Airbus Helicopters X4. Graphic courtesy Airbus Helicopters
While most major players in the helicopter industry are keeping their powder dry before revealing their future plans at the world’s largest helicopter convention, Heli-Expo (March 2-5, Orlando, Fla.), there are a number of trends that are worth watching in the year ahead. In particular, there is still a need to drive new helicopter platforms and new versions of existing types.
Certain to be a headline act will be the unveiling of Airbus Helicopters’ new X4, which has been the center of many industry discussions for the last couple of years. The X4 will replace the Dauphin family and will be the first platform to feature Turbomeca’s new Arrano 1,100 shp engine. The engine will be available for helicopters in the four-to-six ton class.
An eagerly anticipated first flight is expected from Bell Helicopter’s 525 Relentless, the first commercial fly-by-wire helicopter, which will also feature the ARC Horizon flight deck and the Garmin G5000H touchscreen avionics suite, its first use in a commercial helicopter.
Another fly-by-wire first flight scheduled for 2015 is the CH-53K, Sikorsky’s new heavy lifter. It has been designed to lift a massive 27,000 lbs of cargo over 110 nautical miles to adhere to the littoral warfare needs of the U.S. Marine Corps.
The View Ahead - Military
In the beginning of November 2014, Forecast International reported that: “the light military rotorcraft market has entered a period that will see annual production generally head downward during the next 15 years.” The research organization estimated that around 165 light military rotorcraft would have been produced by the end of 2014, with a similar number in 2015. It then predicted a brief increase to around 208 rotorcraft in 2016 followed by another decrease. “This production spike is expected to be a temporary, one-year phenomenon, with annual production resuming a downward track in 2017, and declining to only 55 rotorcraft in 2028,” it revealed.
Forecast International’s data forecasting predicts a production figure of 1,495 light military aircraft from 2014 through 2028. It defines a light military rotorcraft as having a maximum gross weight of less than 15,000 lbs (6,804 kg).
Forecast International places the main reason for decline on the fact that many nations around the world are, and have been, reducing defense spending. Senior Aerospace Analyst Raymond Jaworowski said, “Ongoing rotorcraft procurement programs are being stretched out, reduced in size and scope, or even canceled altogether. At the same time, very few new-start programs have emerged that would help keep production rates up.”
While the main cause of this decline is the reduction of U.S. and European defense budgets, Forecast International sees market opportunities in the increasingly prosperous markets of the Middle East, Asia and South America.
Figures generated by Forecast International’s Platinum 2.0 data prediction software indicate that: “Airbus Helicopters will be the leading light military rotorcraft manufacturer during the 2014-2028 forecast period. Airbus Helicopters is projected to produce 431 such helicopters, worth $7.4 billion, during the period. Hindustan Aeronautics Ltd (HAL) is projected to build 278 units during the timeframe, while Bell Helicopter is expected to produce 269 units.”
In terms of general military rotorcraft, will this be the year that the Bell Boeing partnership can finally announce its first international customer for the V-22 Osprey, especially now that its U.S. pilots have recorded over a quarter of a million flying hours? In terms of military markets, a decision on the 70 medium-lift utility helicopters for the Polish Armed Forces should be made early next year with another competition to replace the Mi-24 attack helicopter potentially being launched in earnest.
The growth of maritime forces outside of Europe, particularly in Asia, is likely to show a continuation of the need to replace old helicopters with new capability. The market for the established attack helicopters could come under pressure from the less technologically advanced (but still potent) light reconnaissance/attack types such as Boeing’s AH-6i and the MD 540F.
With their new-found wealth, a number of emerging Asian nations are eying new military and civil helicopters. Indonesia has a requirement to renew and add to its military fleets, and is a potential new operator of Boeing’s Apaches and Chinooks. In November, the Indonesian Navy also confirmed the acquisition of 11 Airbus Helicopters AS565 MBe Panther helicopters to be used as part of its anti-submarine warfare capability.
Countries such as the Philippines have also demonstrated their willingness to modernize through purchases that include four AW109 Power helicopters for the Philippine Navy.
The heavy-lift market will continue to see Boeing’s new CH-47F pushed hard internationally to soak up as much market share as it can before Sikorsky’s CH-53K comes online.
