"It's 50 percent off the peak, which is pretty draconian," Richard Aboulafia, vice president of analysis at the Virginia-based Teal Group, said of the military helicopter market projections. A big unknown in this sector is the procurement rate for the Air Force's Combat Rescue Helicopter program. The Air Force intends to award to Sikorsky a contract for 112 new Black Hawk helicopters that will replace HH-60G Pave Hawks by the end of June, according to service officials. The Air Force says it plans to spend just over $1 billion between 2015 and 2019 for the effort. But the Army plans to retire the Bell Kiowa Warrior and has not funded a new armed aerial scout program. It did, however, fund procurement of 100 new Airbus Lakota helicopters, adding more than $800 million for that effort in the coming four years.

The downturn in military helicopter purchases could lead to a major merger within the industry, Aboulafia said. The military has relied heavily on helicopters over the past decade, particularly in Afghanistan, where rugged terrain has limited the access of fixed-wing aircraft and ground vehicles. Production rates have soared for the big US helicopter makers Sikorsky, Boeing and Bell over this period.

The projected downturn in the helicopter market sounds bad, “but on the other hand we were at a very high [production] peak,” Aboulafia said. Fewer military buys could lead to the acquisition or merger of one of the three big US helicopter makers, the analyst said. “You have to ask the question, is three primes the right number for the US, especially when there is foreign competition from another two primes?” Aboulafia said. “You’re going to almost certainly see the impetus for a merger or for some kind of asset swap,” he said. “It’s just a question of whether [the Justice Department] and DoD permit it.”

The three prime helicopters survived defense spending declines in the 1990s and the current projected downturn is still not as severe as two decades ago. “Even with this downturn, there’s more business than there was,” Aboulafia said. “On the negative side, corporations have different expectations of growth and profitability today.”

Richard Aboulafia, aviation consultant with Fairfax, Va.-based Teal Group, said that partnerships between Western and Chinese aviation companies have tended to unravel over time because of intellectual-property issues.