“Problems in the Supply Chain will Create Opportunities in Türkiye, But it’s a Slow Process!”

On the occasion of IDEF ‘23, 16th International Defense Industry Fair, Defence Turkey created an opportunity to have an exclusive interview with Airbus Helicopters Vice President & Head of Sales Eastern Europe, Caucasus, Center Asia & Türkiye Thomas ZEMAN to get first-hand information on the Company’s 2022 figures, overview of the first half of 2023, effects of the supply chain problem, H160 and VSR700 Programs as well as an update on the planned Midlife Upgrade (MLU) for the Cougars in the Turkish Armed Forces’ service. Airbus Türkiye President Simon WARD and Airbus Türkiye Communications Manager Özge SEVÜK TOPKAYA also accompanied us and shared information with us on specific topics.

Date: Issue 126 - October 2023 Update: May 24, 2024

Defence Turkey: Can we start our interview by taking a short analysis of 2022. You know the war between Russia and Ukraine heavily affected the Western world. Most of the countries have decided to increase their defense budget, but there is also a supply chain problem that occurs. How was 2022 from Airbus’s perspective. Did you achieve your previously determined goals?

Thomas ZEMAN: If we look at 2022 you mentioned a series of significant crises. So, for the aviation industry, particularly for us in the Helicopter industry business, 2022 has been, let's say, the last year of 10 years of continuous crisis. I’m not going back to 2008 where we had the worldwide financial crisis, but for us in the helicopter business, difficult times started in 2013 with the oil and gas crisis and the collapse of commodity prices. Since then, we have been facing a number of massive global crises accumulated with COVID, and now we have the war in Ukraine. So, what we can say is over the last 10 years, particularly 2022, we have demonstrated the resilience of our business model as Airbus Helicopters, but of course also as a fully integrated division of the Airbus Group. 

So, looking into 2022 more particularly, this was a very successful year and also a year of recovery. In 2022 we were back to pre-COVID business levels in terms of order intake, and we are continuing to progress and improve our profitability, which is extremely important because this gives us the foundation to continue our investment into innovation and research and development so we can identify and test the technologies of the future. So, in that sense, 2022 was quite successful.

If I give you a few numbers, we've had a record year in terms of revenues for the company. We booked 362 helicopter units in the last year, which is very, very significant. It allows us to remain the worldwide helicopter industry leader with 52% of global market share, Civil and Parapublic, and that's an achievement. Of course, it's a challenge as well because staying in the leadership position is never easy. We also take very seriously our role as a leader in the industry. Simon can also comment on that. As Airbus Helicopters, we take it very seriously both in terms of the business leadership, but also in terms of our role in society and particularly with a very ambitious sustainability roadmap, which is aimed at addressing the key challenges that we are all facing, particularly the environment and the need to decarbonize the industry.

Defence Turkey: What can you tell about the first half of 2023?

Thomas ZEMAN: 2023 is an interesting year because after each recovery period you are facing a time of consolidation. This is exactly where we are. 2023 presents opportunities and challenges and we have a huge responsibility to also raise up to the security challenges and threats that are caused by the current conflict in Ukraine. Having said that, war is not a good situation. We are not happy about the situation, but it gives us additional responsibility as an OEM and as a company, which provides both civil and defense and security products. Therefore 2023 will be very focused on the defense and security business. This is where our attention and the strategic priority will be for the year and for the next coming years. 

Defence Turkey: As you pointed out Airbus has a 52% share in global market, Civil and Parapublic. Can you also share about the exports in your turnover?

Thomas ZEMAN: Yes, absolutely. Part of our ability to be so resilient throughout this crisis is the balance of our business. Business is really based on two different dimensions. One is the balance between the Civil and Parapublic business on the one hand, and military business on the other hand. And if you look at the situation today, we are quite balanced in both areas. About 50% of our business is based on the civil market, the other half is the military market. We are also observing the same thing on the support and services and products distribution. Also, a focus on continuing to increase let’s say our baseline for services because this is extremely important in our ability to support our customers worldwide. 

