December 15, 2017 / 1:22 PM / 6 months ago

UPDATE 2-German military kicks off heavy lift helicopter competition-source

* Lockheed, Boeing to compete for contract

* Military moved ahead as forming new government drags

* Initial deliveries planned for 2023 (Adds Lockheed statement)

By Andrea Shalal

BERLIN, Dec 15 (Reuters) - Germany's military has approved plans to buy 45 to 60 new heavy-lift helicopters, kicking off a competition between the two largest U.S. weapons makers for the contract worth nearly 4 billion euros ($4.72 billion), a military source said on Friday.

Lockheed Martin Corp will bid with its massive CH-53K helicopter, while Boeing Co will seek to sell its smaller twin-rotor CH-47.

General Volker Wieker, chief of staff of the German Bundeswehr, signed the document that begins the contract bidding process on Thursday, the source told Reuters. "No decision has been made on a preferred model," the source added.

The defence ministry expects to issue a request for information in the second half of 2018 after completing a fleet capability study, with a contract award seen in mid-2020.

Initial deliveries would begin in 2023, replacing Germany's existing fleet of CH-53G aircraft, the source said.

Wieker's decision calls for a combined contract to include both manufacturing and maintenance, defying a call by Airbus and other German firms that the ministry split the contract into two segments.

The terms of the procurement would require that maintenance was supported in Germany but would not stipulate an award to a German company, the source said.

Lockheed said it had not been officially notified, but would look forward to working with the German military.

Nathalie Previte, vice president of international business development for Lockheed's Sikorsky helicopter unit, said the company planned to involve "German industry to the maximum extent possible around the life of the programme."

No comment was immediately available from Boeing or Airbus.

PARTNERSHIPS

Both Boeing and Lockheed already work closely with German industry and have said they would seek to form partnerships to build and maintain a future German helicopter.

Some military sources had expected the competition to begin only after a new German government was in place. But Wieker decided to press ahead amid signs it could take months until Chancellor Angela Merkel forms a new ruling coalition.

The ministry has proposed spending 3.84 billion euros on the programme from 2018 to 2029, although it must still be approved by parliament.

Boeing's CH-47 Chinook, already used by eight other NATO countries, will compete against Lockheed's Sikorsky CH-53K, a redesigned version of the CH-53G that Germany now flies and which the U.S. Marine Corps will start using in combat in 2019. Israel is also considering buying 20 of the Lockheed aircraft.

The CH-53K will make its international debut at the Berlin air show next April.

Two Boeing CH-47 Chinook helicopters were brought to a conference in Germany in July, but the Lockheed aircraft, just entering production for the U.S. Marine Corps, was not on site.

German military officials would now study the capabilities of the two helicopter models, comparing their effectiveness in different scenarios, the source said. Some officials favour the CH-47 which they say is combat-proven and cheaper, but others say the larger CH-53K would allow growth in future missions.

The U.S. Marine Corps has said the average cost of the huge aircraft will be around $88 million per aircraft. The cost could drop if Germany, Israel and Japan all bought them.

Experts say it would cost less for Germany to buy the Chinook, but that helicopter will require several upgrades in coming years that could add costs. It also carries less, so it takes more flights to accomplish the same mission.

$1 = 0.8478 euros Reporting by Andrea Shalal; Editing by Adrian Croft and Edmund Blair

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