Finance
UK set to approve Leonardo military helicopter contract
Published by Global Banking & Finance Review®
Posted on February 27, 2026
3 min readLast updated: February 27, 2026
Quick Summary
UK Chancellor Rachel Reeves is poised to sign off a ~£1bn contract for Leonardo to build a new medium-lift military helicopter fleet, safeguarding the Yeovil plant and thousands of UK jobs ahead of a March 1 offer deadline. The purchase would reportedly cover 23 aircraft—well below the MoD’s earlier
UK set to approve Leonardo helicopter contract worth up to £1bn
Contract award and UK defence investment context
Reeves set to intervene to secure helicopter manufacturing
LONDON/ROME, Feb 27 (Reuters) - Britain's finance minister Rachel Reeves is set to award a contract to Italian defence company Leonardo to build a new fleet of military helicopters, a Treasury source said on Friday.
Without a new contract, Leonardo had said it could shut Britain's last military helicopter manufacturing site, in Yeovil, southwest England, threatening the jobs of the 3,000 people who work there.
The deal, worth as much as 1 billion pounds ($1.35 billion), had appeared to be up in the air with just days to go until a March 1 deadline.
The source from Reeves' office said the finance minister had felt compelled to intervene to ensure that UK defence spending protects and drives British business and jobs, and that "she wasn't going to let this deal collapse under her watch," the source said.
REEVES TO APPROVE PURCHASE OF 23 HELICOPTERS
Proposed purchase size versus earlier requirement
Reeves is set to approve a deal to buy 23 medium-lift support helicopters, which would be fewer than the requirement for up to 44 helicopters originally stated in a 2022 government notice.
A spokesperson for Leonardo declined to comment.
Timeline, tender expiry, and expected talks
A separate source told Reuters Leonardo's tender offer expires on March 1, adding that further talks between the government and Leonardo were likely in the coming days.
Sky News had reported earlier that defence minister John Healey had been due to visit the factory in Yeovil on Thursday to announce the deal but pulled out because the finance ministry had yet to sign it off.
Defence investment plan delays and budget pressure
The government has previously said it needed to finalise its defence investment plan before it could award the helicopter contract.
That plan has been delayed from the autumn amid media speculation about a 28 billion pound ($38 billion) hole in the military budget, despite Prime Minister Keir Starmer's pledges to boost defence spending.
Yeovil site history and jobs impact
Factory legacy and supply chain employment
The Yeovil facility dates back to 1915, when it was known as Westland and made planes used in World War One. It pivoted to helicopters in the 1950s and has recently produced the Merlin and Apache helicopters.
As well as the 3,000 jobs on site, a further 9,000 jobs in the supply chain are supported by the factory.
Currency conversion and credits
($1 = 0.7422 pounds)
(Reporting by Sarah Young and Sam Tabahriti in London and Giulia Segreti in Rome; Editing by Kevin Liffey)
Key Takeaways
- •Reeves’ intervention underscores the political and industrial stakes: Yeovil is the UK’s last onshore military helicopter manufacturing site, with roughly 3,000+ direct jobs and a large supply chain footprint tied to keeping production lines active. (ft.com)
- •The New Medium Helicopter (NMH) programme has been drifting from the May 2022 notice of “up to 44” helicopters toward a smaller buy; industry reporting has pointed to scenarios as low as 23 aircraft, aligning with Reuters’ reported 23-aircraft approval. (janes.com)
- •Leonardo has effectively become the only viable bidder after Airbus and Lockheed Martin exited in 2024, increasing pressure on the UK to decide whether to award, reframe, or relaunch NMH amid wider Defence Investment Plan delays. (janes.com)
References
Frequently Asked Questions about UK set to approve Leonardo military helicopter contract
1Who is set to approve the Leonardo helicopter contract in the UK?
Britain's finance minister Rachel Reeves is set to approve and award the contract, according to a Treasury source.
2How much is the helicopter deal reportedly worth?
The contract is worth as much as 1 billion pounds ($1.35 billion).
3How many helicopters is the UK expected to buy under the deal?
Reeves is set to approve a purchase of 23 medium-lift support helicopters, fewer than the earlier requirement of up to 44 in a 2022 notice.
4Why is the Yeovil site important in this contract decision?
Leonardo had said it could shut Britain's last military helicopter manufacturing site in Yeovil without a new contract, putting 3,000 on-site jobs and 9,000 supply-chain jobs at risk.
5What is the key deadline mentioned for Leonardo's offer?
A separate source said Leonardo's tender offer expires on March 1.