So, this is where we are pretty much now. That's bound to evolve as the market evolves but this is key in the resilience of our business model. So, 50/50 today can be 40/60 tomorrow. That's not what's important. What’s important is that we can rely on these two pillars: civil and military on the one hand and products and services on the other hand to be able to adapt and adjust to the evolving market conditions.

Defence Turkey: Have you experienced any problems in delivery schedules due to the supply chain problems?

Thomas ZEMAN: Supply chain is a major concern for all the actors in the aviation industry and beyond. It’s fair to say that we are still feeling the effects of the COVID crisis and interruptions of the supply chain. The impact can be particularly severe on small and medium businesses. Airbus is extremely active and involved in securing this very important and fundamental part of the supply chain. We work very closely with our suppliers so we can also secure their industrial outputs. Is it challenging, yes, it’s challenging. We have a very ambitious ramp-up plan throughout the different divisions right now. I would say that we are in a good position to meet our delivery commitments.

Overall, has it been challenging? Yes, have we had any major disruptions in 2022 and the beginning of 2023? Based on the successful order intake of 2022, not really, but it's an area where we are extremely cautious and very active.

Defence Turkey: Considering your ramp up, do you have any plans or have you started to create alternative solutions to find new suppliers to assist your existing supply chain? For example, do you have any plans to utilize Turkish industry companies to assist your supply chain?

Simon WARD:  Even though we are facing challenges in the supply chain, “in the middle of difficulty lies opportunity.” The supply chain has issues and there are clearly opportunities for the suppliers to come and get. But it's quite a slow process, it’s not something you can do overnight because a lot of factors are involved like quality standards of suppliers and making sure that all processes are in line.

Yes, these problems in the supply chain will create opportunities in Türkiye but it’s a slow process. We are looking very much at Airbus' strategy now; we don’t want one source for anything. Whatever we buy, we want two sources in two different countries. Because we saw in COVID some countries were shut down much longer than others, so we decided to spread our risk. You see the recent order with TUSAŞ from Airbus Commercial is nominally 50% of the volume. We have another supplier somewhere else doing the other 50%. The overall strategy now of Airbus is to go for two sources, minimum, in Türkiye and other countries.

Defence Turkey: How would you assess the global position of Airbus Helicopters in the global helicopter market and where do you see the strong points of Airbus and how does it differ from its competitors in the market?

Thomas ZEMAN: We can say it’s a highly competitive market, particularly in our traditional historical markets, but we can also say the same thing for future emerging markets such as UAVs, e-VTOL, etc. And we have seen the rise of many different new players in this part of the market, which has not yet materialized. So, this is a very specific market environment right now which we haven't seen for a very long time. Our key strength is definitely the range of our product portfolio. It’s evident that for us it allows us to address a very wide variety if not to say all market challenges. So, this is one of the key advantages we have I would say in the marketplace, and we will continue to work to further develop this approach of having a broad product portfolio so we can address specifically each and every need of the market. 

As we said before, both on the civil and parapublic side, but also on the military side. How do we do it? We do it through, of course, continuous innovation and with a roadmap that addresses all time horizons. In the short term, this is continuing to enhance our products and platforms, to increase the performance, to raise the safety levels, to bring new mission capabilities to our customers and also to bring new solutions to the market. Because the market is evolving as well, the regulation is changing, the operators, the end users, they also have to adapt to that and as an OEM we have to align with them in order to provide the solutions to best answer those market challenges. In the mid and long term, this is continuous investment in our innovation base in order to develop the technologies which will allow us to continue to enhance our product base, but also to develop the disruptive technologies of the future which will allow us to meet the next critical industry and societal challenges such as decarbonization.

Defence Turkey: During IATA, decarbonization was widely discussed. Is it really necessary for the Aviation industry because it only accounts for a relatively small share of global emission? Many companies are asking if such an extensive investment is necessary in this field? 