The View Ahead - Civil
The introduction of new helicopter platforms, combined with an ever-detailed focus on enhancements to existing types resulting in better performance, will continue to entice operators into buying new aircraft as well as replacing older, especially analogue equipped, helicopters. The ongoing need to help operators reduce their costs, along with a sharpened general campaign on safety, will continue to be important themes throughout the year, particularly in markets that have, for example, more remote/offshore oil and gas fields where operators do not have well practiced crew resource management principles. New helicopters added to bad practice makes for a bad combination.
Strategy Guide – 2015 – World’s 6 Leading Helicopter & Rotorcraft Manufacturers – Key Strategies & Plans – Airbus Helicopters, AgustaWestland, Bell Helicopter, Boeing, Russian Helicopters, Sikorsky, published by Research & Markets, states that around “4,800 to 5,500 new civil helicopters are projected to be delivered globally through the 2014 - 2018 period with North America projected to lead the demand for new civil helicopters.” However, the guide also warns about the effect of the economic slowdown in Europe and other economies, together with the knock-on effect this will have on the buying power of countries such as China in the near term.
Segmental growth can be found around the globe. When Bell Helicopter recently announced the sale of a Bell 429 and orders for two Bell 505 Jet Ranger X helicopters to Wallan Aviation in Saudi Arabia, company chairman Saad Wallan said, “there is a need for vertical lift in the Kingdom [of Saudi Arabia], for tasks such as traffic control, border protection, training and VIP transport.”
The law enforcement market in Asia has also been strong, and is expected to continue its growth. AgustaWestland has had success in the Japanese civil helicopter market, particularly with its recent sale of another AW139 to the Tokyo Metropolitan Police. This brings the current total ordered by the force to four AW139s. AgustaWestland believes that there is further growth potential in Japan for its commercial product range.
Airbus Helicopter has also been targeting South American markets, with Peru’s Ministry of Interior accepting a fifth EC145 for the National Police. The law enforcement sector in this region is expected to continue its modernization into 2015.
Ed Dolanski, president and chief executive officer of Aviall since July 2013, believes that there will be less instability in the rotorcraft market in the coming year. Aviall is Boeing’s largest subsidiary and is an aftermarket supply-chain management services provider.
“There are several drivers behind market trends and helicopter demand worldwide,” he begins. “For the most part, demand has stabilized since the economic downturn in 2008. However, the market remains volatile, and it proves difficult to predict future market requirements.”
Explaining the effects this will have on operators and MROs, he said that the knock-on effect for material availability would be even more difficult to predict and control. “Having the right part on hand exactly when they need it is crucial for business,” he said, emphasizing why he believes that Aviall’s forecasting and on-time delivery support would be in demand.
In terms of change in the commercial market, Dolanski observes: “We’re seeing a transition in typi-cal flying time for rotorcraft, one which is moving toward long-haul missions. For rotorcraft operators around the globe, long-distance missions challenge the traditional requirements for these aircraft.” Selecting the appropriate parts and support is crucial for the success of these types of operations. Aviall’s LIFT program adds value for helicopter operators by reducing costs and improving efficiency, with benefits that include more product lines, local stocking of high-demand parts, inventory management, electronic ordering, and the support of Aviall personnel in our 40 customer service centers around the world.
In terms of defense, Dolanski looks to the further international adoption of Bell Boeing’s V-22 tiltrotor Osprey: “The Osprey represents a utility aircraft that this segment has yet to fully employ. Aviall will work closely with our parent company Boeing to provide support to this program, and we are currently evaluating how we can leverage our vast international footprint to support its growth.”
Looking ahead for the next 12 months, Cobham Aerospace Communications General Manager John Payne “anticipates continued healthy growth in 2015 in civilian, commercial, and special mission rotorcraft sectors.”
Payne notes the steady production rates that have been forecasted by the major OEMs, and points to the continued economic recovery within the U.S. “With GDP growth estimated at over three per-cent, [this] will positively impact the rotorcraft OEM and retrofit markets in multiple segments, in-cluding airborne law enforcement, helicopter emergency medical services, fire suppression, off-shore oil and gas transport, training, and state National Guard units,” he said.
In terms of his own company’s business prospects, he highlights three important areas that could contribute to business growth:
“The pressing need for total communication interoperability by federal, state, and municipal agencies; the ongoing replacement of outdated and heavy avionics with lighter, more compact, more power-efficient, and feature-rich components by integrators and operators; and finally Cobham’s decision to expand our suite of audio communications products by pulling over 200 items back from sunset status to address operator and mission requirements.”
