During the 1950s numerous engineers and builders (especially in the United States), probably inspired by the success of the early helicopters, were convinced that these would soon replace cars. Encouraged by this perceived, but unreal market, they designed and built a long list of one or two-seater to satisfy the hoped demand from private buyers. The majority of these small companies were however forced to close their activities, most of the time because they were bankrupt.

To avoid the premature end of its new kind of activity the Hughes Tool Company, based in Culver City (California) and owned by the famous American billionaire Howard Hughes, used a more cautious approach.
The society started its rotary-wing activities in 1948 when it took over the Kellett Aircraft Company which was in serious financial difficulties. The latter was developing the giant XH-17 Flying Crane, a helicopter with a payload of 5 tons.

In 1954 the Aircraft Division of Hughes commissioned a market survey to the Stanford Research Institute to precisely learn the needs of the civil aviation market. The survey indicated that a two-seater machine would in fact perform 80% of the tasks for which business and utility helicopters were being used. Civil operators were looking for a low cost, lightweight two-seater helicopter, simple, rugged and easy to maintain.

Based on this information Hughes moved rapidly ahead with the development of a project known as the Model 269, described by its engineers as “radical in its simplicity and economy”. The engineering works started in September 1955 under the guidance of the chief-project Fred C. Strible.

The first prototype registered N78P made its first test flight in Culver City piloted by Gale J. Moore on October 2, 1956.
Anything but attractive in its initial version, the helicopter had a fully-glazed cabin, an open framework rear boom and a skid landing gear. The three-blade articulated main rotor was identical to the one fitted to the tandem rotor helicopter Mc Culloch MC-4 also developed in Culver City by Drago K. “Gish” Jovanovich. Hughes had in fact bought the rotor patent from this engineer.

The Model 269 was powered by a 134/180 kW/hp Lycoming O-360 engine.