Simon WARD: Flying is an essential part of life these days. It unites people, contributes to global understanding, exchange of goods and people. It drives global trade and prosperity and as we have seen during the recent earthquakes in Türkiye it is also essential in times of humanitarian crises. And we acknowledge it is also responsible for over 2% of global carbon emissions. 

When you look at what the aviation industry has done in the last 60 years, the aviation industry has cut fuel burn and CO2 emissions per seat-kilometer by more than 80%, NOx emissions by 90% and noise by 75%. And still there is a credible roadmap to decarbonise aviation, and Airbus is playing an active role. So even if it seems like aviation has a small role to play in carbon emission, we are conscious of our responsibility, that we have a role - a leading role - to play in developing sustainable means of flight for the future.

Every Airbus aircraft is already capable of flying with 50% SAF (sustainable aviation fuel) and we aim to have a 100% SAF capable fleet by 2030 for commercial, military aircraft and for helicopters. 

Still there is more that can be done, and it is not a task we can do alone, we have to work together with other players, if not all, in the industry. We have to tackle the carbon emission problem together. 

That is what we are doing all around the world, and in Türkiye as well. We are talking to our stakeholders, understanding their point of view, and trying to find a more affordable, efficient and sustainable solution for the whole industry.

Defence Turkey: Even the price of SAF, it is currently very expensive…

Simon WARD:  Yes, simply six times the price of normal fuel. Somehow, you're going to break the cycle, you're going to create the demand so that people will invest in technology, create the supply at a cost-effective price. If you don't do anything you can’t succeed. So, in the short term it’s a problem that needs our attention. But in the long term it will be much better for all of us. 

Defence Turkey: You underlined that being the market leader is not an easy thing, you also said that you work on new technologies to keep your position. Can you elaborate on your R&D expenditures?

Thomas ZEMAN: If you look at what we have done lately. First of all, we have continuously developed and put out to flight a number of technology demonstrators. The latest clear demonstration of our innovation power is the H160, which is the first new generation of helicopters. It is the first breakthrough in helicopter aviation. Why, because it not only includes a number of innovations and patents, but particularly because it's focused on bringing efficiencies to the market. We talked about decarbonization from the fuel consumption standpoint, while not giving in to performance and this is what we managed to do with the one H160. We need to go further than that. You have seen lately a number of technology demonstrators including the Flight Lab, which is based on the H130, it’s a global technology brick test bed before integrating these new technologies in our product range. More recently, the Disruptive Lab, which is a light single engine helicopter which performed its maiden flight earlier this year. While we are testing new propulsion systems, also with the objective to bring additional performance to the market to meet future market requirements as well, at the same time we continue to decrease our carbon footprint and the carbon footprint of our future customers. 

Airbus next generation CityAirbus eVTOL, this is also a significant demonstration of our focus on decarbonization and the introduction on the market of new propulsion systems. In this case it is a fully electrical propulsion system. We are getting ready to demonstrate the next evolution of “CityAirbus”, which is the “CityAirbus NextGen” and later this year we will have the first flight of our racer demonstrator which is a fast, high-speed compound helicopter based on a propeller system coupled with a traditional main rotor system. So, this gives you an idea of our innovation journey and the amount of resources that we are putting into our research and development and innovation roadmap. The aim is very clear, it is to continue to enhance the safety of our products because safety is Airbus’ number one priority, while bringing new environment-friendly solutions to the marketplace and at large answer the future needs of our customers in terms of mission capability and performance.

Defence Turkey: Can you inform our readers about your ongoing major international and local helicopter programs for which you are offering proposals? 

Thomas ZEMAN: We do not elaborate on specific campaigns, but with our range of products of light single engine helicopters, H125 all the way up to heavy helicopters H215 Super Puma and NH90 which is a specialized military troops transport helicopter, we are competing in a large number of competitions. 

