AgustaWestland to upgrade old Sea Kings if new air fleet is axed

A £7bn contract with Soteria for 24 search-and-rescue helicopters may be scrapped by the Treasury

AgustaWestland, the Anglo-Italian helicopter company, is preparing to renew the UK's search-and-rescue (SAR) air fleet, if the coalition Government decides to scrap a £7bn contract for its replacement.

The Chief Secretary to the Treasury, Danny Alexander, announced last Thursday that he was suspending plans to replace the ageing Sea King fleet, manufactured by Westland Helicopters. The move has sparked safety fears, as the Sea King's lifespan is expected to end by 2017.

However, AgustaWestland is preparing to dust off two-year-old studies showing that it can extend the helicopters' lives to 2022. It is not clear how much this would cost, but industry sources say that the move is unlikely to provide value for money.

Under the terms of the £7bn SAR-H contract, a Thales-led consortium known as Soteria would provide 24 or more new aircraft working from 12 bases across the country from 2012. A private finance initiative scheme, Soteria would be responsible for training crewmen and for helicopter maintenance over the length of the 25-year contract, which the public sector would pay for in annual instalments.

Mr Alexander decided SAR-H needed to be reassessed to see if it was a necessary expenditure. A defence source said he expected a decision by the end of July, as the Treasury's press notice suggested that SAR-H would be looked into "as a matter of urgency".

This will do little to placate a nervous Whitehall. A senior figure said: "The Sea Kings are knackered and if the Government tries to cut the scope of the contract, availability [of helicopters] will suffer and people will die."

The source added that the Ministry of Defence, in conjunction with the Department for Transport, is against pulling the contract. Historically, much search-and-rescue was run by the military, but now more than 90 per cent is thought to involve civilians.

However, a source close to the Government claimed the Sea Kings will prove durable. He said: "There are other helicopters being upgraded around the world and it tends to be found that those upgrades aren't as difficult as had been anticipated."

The 12 bases cover 11,000 miles of coastline and 1.4m square miles of sea and land. The Soteria consortium includes Royal Bank of Scotland, the helicopter group CHC and manufacturer Sikorsky, as well as Thales.

Soteria is understood to be treating the project as ongoing. Executives have recently been holding meetings with staff across the country about SAR-H and will continue to do so.

Mr Alexander delayed the contract as part of a review of £34bn of schemes and loans approved in the final days of the Labour administration.

An £80m loan to the steel group, Sheffield Forgemasters, to build a press to manufacture components for the nuclear industry was one of the high-profiles plans that has been axed.