Helicopter - Storm brewing offshore - Avionics

Bristow Says Offshore Sector Faces Unmatched Headwinds

Offshore helicopter support operators face economic challenges that are unmatched in their history, said Bristow Group President/CEO Jonathan Baliff. “This industry at its current scale has not faced this level of commercial, foreign exchange and financial market headwinds before,” said Baliff. Bristow reported financial results for the second quarter of its 2016 fiscal year that included a 96% plunge in adjusted net income (to $1.3 million compared to the quarter that ended Sept. 30, 2014, from $31.1 million). The adjustments included the exclusion of $37.6 million of special items and $10.8 million of losses on asset dispositions. Over that period, the company’s adjusted earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) fell 17% to $92.8 million for the September 2015 quarter from $112.1 million for the same period a year ago. Bristow has seen clients “implement more supply chain efficiencies that curtailed our flight hours and triggered several contract terminations,” Baliff said. (Other offshore operators have seen the same.) Bristow’s adjusted EBITDAR was cut $30 million for the quarter, primarily by the 28% drop in the value of Brazilian real against the U.S. dollar. He also said that “the finance markets have also been challenged," adding that the company "has worked very hard to implement our economic restructuring initiatives” designed to enhance its competitive position and financial strength. That included agreements in principal with OEMs to defer about $100 million of aircraft capital obligations from this year into fiscal 2017, “with further deferrals expected for subsequent periods,” said Don Miller, Bristow’s senior vice president and chief financial officer.

Era Looks at Cutting Aircraft Orders

Era Group has more helicopters than it can use to support offshore oil and gas production and exploration and is looking to trim new aircraft orders as it pares its existing fleet. The Houston-based operator said its third-quarter net income plunged 79% to $900,000 this year from $4.3 million in the same period for 2014. Year over year, operating revenues for the quarter dropped 23% to $69.7 million from $90.5 million. Era President and CEO Chris Bradshaw said the third quarter “proved to be a very challenging one as conditions further deteriorated in our key geographical markets," noting the price of benchmark West Texas Intermediate crude oil dropped from about $60 a barrel at the end of June to less than $40 in mid-August. That prompted Era last month to a new round of cost-control measures. The company said it has excess capacity in medium helicopters and expects the excess in its heavy-helicopter fleet “to increase beginning in the fourth quarter.” While it is bidding for medium- and heavy-helicopter contracts, Era might sell aircraft if it loses those bids. The company also said it may terminate $127 million in commitments for new aircraft and other capital. Those capital commitments include agreements to purchase nine AgustaWestland AW189s, five AW169s and threeSikorsky Aircraft S-92s, Era said, adding that it has options for 10 more AW189s and three more S-92s. The AW189s and S-92s on firm order are scheduled for delivery this year through 2018.

Report: Bell Sees No Commercial Recovery Until 2017

Bell Helicopter does not expect the commercial helicopter market to recover until early to mid-2017, according to a Reuters report from this week’s Dubai Air Show. The news service quoted Bell’s vice president of global sales and marketing, Patrick Moulay, saying the market’s outlook is worse than was expected just six months ago, with key customers believing oil prices will remain low for a longer period. The commercial helicopter market is down about 30% compared to a year earlier, the report said (citing Moulay), with customers delaying decisions on new contracts, re-negotiating existing ones and changing aircraft acquisition plans. "It's going to get worse before it gets better," Reuters quoted Moulay.