Defence Turkey: Can you share information about the H160. Have you started deliveries, and what are the major differences between existing platforms and the H160?

Thomas ZEMAN: H160 is a successful product. It's a medium sized helicopter in the 6-ton range. The start of the program is quite successful. We have registered over 100 firm orders for the helicopter. It fits our strategy which is to propose solutions to all market segments, civil, parapublic and military. Why do I say that? Because Airbus Helicopters strategy has been for a long time to not only address military needs with specialized military platforms like the Tiger and the NH90 which are absolutely necessary in the military world, but also to use our experience on civil platforms and the resilience of the supply chain, the reliability of the products to adapt them to also meet military requirements. H160 is completely aligned with this strategy. For the H160 we have a civil version which is H160. We also are developing the H160M, which is the military version. So, in that sense it is completely aligned with our product portfolio strategy, to be able to offer the market this variety of solutions. It’s not only a question of products, but it's a full solution. 

What makes the difference between the H160 and other helicopters, I would say, is of course the technology and also the design concept. From a design standpoint, this helicopter was designed with the operation and the operators in mind. So, with the goal to not only make a high-performance helicopter but also easy to maintain and cost efficient to operate. That's a significant breakthrough to integrate this lifecycle approach of the product from the initial design. That's a very challenging approach from a technological standpoint. Some of the key innovations on the H160; First of all, it's a composite airframe that has lots of positive effects on weight. Less weight means also less fuel consumption. Less weight means more performance and with less weight you can also generate more payload. Payload is essential for our operators and a lot of other active safety features were integrated with our in-house avionics suite, which is the avionics suite developed by Airbus Helicopters products. So, this is now available on our twin helicopters from the H135, H145, H160, H175. But with each new product we incrementally also implement new features and advanced features. So now it's fully coupled with four axis autopilot with advanced autopilot modes and new safety features such as the automatic recovery button. The pilot can click on the stick if he loses his reference, such as in a brown out or in a white out or in the clouds, and it will automatically bring the helicopter back to level flight and safety so the pilot can recover and recover their flight. 

Also, sustainability and the approach to the environment is not only a question of decarbonization. Our environmental footprint is also made of noise and so we also introduce a significant innovation with the blue edge blades, which is this V-shaped blades, which, coupled with the Fenestron, allow us to significantly reduce the internal and external noise of the helicopter, which offers the lowest noise in its category on the market. So, you see a number of innovations which really set this helicopter apart from the competition. At the end of the day, it's the most comfortable helicopter in its class. A very smooth level flight with very low vibration. So, to name a few differentiating innovations of the H160 those would be the ones that I would pick. 

Defence Turkey: Have you completed the civil and military certification processes?

Thomas ZEMAN:Yes. So, since this is a civil helicopter, we first achieved a civil certification with the EASA in Europe and the FAA in the US. It is very important, and we are now developing the military version and preparing for military certification of the military version of the H160M absolutely.

Özge SEVÜK TOPKAYA: FAA Certification was already received on June 30. Military is on the way.

Defence Turkey: How long did it take for Airbus Helicopters to develop H160 from first flight to first delivery?

Thomas ZEMAN: Obviously, it's very important to reduce your cycle time to market, it's important because as we said, we are in a very competitive environment, so we must have our solutions, the expected solutions of the future expected by our customers, we have to have them on the market as soon as possible. It's also a matter of cost: the longer it takes the more costly it is to develop and it's also a matter of being able to quickly integrate the latest available technology. We have specifically invested in two areas to continue this effort to reduce our cycle time to market for the H160. First is the integration of all systems into a static system called “system helicopter zero” where we can take the propulsion system, all the avionics, all electrical systems, the cockpit controls everything integrated except for the airframe. And then we've also developed a new testing facility which is called “Dynamic Helicopter Zero”, which is a facility where we test this time the airframe in simulated conditions but with its actual main rotor, engines, tail rotor and all the airframe components, we test the resistance, the reliability and key dynamic behaviors before we can test it in flight. This has two effects. First, we log a lot more test hours on key components. Secondly, we increase the safety of our testing program when our test pilots fly the new developments for the first time. We've already tested it in this dedicated test facility, and we are able to incrementally, let’s say, address technical changes a lot quicker. So, at the end of the day, it reduces our cycle time to market. 

