By James T. McKenna | March 6, 2017
Bruno Even returned to Turbomeca (now Safran Helicopter Engines) as CEO in June 2015, after two years leading the Safran unit Sagem Defense and Electronics. Before Sagem, he spent 15 years at the engine maker in posts that included VP of programs. R&WI spoke to Even before Heli-Expo.
Everybody involved in the helicopter business, I think, has been surprised by the speed of this crisis. It required from us, required from all the industry the ability to manage with agility, flexibility. That's clearly the activity on which we are working a lot.
Just to illustrate, we have been working on reducing the cycle of production, reducing the cycle of repair. These are the key performance parameters on which we are working. In terms of repair time, as an example, we have improved a lot in terms of reducing our turnaround time. In 2016, we are around 50 days for the Arriel and Arrius, which is at the best standard of the market.
We are very proud and excited by this new journey with Bell, with our Arrius 505 powering this new helicopter. We are strongly committed to supporting Bell on this entry into service and all our new customers operating the Bell 505 starting in this year.
The key point for customer satisfaction is to ensure, at entry into service, the maturity of the engine. From that perspective, we will benefit from all the Arrius family. Since the first Arrius engine was launched in 1981, this engine family globally has accumulated 8 million flight hours.
During the Arrius 2R development plan — you remember that we certified the engine at the end of 2015 — we performed a lot of maturity tests. We continued all these maturity tests, endurance tests in 2016, even after the certification of the engine, to ensure that at the entry into service we have all the reliability that we committed to for the engine.
At the same time, our customers will benefit from the worldwide network that we have progressively developed year after year for all our engines. Of course, they will benefit from this network in North America through our facilities in Dallas and in Montreal. The Arrius 2R will be produced, assembled and tested by Safran Helicopter Engines in Dallas. We deliver the engines to Bell from our Dallas facility, which is a good sign that our people there are prepared to support the Arrius 2R.
We have a strong support base, of course, in North America, and we have all our worldwide network, in Brazil, in Australia, in Europe, in Asia, able to support the sale of the Bell 505 in the different countries. We see a huge interest in the Bell 505, not only in North America but worldwide. So the Arrius 2R will benefit from the maturity of the Arrius 2R, all of the experience with Arrius engines in service and a worldwide support network.
The main lesson is that we have been resilient. We have all seen that in 2016 the market continued to go down – by some estimates negative 30% in terms of orders in the last two years for the global helicopter market. In this context, we have stabilized our new engine production. We finished the year around 708 new engines, which is roughly the same level as 2015.
The reason why we stabilized our production is mainly due to the resilience of the light and medium helicopter market, where we have a strong position with the Arriel and the Arrius engines.
When we look at 2017, we don't expect market recovery. We consider that the market will still be flat. We will expect to see a slow recovery starting in 2018. In this context, we consider that, from our perspective, we should be stable in terms of new engine deliveries. So again, we should be able to stabilize our production in the context of a low market.
We see also have seen a slowdown in support and MRO activity as we saw a decrease of the flight hours, in particularly in the offshore market, which is from our perspective is the main segment impacted by the crisis. In this context, we again saw the resilience of the company based on our strategy to develop services. I have in particular mind our strategy to continue to develop the by-hour contract offerings to our civil but also to our military market.
At Heli-Expo last year, we launched marketing around the BOOST service, which is our new online engine maintenance services. We had the entry in service of BOOST at the end of 2016 with Helicopters Italia. That's really a good sign for the future development of these services. The feedback from the customers after several weeks and months of going into service on their operations is very positive. It confirmed all the benefits identified for these kinds of services for our customers.
The second point, which is key for us, is to continue to invest in and prepare the future. Our successes in 2016 illustrate this approach.
In 2016, we achieved five maiden flights, five first flights of new helicopters with Safran Helicopter engines.
In January, we saw the first flight of Airbus Helicopters’ H160 with an Arrano engine. In April, it was the first flight of the Kamov Ka-62A with the Ardiden 3G. In July, we had the first flight of the Avic AC312e in China with the Arriel 2H. In September, we added the first flight of the Indian LUH, designed by Hindustan Aeronautics Ltd, with our Ardiden 1U engine. And in Decmember, we had the first flight of the AC352, which is the Chinese version of the EC175, with our Ardiden 3C.
As you know, we have developed Ardiden 3C's in cooperation with our Chinese partner, CAPI and Dongan [parts of the new Aero Engine Corporation of China consortium], and the Chinese have designated it WZ-16.
These were a huge success, as we have demonstrated in 2016 our ability to respect our commitments to our main helicopter customers. We have been there to succeed in the first flight of these five helicopters. So 2016 was an exciting year for us.
In addition to these five first flights, we maintain our level of investment in R&D at around 15% of our revenue. We are preparing the future with the factory of the future, with the line of the future for production but also the factory of the future for MRO. We have launched what we call the Cap 2020 project, which is a modernization of our Tarnos site in France, where we have all our MRO activity to cover Europe.
It was also a good year in terms of commercial dynamics. I don't mean in terms of new contracts for helicopters. That's not my point. But in terms of commercial dynamics regarding our market share, in particular on the H135. You know that on this helicopter we are in competition with the Arrius and Pratt & Whitney Canada’s PW206B.
We finished the year with 74% market share, which is a good sign of our competitiveness and the fact that our Arrius meets the expectations of our operator customers. We signed the contract for the U.K. Military Flying Training System with the U.K. Ministry of Defence. Its contractor selected Arrius-powered H135s [and Arriel-powered H145s]. We signed with DRF Luftrettung in Germany, so we had good success for the Arrius on the H135.
At the end of 2015, we signed the contract for Korea’s Light Civil Helicopter program and in early 2016 we signed the contract for the military the Light Armed Helicopter program. So we have been selected with the Ariel for these two contracts.
I mentioned our commitment to support the Bell 505’s entry to service. We also want to ensure that we remain agile and resilient to the market.
Another challenge is with the Arrano. We had the first flight in 2016 of the Airbus Helicopters H160 with the Arrano, and of course we will continue to support Airbus Helicopters and to meet all the objectives of this program, in terms of flight test and in terms of engine development. Today, the feedback is very positive from the pilots. In terms of performance, we are on track. We are very excited because we see this engine as a trendsetter for the market.
Our strategy has four pillars. The first pillar is to diversify our customer portfolio. The second is to be preferred partner in growth countries. In particular, we have in mind India, Russia and China. The third pillar is built around innovation. The fourth pillar is around customer relationship. Clearly, the customer is at the core of our strategy.
Regarding development in the growth countries, I mentioned the Ardiden 3. There we have two clear objectives: EASA certification of the Ardiden 3G for the Kamov Ka-62 program and EASA certification of the Ardiden 3C for our Chinese partners and the AC352 program. EASA certification will be a strong sign that we are on track with this program. We have a state-of-the-art engine certified, ready to answer to any requirement for any customers a range of six-to-nine metric-ton helicopter.
Another challenge this year regarding the emerging countries is in India. We signed a contract with our partner in India, HAL, and the defense minister of Indian at the end of 2016 for the creation of a joint venture in the MRO field. This joint venture is charged with the support and repair of all our engines in India in the military market. When I said, I have in mind 1,000 engines from Safran Helicopter Engines operating in India.
Our key objective for 2017 is to have this joint venture operational and in particular to be able to maintain these engines. The next step will be to open the repair shop in 2018. [There also is an the agreement between Russia and India about] the sale of 200 Kamov Ka-226s, which are fitted with our Arrius 2G1. Our objective is to support the development of this program in India, as we are doing for all our engines.