said.

But Erlandsson rejected this possibility, saying that CybAero is likely to focus solely on heli-UAVs.

"We are a helicopter UAV specialist, and this is our niche area and an area where we are strong," he said. "We have no plans to enter the fixed-wing market."

CybAero's deal with Indra proves that the small Swedish company can punch well above its weight in securing contracts and finding major partners and projects, the CEO said. The deal involves the development of a UAV for the Spanish Navy.

"Our strategy is to become the world leader in heli-UAV aircraft," Erlandsson said. "To achieve this, we need to ally ourselves with strong, globally active partners who can develop applications and both deliver and integrate components for the aircraft and complete UAV systems that can then be sold to customers in a global market. Working with EADS and Indra, we have taken a big step in the right direction."

The sharpened interest in UAVs has been reinforced by defense budget cuts in Europe and the need to look for more cost-efficient solutions to protect installations, equipment and troops in the field, said Jorn Larsen, a Copenhagen-based aerospace markets analyst.

"UAVs can be made, and launched, quite cheaply and operated with small crews," Larsen said. "They are an ideal solution for early enemy detection."

UAVs are being increasingly used in crisis areas such as Afghanistan. Governments, especially in Scandinavia, have been criticized for not doing enough to supply the right equipment to protect troops, Larsen said.

"Governments are more disposed to funding UAV programs than investing large sums on developing vehicles with superior armored protection," he said. "UAVs also have the flexibility to operate in [both] marine and land battle-theaters."

Meeting Naval Needs

CybAero believes that naval demand in the future for heli-UAVs will be huge.

"We are seeing a big jump in interest for marine applications," Erlandsson said. "This in itself is heavily influenced by current needs and developments, such as anti-pirate hunting in the Gulf of Aden in Somalia, and the kind of battle theater that exists in Afghanistan. Navies in Europe are also developing and adding more capacity in the heli-UAV area."

Although Sweden's arsenal includes only fixed-wing UAVs, the potential for local orders remains good. Sweden also will need to upgrade its naval capabilities by buying heli-UAVs, the CEO said.

CybAero has just left the starting blocks in terms of expansion, Erlandsson said. "If you look at our product and our competition, the market we are in is just taking off.

"There are really no naval units in the world who have UAVs on board yet," the CEO said. "The first commercial deliveries of helicopter UAVs to any navy will be in the next one to two years. In Europe, and in other countries, the naval units are getting smaller and smaller, so we will find heli-UAVs working from and on all kinds of ships down to 50-foot boats."

One rival to CybAero's naval heli-UAV is the Fire Scout, being developed by Northrop Grumman for the U.S. Navy. The Fire Scout is in low-rate initial production; one aircraft returned in April from a six-month operational deployment on the frigate USS McInerney, a first for the UAV.

CybAero's collaboration with Indra centers on a high-endurance heli-UAV developed for smaller naval units.

CybAero delivered its first heli-UAV to Indra on Nov. 22. Indra's autonomous heli-UAV, Pelicano, is based on CybAero's APID 60 and designed for naval use.

The delivery comprised a modified APID 60 to be used as a test bed for the development and certification of the final Pelicano aircraft. Two more APID 60 systems will be delivered to Indra in 2011.

In coming years, heli-UAVs will be customized for specific military and commercial functions, Erlandsson said.

The APID 60 is equipped to conduct a range of missions, including reconnaissance, electronic warfare, target identification and communications relay.

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