Helicopter Sales Down
With demand in decline, offshore helicopter operators and helicopter leasing companies responded by cancelling orders for new rotorcraft.
“The collapse in helicopter services can be illustrated by the drastic falloff in helicopter sales,” said Richard Aboulafia, vice president of analysis at Teal Group. “Deliveries by value grew a remarkable 19.8% per year between 2003 and 2008, but then fell 20.4% by value between 2008 and 2010. They have since fallen a further 17.7% by value.
“Output of smaller models held up well during this period,” Aboulafia told Rotorcraft Pro. “The market downturn was purely due to the larger models, particularly the S-92 and H225 Super Puma, but also the S-76 series, which is heavily oil and gas.”
According to Foley, the percentage of new large offshore helicopters delivered to clients went
from 15% of all industry deliveries five years ago to just 6% last year. “This hurt the OEMs, because a large offshore machine can be worth over $25 million,” Foley said, “whereas an entry- level helicopter only costs $1 million.”
With this slump in large helicopter sales, Foley is wondering what the fate of many OEM models might be.
The Sikorsky S-92 has received a reprieve by being selected as the next U.S. presidential helicopter. (Six of these have been ordered by the U.S. Navy under the VH-92A designation, at a value of $542 million.) “I am not sure how the Airbus’ H225 will fare in this tight market, given a number of high-profile accidents that have hurt its reputation,” Foley said. “Bell still has time to pull the plug on the 525 before investing heavily in production, if they so choose. Meanwhile, from what I have seen, Leonardo’s AW189 seems to be in a good market position.”
CHC’s Insights
The slump in offshore business has forced helicopter operators such as Bristow, CHC, and PHI to go through Chapter 11 bankruptcies. These operators did so to shed debt and surplus assets, and to restructure themselves to effectively compete in the leaner, meaner offshore support market. Waypoint Leasing Holdings Ltd., which billed itself as “the largest independent global helicopter leasing company,” also went into Chapter 11 and subsequently sold the company to Macquarie Group for around $650 million.
Going bankrupt “is not unusual for asset-heavy oilfield services businesses,” said Robertson. “We have seen the same trend in the offshore rig and vessel markets.”
No matter how wise a choice it may be, bankruptcy is a difficult subject for any corporation to discuss publicly. Rotorcraft Pro appreciates CHC’s decision to talk about this process — and what
the company learned that could help everyone in the industry.
“CHC has lived the Chapter 11 process from the inside, giving us a unique perspective on the issues facing the sector,” said a CHC spokesperson. “We believe the long-term way forward is for both the oil and gas producers, and the operators serving them, to focus on how to best build sustainability in the market.”
In calling for sustainability, CHC wants the offshore oil and gas industry to pay their transportation companies enough money to keep the transport business viable, rather than pushing for low prices that make it hard for cash-strapped helicopter operators to survive.
“There is a pressing need to adopt a model that incorporates overall value versus cost,” CHC said. “This is essential to creating a sustainable pricing and support model that allows helicopter
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Sep/Oct 2019
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