Canada's air force will take delivery of its first new maritime helicopter in half a century by November 2010, two years behind schedule and with changes that will cost $117 million.

Defence sources tell the Canadian Press that a deal with U.S. defence contractor Sikorsky was concluded recently.

It resulted in a firm delivery date for the first of 28 CH-148 Cyclones, which were initially supposed to start flying from the decks of Canadian warships last month.

"We hope to have the program on track relatively soon," said a senior defence official who spoke on background.

The first helicopter — known by tail number 001 — is expected to arrive at Shearwater, N.S., the air force's principal base on the East Coast, and will be used to train flight crews, said the official.

The aircraft-maker isn't expected to complete delivery of all aircraft until 2012 and the fleet won't be fully operational until 2013.

National Defence is confident enough in the timetable that it has begun drawing up a schedule to retire its antique fleet of CH-124 Sea Kings, which have been in service since the early 1960s.

It became apparent last year that Sikorsky wasn't going to meet its contract deadlines for delivering the Cyclones.

During the intense negotiations that followed between the company, Public Works Canada and the Defence Department, it was suggested that taxpayers could end up forking out an additional $200 million beyond the already planned $5-billion budget.

Defence Minister Peter MacKay, as late as September, was expecting some form of additional cost to be tacked on to any potential agreement with Sikorsky.

In a statement late Tuesday, Public Works Canada confirmed a deal had been reached at a cost of $77 million for the helicopter purchase and $40 million for the 20 year in-service support contract.

But senior defence and military sources insisted that the extra cash will be made up from within the project's overall $5-billion initial price tag.

"It stays within budget," an official declared.

At one point during the talks, Sikorsky was told the federal government was prepared to impose late delivery penalties of $100,000 per day — to a maximum of $36 million — as provided in the original contract.

It's unclear if Ottawa followed through or whether the threat played a role in delivering the settlement. There was also speculation the Conservatives would simply cancel the deal.

New Democrat MP Peter Stoffer, whose Nova Scotia riding encompasses many air force pilots and maintainers, said he's skeptical of the new deadline.

"We've heard so many deadlines, so many timelines regarding the Sea King replacement, you don't know what to believe any more," he said Tuesday.

He said the auditor general should review the Tory government's handling of the contract.

The Cyclone's design was based on Sikorsky's already proven H-92 civilian helicopter, which is widely used in the offshore oil industry.

The recast, militarized version has the addition of a folding tail and rotors for storage aboard warships, anti-submarine warfare electronics, and a fly-by-wire system that allows the aircraft to be flown by computer.

"You have no idea how hard it has been" to re-engineer the aircraft, said a military official who has followed the program.

The extra equipment has made the Cyclone heavier, forcing Sikorsky to upgrade the GE CT7-8A engines to a more powerful variant. That has taken time and money.

Much of the equipment going into the aircraft is based on proven technology, which has increased the air force's "expectations of reliability and performance," said the senior defence official.

It was a reference to the availability problems facing the military's last big helicopter purchase, the CH-149 Cormorants, which have been in the shop for inspections and maintenance more often than expected.

Defence officials say the Cyclone will arrive with technical airworthy certification, meaning the aircraft design has been deemed safe.

It will still face gruelling operational testing after delivery, when the air force will determine whether the helicopter can do everything expected.