Defence Turkey: Airbus Helicopters is also active in vertical take-off/landing unmanned aerial vehicle (VUAV) market. What can you tell us about the distinguishing features of the VSR700 Multi-Mission Naval Tactical Unmanned Aerial System (UAS), which can be stationed aboard frigates and destroyers alongside manned helicopters and have begun trialling autonomous take-off and landing capabilities at sea in 2022?

You also have solutions for the vertical take-off/landing unmanned aerial vehicle (VUAV) market, VSR700. Can you share information about the multi-mission Naval Tactical Unmanned Aerial System (UAS) VSR700 and elaborate on your targets for the UAV market?

Thomas ZEMAN: Yeah, absolutely so, as we said, Unmanned Aerial Systems is a significantly emerging market right now, both for civilian applications and public services and military as well. The conflict in Ukraine has demonstrated the importance of such technology. We are convinced that the lessons that we can see from a number of experts, we are convinced that UAVs are going to complement what helicopters can do because they cannot do exactly the same thing, they don't have the same capabilities, but we are also convinced that these are much required, let’s say solutions to face the current challenges and the challenges of the future, both in the civilian world and on the modern battlefield. 

So, we have a number of programs, you mentioned the VSR700 which is a very significant program that we launched several years ago. It’s a unique UAV solution which we have developed. It’s based on the Cabri G2 Helicopter which is designed by the French Company Guimbal and we are using this platform to use all the autonomous flight capabilities. We've conducted a wide range of tests, particularly with the French DGA (Directorate General of Armament) as part of the SDAM Program for the Marine drone for the French Navy. We have demonstrated the capability of the VSR700 in real situations for fully automated deck landing and take-off. We've conducted more than 80 take-off and landing real situations at sea and demonstrated the success and efficiency of the system with the winds up to 40 knots and waves from 5.5 to 7.5 meters. So, it gives the market a unique UAV capability, with 700 kilograms maximum take-off weight range, demonstrated capabilities of eight hours of flight endurance with 100 kilograms of payload. But we want to go further than that. So, the possible applications are quite diverse. We are obviously right now focusing on military applications, you can carry electro optical systems, you can carry the process of radar sensors such as automatic identification systems as well. 

Defence Turkey: Do you have any plans to also develop the armed version?

Thomas ZEMAN:Yeah, that's a fair question, it's a matter of as you said, of payloads. So, if you have the payload, we can imagine any payload from as we said, a variety of sensors, armament systems, weapon systems but also simply cargo which is very useful for naval operations but also land operations. So, based on the requirements and needs of the customers, we have the capacity to assess such integration. 

Defence Turkey: Can you elaborate on Airbus Helicopters’ goals and expectations from the Turkish market? The Turkish Armed Forces (TAF) has operated some 46 AS-532UL and AS532AL Cougar Helicopters for nearly 30 years and you are also very active in the civilian market.