“We foresee another healthy year for the rotorcraft sectors in which we have a presence, and for our technologies as a result,” he concluded.
Macquarie Rotorcraft Leasing
Jeffrey Pino, chief executive officer of Macquarie Rotorcraft Leasing, and previously the president of Sikorsky helicopters, reflects on the immediate effect of the pre-Christmas slump on the price of oil. “We’re going to see a 12 to 18 months dip in offshore oil and gas activity as the macro economics settle out the price of oil. We are already seeing hesitancy to place new equipment orders until the situation resolves and oil trends back up to $80-$90 a barrel,” he said.
Pino also recognizes growth in the newly emerging super medium class of helicopters, which includes the AW189, EC175 and Bell 525 Relentless. “It’s my sense that the super medium class will cannibalize more of the current mediums than the current heavies. It’s a very interesting dynamic that differentiation in helicopter class is now being done in three passenger segments. I think some of that differentiation speaks to the fact that there is no real disruptive technology in rotary-wing aviation in the short or mid term, and the view to growth is in further market segmentation.”
Commenting on the emergence of lessors, he states that their ability to bring financial flexibility to the rotorcraft market has added a successful dynamic. “I think that operators are now using lessors as a strategic tool in their financial tool bag,” he said, adding that, as a result, “the OEMs now have to develop strategies to deal with lessors. They are now seeing that lessor demand is really surrogate demand and they need to be very wary of overproduction.”
Macquarie Rotorcraft Leasing is a relatively new player in the U.S. market, having been launched in June 2013, but Pino says the company has already consolidated its position in the marketplace and is bullish about the future: “We have carefully and strategically built nearly a quarter billion dollar fleet of assets and have placed orders for nearly $200 million more. We see the ability to continue to expand at that rate for the midterm.”
Turbomeca’s international ventures will gather pace, in addition to the first flight of Airbus Helicopter’s X4, with additional first flights next year of its Ardiden 3 engine on the Russian Helicopters Ka-62 and Avicopter AC352 in China.
“In terms of market, one of our highlights for 2015 will be to continue to strengthen our position in emerging markets: China, India and Russia,” said Turbomeca spokesman François Julian.
In relatively new and developing markets such as in China, where there is demand that is unlikely to decline, Turbomeca expects its sales to continue to grow. Said Julian: “The number of civil heli-copters could grow from the current 500 to 1500 by 2020. For China, we are forecasting a strong demand for the EMS, offshore, police and utility helicopter markets.”
Leaving aside the current economic situation that Russia finds itself in following western sanctions over its involvement in Ukraine, as well as the decline in oil prices, the civil helicopter fleet in Russia will also continue to expand in the coming years. Julian explains that this will be through a “combination of the increase of western OEM helicopters operating in the country, together with the entry into service of two significant models under development and certification by Russian Helicopters, and powered by Turbomeca, the Kamov Ka-226 and Ka-62.”
The Indian market is another with existing positive potential. “We have a strong presence in India on civil aircraft, with around 200 civil Turbomeca engines in operation … it is a growing marketplace for both civil and military markets; hence the number of Turbomeca engines in India is likely to grow by 100 percent in the next 10 years.”
In the U.S. there is the Arrius 2R, which is powering the new Bell 505 with the future orders that will generate. “Turbomeca is also fully dedicated in its support of the RTM322 engine for NH-90, AH-64 Apache and EH101 users as this engine is now a 100 percent Turbomeca product.”
UTC Aerospace Systems
“The civil and military helicopter markets are facing a significant challenge for their helicopter fleets in the near term,” states Tom Mepham, senior vice president of Power, Controls & Sensing Systems. There is a stated need “to improve the mission capability and availability of aircraft while reducing the procurement and operating costs.”
Mepham believes that while this will mean fewer new helicopter development programs, it will also mean a more intense focus on providing upgrades for existing aircraft types. He cites the example of the U.S. Army’s bedrock Sikorsky UH-60 Black Hawks, Boeing AH-64 Apaches and CH-47 Chinook all having model upgrades to keep them relevant and to extend their fleet lives with the corresponding upgrades of onboard avionics and mission equipment packages.
