It Took 5 Years, but the President Will Finally Get a New Helicopter

And the company that will build it for him gets a $1.2 billion contract.

May 17, 2014 at 10:30AM

If there's one thing surprising about the Pentagon's decision to spend $1.24 billion on a new helicopter for the president, it's that it took them so long.

President Obama boarding the current Marine One. Source: Wikimedia Commons.

The Pentagon has been talking about the need to develop a next-generation version of "Marine One" for more than five years now. A few times it came close to making a decision -- then backed away. But by last July, the process appeared to be finally winding down, when potential helo-builders Boeing and then, Northrop Grumman as well, confirmed that they would not be bidding on the contract. This left United Technologies' (NYSE:UTX) Sikorsky unit, working in cooperation with Lockheed Martin (NYSE:LMT), as the winners by default of the $1.24 billion Marine One presidential helicopter contract.

Mind you, this was 10 months ago, yet it took the Pentagon until last week to make up its mind to give the Marine One contract to the only company that wanted it.

The Marine One contract: What it is
United Technologies' win, announced as the lead item in the Pentagon's daily announcements of contract awards on May 7, awards it the right to begin "engineering and manufacturing development" work on Marine One. Six specially outfitted S-92 helicopters will be built in this initial phase of the contract, with two to be delivered by 2018, and the rest subsequently. "Associated support equipment, integration of mature government-defined mission systems, a training system including a flight training device and a maintenance training device, logistics, engineering, and test and evaluation support" will also be provided.

All of this is provided for in the contract award, which covers work to be performed by United Tech through October 2020.

The Marine One contract: What it is worth
Ultimately, United Technologies is expected to build a total of 21 Marine One helicopters for use by the President, Vice President, and senior executive personnel over the course of the next nine years. As such, United Technologies will retain a half-century-old franchise that Sikorsky has controlled since building the first presidential helicopter back in 1957.

How much will it be worth to United Tech? According to military aircraft data clearinghouse, the list cost on a standard S-92 helicopter is $17 million. Times the 15 helos to be built after the initial development contract wraps up, that works out to $255 million -- on top of the initial $1.24 billion United Technologies will get for designing a specialty S-92 fit for a president-hauling duties.

So at the very least, we're talking about a $1.5 billion contract for United Technologies. At 2.4% of annual revenues -- and spread out over nine years to boot -- that's not going to move the needle much for United Tech. Indeed, even if you assume that Marine One variants include additional bells and whistles not found on an ordinary S-92, and push the cost up a bit, this still isn't a huge deal for United Technologies, from a financial perspective.

Foolish takeaway
What it is is a huge PR coup for the company. With this win under its belt, United Technologies can continue to boast that it is "the company that builds helicopters for the President of the United States of America" -- pretty exclusive bragging rights. If you ask me, this win by the S-92 should probably "86" talk of United Technologies spinning off or selling Sikorsky (even if it's not the company's most profitable unit). Or at the very least, if United Tech does decide to sell, I'd say the value of the Sikorsky unit just went up by a quite a bit.

Long story short, United Technologies shareholders have had to wait longer than they probably ought to have for this news. But at least the wait was worth it.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. And contracts like this one help enable United Technologies to pay out a tidy 2% dividend every year. Smart investors know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Lockheed Martin and Northrop Grumman. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers