$1.3 Billion Project of Watchkeeper Further Delayed

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The troubled, extremely expensive Watchkeeper project intended to supply  unmanned surveillance aircraft to the Royal Artillery has hit further technical  delays. The first robot spyplanes should have been delivered in February – eight  months later than the original contract called for – but they will now arrive  “toward year’s end”.

Handover of the system, intended for intelligence, surveillance, target  acquisition and reconnaissance, had been expected in February but were delayed  by some as-yet-undisclosed “technical difficulties,” Thales executives said Feb.  25 in revealing 2010 final results.

Executives say the issues were detected in a report issued by Britain’s National  Audit Office and have now been resolved. Thales is building 54 Watchkeeper  units, based on Elbit’s Hermes 450 air vehicle, under a ₤800 million ($1.3  billion) contract with the U.K. Ministry of Defense. It is also supplying spares  and support services under a three-year follow-on award issued last year. The  UAV made its first flight in April 2010.

The French-based aerospace and defense contractor is emerging from a series of  program delays and cost overruns that caused it to take a €700 million ($962  million) charge last year last year, on top of a €240 million write-down in  2009, plunging it into the red for the second year running. Thales suffered a  €45 million net loss last year, a bit better than the €128 million deficit in  2010, but also dipped €92 million into the red on an operational basis, after  earning a €151 million operating profit a year earlier.