In terms of the civil helicopter market, Mepham sees near term growth. “The need will be met by upgrading current models and introducing new models that are mainly derivatives of existing models, like the AugustaWestland family of AW1X9 helicopters,” he commented.
In terms of how that is evolving the market he added: “Providing operators with helicopters that have improved safety and operational capability at the lowest price is driving airframers to partner with second tier suppliers to share opportunity and risk. Industry partners will see an increase in opportunities to provide ‘smart’ products and systems that significantly increase aircraft availability and greatly reduce life cycle costs.”
He confirms that industry has invested in the future whether that is in actual new platforms or in enabling technology. He identifies one example as the U.S. Army’s Improved Turbine Engine Program (ITEP) and Joint Multi-Role Technology Demonstrator (JMRTD), the latter of which will be seen flying in 2017. As a result, there are new levels of safety, efficiency and affordability, he notes, and such technological advances “will appear in platform upgrades in the near term as well as long term development programs like the U.S. Army’s Future Vertical Lift (FVL).”
In summary, he confirms that UTC Aerospace Systems will continue its own investment strategies in areas such as advanced modeling, analysis and simulation in addition to “expanding its role as an integrated system supplier.”
Aviation Instrument Services
A sizable portion of our worldwide customer base stands in the oil and gas sector. Our forecast for the next 12 to 24 months is to remain vigilant. Aviation Instrument Services (AIS) believes that the recent decline in oil prices will impact new investment opportunities in this area and limit future exploration. Since research is heavily supported by helicopter operations, it may be affected by potentially declining profits. Should there be a price war between oil suppliers, companies may need to mothball platform projects in order to decrease production and force a rise in prices. As a result, helicopter support of current oil and gas platforms will likely suffer. Operators will fly fewer hours on fewer helicopters, affecting the forecasted major capital expenditures of repairs and overhauls. AIS will continue to focus on our existing customer base of EMS, corporate, law enforcement and tourism companies to ensure that any decline in the oil and gas industry has a minimal impact.
In terms of investment prospects within the rotorcraft sector, AIS advises investment “in companies that have or are developing parts and repair methods to reduce direct operating costs (DOC). This includes businesses providing direct replacement parts as well as companies offering repairs or modifications of OEM parts with better durability, higher TBO and longer retirement life limits. With DOC and OEM replacement part prices on the rise, many operators once shy of PMA repairs and OEM part alternatives are moving toward these cost-effective solutions to remain competitive. A longer commitment of five to 10 years rather than 24 months would yield a stronger return for potential investors.”
Aviation Instrument Services, Inc. (AIS), Jim Sensale, President and CEO
RW: What is your forecast for the next 12-24 months, and why?
A sizable portion of our worldwide customer base stands in the oil and gas sector. Our forecast for the next 12 to 24 months is to remain vigilant. Aviation Instrument Services (AIS) believes that the recent decline in oil prices will impact new investment opportunities in this area and limit future exploration. Since research is heavily supported by helicopter operations, it may be affected by potentially declining profits. Should there be a price war between oil suppliers, companies may need to mothball platform projects in order to decrease production and force a rise in prices. As a result, helicopter support of current oil and gas platforms will likely suffer. Operators will fly less hours on fewer helicopters affecting the forecasted major capital expenditures of repairs and overhauls. AIS will continue to focus on our existing customer base of EMS, corporate, law enforcement and tourism companies to ensure that any decline in the oil and gas industry has a minimal impact.
RW: If you had to convince Wall Street to invest in any segment or element of the rotorcraft market for a minimum of 12 months and a maximum of 24 months, where would you point them?
I would advise investment in companies that have or are developing parts and repair methods to reduce DOC (Direct Operating Costs). This includes businesses providing direct replacement parts as well as companies offering repairs or modifications of OEM parts with better durability, higher TBO and longer retirement life limits. With DOC and OEM replacement part prices on the rise, many operators once shy of PMA repairs and OEM part alternatives are moving toward these cost-effective solutions to remain competitive. A longer commitment of five to 10 years rather than 24 months would yield a stronger return for potential investors.
RW: What market trends do you see over the next 12-24 months?
There are several drivers behind market trends and helicopter demand worldwide. For the most part, demand has stabilized since the economic downturn in 2008. However, the market remains volatile, and it proves difficult to predict future market requirements. For operators and MROs, this means material availability will become an even greater challenge. Having the right part on hand exactly when they need it is crucial for business. