Chris Emerson on June 1 became president and chief executive of Airbus Helicopters Inc. [Booth 9651] and head of Airbus Helicopters North America Region, overseeing Airbus Helicopters’ subsidiaries in the U.S. and Canada. (He succeeded Marc Paganini, who led the Grand Prairie, Texas-based U.S. subsidiary for more than 12 years.) Emerson previously was SVP and head of marketing for Airbus’ airliner unit. We asked Emerson about the current market in North America and Airbus’ response to it.
How is Airbus Helicopters responding to the changing market in North America?
Clearly a major change has been the impact of low oil prices and its effect on offshore support operators. We monitor the global market from headquarters in Europe and we know that those operators are responding to the changes in part by examining everything they do to support oil and gas companies and figuring out how they can do those things better and more efficiently.
In North America, we’re asking the same question: “What is it that we could do better when oil does come back?” We’re looking really deep at how we support our customers’ fleets in the Gulf of Mexico. We have teams here, and Europe is sending teams, to figure out what kind of service programs we can initiate or develop that are tailored to the way our customers are operating.
As one example, I’ve gotten agreement from Europe that we’re going to do more and more light-helicopter sustainment engineering out of the U.S. That will help us support those operators when the market does come back and they’re ready to buy new light helicopters to service the Gulf.
What was 2015 like in the North American market?
Last year turned out to be one of the worst years, not just in looking at the numbers but also in what we had to do to stimulate sales. It was highly competitive. Everyone was in the market place. It was a buyer’s market. My teams tell me that customers were more demanding than they have ever been.
In a way, we almost needed to be evangelists. We needed to be more than product specialists and say: “Hey, guys, you know you have the need. And tomorrow will be a good day. And today is the right day to buy an aircraft.”
It is clear our products at Airbus Helicopters are loved. We’re well positioned with them. And customers do see a need. They actually do look and say: “I might be coming up to a 12-year inspection. I might get an opportunity for a little more work.” So there is a need developing for additional or replacement helicopters. But they just aren’t optimistic about the future. They saying: “I’ll make that decision next year. I don’t need to make it today.”
So there was a lot of explaining of why it makes sense to make the decision today.
What do you foresee for the coming year?
I’m expecting this year will be pretty flat to 2015 in North America. We’ll have a better mix of aircraft. I think you’ll see a mix toward twin engines in 2016.
Where we’ll see surprises is from the VIP/corporate segment. We saw a lot of interest in 2015. We weren’t able to convert all the interest into bookings. Nevertheless, that interest is still there.
Late in December, the U.S. bonus depreciation tax rule was signed in law for two years, 2015 and 2016. So we lost last-minute bookings simply because customers didn’t need to order aircraft by the end of 2015 to get that tax credit. We’ll see a lot of that interest converted into sales this year.
In the air medical segment, I see a very interesting development on the light twins, particularly with hospital-based operations and then those that are looking to differentiate themselves from the pure community-based operators, wanting to have more equipment and more range on their aircraft. We saw some of that in 2015, with orders from CalStar and MedTrans for the H135.
The key for me in air medical is that we’ve got an aging fleet in place. We need to work with operators closely on how we can find solutions for that, given the restraints of the current insurance reimbursement schedules.
Photo courtesy of Airbus Helicopters