By Andrea Shalal-Esa

U.S. NAVAL AIR STATION, PATUXENT RIVER, Md. (Reuters) - After a rocky start on the VH-71 presidential helicopter program, Lockheed Martin Corp (LMT.N: Quote, Profile, Research) is making good progress toward fielding the first batch of aircraft in September 2010, the program manager said on Monday.

The program was recently restructured after delays and cost overruns blamed on an overly ambitious schedule and insufficient understanding of complex requirements after the Sept. 11, 2001 hijacking attacks, program manager Capt. Donald Gaddis said.

"I think there's sufficient blame to go around for everybody, in government and industry. We just didn't set up this program up with a high percentage of success rate," Gaddis told reporters. "We accepted a whole lot more program risk on this program than we normally do."

But it soon became apparent that it would cost more and take longer to modify the AgustaWestland Merlin helicopter chosen by Lockheed for its new job ferrying the president.

Lockheed, the Navy and the White House now understand what is needed to meet the requirements for the new fleet of helicopters and plan to allot adequate time for development and testing, Gaddis said.

Lockheed is scheduled to deliver the first batch of aircraft in 2010 and the remaining, fully-loaded, 23 helicopters beginning in 2017.

Costs should be more stable after the restructuring, which added $2.3 billion to the first phase of the program, he said. The first phase includes four test aircraft and five production aircraft, now costing a total $3.7 billion.

The second phase of the program is now slated to cost $7.5 billion, about $4.5 billion more than initially expected, he said. It includes 23 full-rate production aircraft with more powerful engines, longer rotors, an upgraded transmission and improved defensive equipment.