FORTH WORTH, Texas (AP) -- Textron Inc.'s Bell Helicopter said Wednesday it is laying off 500 employees, after losing a multibillion-dollar reconnaissance helicopter contract with the Army earlier this month.
The Pentagon decided to dump the program -- which had been over-budget and behind schedule -- to look for another replacement for the existing Kiowa aircraft, the Army's most heavily used fleet in Iraq and Afghanistan that is also built by Bell.
Development of the Armed Reconnaissance Helicopter was initially set at about $359 million, with each aircraft costing about $8.5 million. That price has soared to $942 million for development and nearly $14.5 million for each helicopter.
The Defense Department said it would have cost $9.2 billion for the 512 helicopters the Army was expected to buy by 2021.
Roughly 4.5 percent of the work force will be affected including 470 employees in Forth Worth and an additional 30 in Amarillo, Texas. Employees were notified on Wednesday.
"Staffing decisions are always difficult, especially in light of the global economic conditions," said Richard Millman, president and chief executive of Bell Helicopter, in a statement.
Bell said it would provide discharged employees with pay and benefits for up to 60 days. It will also offer severance pay based on its standard company policy.
Shares of Providence, R.I.-based Textron fell 22 cents to $15.11 in afternoon trading.