Forget selling rustproof "undercoating" and "fabric protection" on new cars. If you want to make some real money on a new vehicle warranty, you should try selling helicopters. This morning, United Technologies subsidiary Sikorsky Aerospace followed up on its sister firm's (Sikorsky Aircraft) deal to sell Bristow Group a fleet of two dozen or so S-76D helicopters, signing a new contract of its own. If yesterday's news was worth perhaps $257 million to one UTC subsidiary, then today's could generate three times more revenue for another UTC sub.
Dubbed its "Total Assurance Program" (TAP), Sikorsky Aerospace has signed Bristow up for a decade-long deal to provide maintenance and servicing on its fleet of Sikorsky S92 helos -- a warranty contract worth $840 million over 10 years.
Pricey as the contract seems, Bristow seems to think it's getting a good deal. In signing on for the 10-year TAP program, Bristow's actually coming off of a similar seven-year warranty deal -- which it liked so much that it's re-upping for an even longer term.
As described in the firm's press release, TAP guarantees that Sikorsky Aerospace will cover "up to 98 percent of the cost of parts replacement including airframe, drive train, gearboxes, avionics and consumable parts" when a Sikorsky aircraft needs repair. It also locks in Bristow's costs for servicing its fleet, ensuring the customer need not worry about prices going up, crimping operating profits in an unexpected manner -- for the next 10 years.
The article Sikorsky Sells Bristow a $840 Million Extended Warranty originally appeared on Fool.com.
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