Thomas ZEMAN: Yeah, that's why Türkiye is a very important market for us. It’s a big market and it's definitely a market which we perceive as having a lot of helicopter requirements, both for military applications and for civilian applications. We have been working for a long term with the Turkish Armed Forces with the introduction of the Cougars in the 1990s. So, this is a very long partnership, very strong relationship. We have developed with the Turkish Air Forces, both the Air Force and the land forces over the years. We are actively supporting them to make sure that they can fly those helicopters as they need. We are continuously discussing with them about further improving their capabilities, our support capabilities and also the capabilities of their helicopters. In the civilian market, we have also been in the marketplace for a long time. The civilian market is roughly around 60-65 helicopters, it's a moving target because it’s a very dynamic market. We are present both on the purely private commercial market as well as for public services, particularly medical evacuation services. So today Airbus Helicopters products in Türkiye in this market represent a little bit over one third of the overall fleet, which is quite significant with a large fleet base which is dedicated to medical evacuation services with the H135. It’s a light twin-engine helicopter with up to 3.1 tons max take-off weight, which is the leading EMS helicopter solution worldwide. Now with more than 60 percent of market share worldwide. So, for us it's a great responsibility. It’s a great pride also to serve these very demanding strategic mission segments for the Turkish authorities and for the Turkish population as well.

Defence Turkey: TAF procured 30 (20+10) AS532UL and 20 AS532AL Cougar Helicopters. Deliveries of AS532UL Cougar Helicopters started in March 1995 and the deliveries of the AS532AL Cougars started in May 2000. Is there a program to perform a Midlife Upgrade (MLU) for the Cougars in cooperation with TUSAŞ and ASFAT? 

Simon WARD: We are in discussion with the Ministry of Defense about the upgrade of Cougars, the proposal we have is for a glass cockpit, modern cockpit system, avionics upgrade. The contracting authority is ASFAT and will probably involve ASELSAN for the Turkish content. The first question for us is what systems do Airbus Helicopters supply, and what systems do ASELSAN supply. We are working together to define the best and most cost-effective solution. This discussion is at the moment between ASFAT, ASELSAN and Airbus. 

Thomas ZEMAN:The full-glass cockpit is also the integration of the four-axis autopilot so the modernization is an important leap in terms of what the helicopter's capabilities will be after such modernization.

Defence Turkey: Did the SSB or Turkish MoD knock on your door and request this upgrade or did you submit this proposal? Because you know Türkiye usually prefers to make modernization efforts locally.

Simon WARD:  I think it was a combination. We are very aware that the Cougar fleet needs to be upgraded. Due to the age of the helicopters, we are faced with increasing obsolescence issues for spare parts, we know the aircraft well, in fact it is not a surprise that as the original manufacturer we know the aircraft better than anybody else. So, we made a proposal and ASELSAN also made a proposal and now we're trying to find the best fit between off the shelf solutions and indigenous Turkish developed solutions.

Thomas ZEMAN: It’s a very, very natural discussion, we said we worked very closely with the Turkish Armed Forces as well and the Turkish industrial ecosystem, ASELSAN and ASFAT. We are used to all sorts of different cooperation in many different countries, so we can, I would say, confidently approach this project as well with multiple partners.

Defence Turkey: So, you will provide technical support and the four-axis autopilot system and maybe ASELSAN will provide the MFDs and upgrade the communication system?

Simon WARD: At this point, it is not defined because Airbus Helicopter has complete solutions. So, ASELSAN may not have a complete solution but has a lot of solutions for lots of the system but its whether we can integrate those systems into the helicopter systems. Quite a lot of technical discussions are going on about what modules we can work on together. What is the best solution that we can offer because you can have a whole ASELSAN solution. Maybe it's not the best because it’s not directed at that particular helicopter and also how expensive it is. How we will balance the local work content and what you want to do strategically in ASELSAN against the overall cost of the project. At the end of the day this is a midlife upgrade project. This is not an MMU/TF-X Project so there is a balance between the technology you do in-house and the costs that you have to pay.

Defence Turkey: Have you conducted any similar upgrade programs in other countries for Cougar Helicopters? 

Thomas ZEMAN: Yes, this is actually the development of this MLU package, the one we normally provide, let’s say off-the-shelf is a midlife upgrade which allows to bring the Cougar to the latest evolution of the H215 with the full-glass cockpit and four-axis autopilot and all capabilities. Yes, we will do it for those customers who are in that MLU phase.

Defence Turkey: Thank you for sparing your time for our readers.