Uncategorized

Uncertainty Puzzles OEMS, Operators

By By James T. McKenna | July 1, 2016


Photo courtesy of Airbus Helicopter

A conversation among several industry veterans in early June turned toward the upcoming Farnborough Air Show and the history of impressive displays and chalets by major manufacturers at it and similar events.

As an example, the talk recalled the presence of AgustaWestland (now Leonardo) at Farnboroughs in the not too distant past and its chalet’s dominant position near the show entrance, with an abundance of elegant people, fine espresso and treats and a line of Maseratis outside awaiting departing executives and VIPs.

Advertisement

The conversation faded. Then one gent lamented, “Ah, the good old days.”

The banishment of extravagance is one indicator of the predicament of aerospace in general and rotorcraft in particular. Executives across the board seem puzzled by the challenges confronting business, from military to commercial markets and all segments in them, throughout the world.

Lackluster economic growth is baffling in nearly every region, save India. China’s great promise seems to be on hold, stalled by general economic concerns. The helicopter sector is growing there, as indicated by Airbus Helicopters’ sale of 100 H135s and plans for a production line in China to build them. But China’s rotorcraft operations remain caged by airspace restrictions.

Setting aside the adverse effects of low oil prices on the industry (particularly sales of its highest profit margin of medium and heavy helicopters, bosses and prognosticators seem baffled by chronically slow growth and a corresponding lack of capital investment throughout the business world.

Political turmoil magnifies the uncertainty, with nativist and isolationist candidates gaining appeal in the U.S. and parts of Europe and major governments upturned by partisan fighting and intrigue, as in Brazil.

The rotorcraft industry began 2016 wondering how it possibly could accommodate all the many medium and heavy helicopters idled by oil’s downturn. (It seemed impossible that they could be redirected in any significant way to corporate, search and rescue or emergency medical service work.)

Yet the mid-year is confronted with hundreds of such aircraft grounded and out of operation while international investigators plumb the causes of the April 29 in-flight failure of a CHC Helikopter Airbus EC225.

Bell Helicopter cut the ribbon in Louisiana for a custom-built plant to build its new 505 Jet Ranger X, but business vagaries have prompted it to move that production work to Mirabel, in part to offset declines in commercial sales (particularly of the medium twin 412EPI).
Photos courtesy of Bell Helicopter

Cooler, grayer heads point out that this industry, particularly its offshore oil and gas sector, is cyclical in nature, and (while it seems hard to imagine) times have been worse. That may be true, but it is little comfort to chieftains charged with the current quarter’s profits or their underlings eyeing next month’s bills.

Conditions make times unpredictable.

CHC is in bankruptcy court, pushed there in part by the loss of revenue after the April 29 crash that made its financial situation untenable.

Erickson banked on unsettled conditions in Southwest Asia and Africa to justify its investment in Evergreen Helicopters and its bench of U.S. Defense Dept. work. But it has hired as a CFO an aviation turnaround specialist and engaged consultants to help it assess “strategic alternatives” for its business.

To help it sustain the new 505 Jet Ranger X as a reasonably low-cost option in the light, single-engine market, Bell Helicopter got backing from the state of Louisiana to build a new, efficient production facility in Lafayette.

Just shy of a year ago, Bell hosted industry and political dignitaries to cut the ribbon on the 82,300-sq-ft, $26.3 million facility built on 14.5 acres of leased land on Lafayette Regional Airport. The state built the facility, with Bell expected to bring $11.4 million in equipment and tooling and create 115 new jobs.

Now, Bell is moving 505 production to its Mirabel Assembly and Delivery Center outside Montreal; it has been laying off workers at that Canadian plant for more than a year.

In that light single’s place, the Lafayette plant does cabin subassemblies for the 525 Relentless “super medium” twin and modifications for the Northrop Grumman MQ-8C Fire Scout unmanned aerial vehicle (UAV) based on its 407. Bell is moving the 525 work from Amarillo and the UAV work from Ozark, Alabama.

It would seem at a time when the U.S. is at odds with China, America and Europe at odds with Russia, migrants flooding Europe and the Islamic State sowing havoc throughout the world, the military market would be picking up. Yet nations are wrestling with budget constraints that squeeze their acquisition ability. At Farnborough, for instance, the U.K. may clarify whether it will buy Apaches from Boeing rather than its own industrial base of Westland.

This year’s show may not be rich, but it will be interesting.


Safety Issues Stunt Air Show

New safety measures unsettled neighbors around Farnborough Airport and prompted at least one star performer to curtail its participation at the biennial show.

The measures are in the U.K. Civil Aviation Authority’s Civil Air Display Review, which followed the Aug. 22, 2015, crash of a vintage fighter during the Shoreham Air Show. The aircraft crashed onto a major road, killing 11 people on the ground.

The measures include road closures the week before Farnborough and during its flight demonstrations.

A related review by the Royal Air Force prompted that service to curtail the performance of its Red Arrows flight demonstration team during Farnborough.

Save

Receive the latest rotorcraft news right to your inbox


Curated By Logo