The U.S. Army signed an $86.1 million contract with AAI Corp. yesterday to begin full production of the Shadow unmanned surveillance aircraft, giving the Hunt Valley contractor's top product a valuable endorsement as the company searches for potential buyers.
While expected, the contract was considered a major score for AAI, which now can claim the nation's first full-rate production line for an unmanned aerial vehicle of its kind.
The Pentagon uses numerous unmanned aircraft for surveillance, reconnaissance and combat missions, but the Shadow is the first to be deemed both sufficiently reliable and militarily useful to warrant the commitment of a large-scale production contract.
AAI will deliver to the Army nine complete Shadow systems, each consisting of four aircraft, six specially equipped Humvees, two ground control stations, four remote video terminals and related equipment.
The contract contains options that, if exercised, could extend production at Hunt Valley through 2007.
Executives of AAI left no doubt yesterday that they hope to parlay the success of Shadow into more work with unmanned aerial vehicles, or UAVs, a fast-growing technology of modern war.
The company, which employees roughly 1,000 people in Maryland, hopes to also market the Shadow overseas and to pursue contracts for support and maintenance that could be worth as much as the production business.
"We are extremely proud," said Richard R. Erkeneff, AAI's chief executive officer.
"We look forward to leveraging our expertise in the UAV field to meet the Army's future unmanned system requirements."
The contract comes as AAI's parent company, United Industrial Corp., is reeling from a barrage of asbestos-related lawsuits filed against another subsidiary, Detroit Stoker Co., that foiled the company's hopes to sell itself off.
United Industrial was close to closing a deal with a potential buyer late last year when word of 10,000 or more asbestos-related claims against Detroit Stoker propelled United Industrial's stock into a dive and scared the buyer out the door.
AAI, which also makes training simulation systems and other defense products, is responsible for roughly 90 percent of United Industrial's revenue.
It is widely considered an attractive takeover target, largely because of the success and potential of its UAVs.
The Shadow is a "tactical" air vehicle designed for relatively short-range and low-altitude surveillance missions.
The bigger Predator and the jet-powered Global Hawk unmanned aircraft, used recently in Afghanistan, offer satellite-like photography and imaging and even some missile-launching capability, while the smaller Shadow is designed for brigade-level surveillance over mountains or beyond the horizon.
The aircraft has a 13-foot wingspan and can carry about 60 pounds of sensors and communications equipment, including radar, infrared, video and other technology.
The propeller-driven aircraft can take off and land on a conventional runway or be shot into the air from a hydraulic launcher and recovered with arresting cables like those on an aircraft carrier.
While not the first unmanned aircraft to win favor with the Pentagon - AAI's own Pioneer aircraft saw action in the Persian Gulf war - the Shadow became yesterday the first tactical UAV to go into full-scale production.
Industry analysts say that Shadow's early success in a field that is expected to blossom quickly - as sensors and computer packages improve - places AAI on the outer edges of a potentially lucrative frontier.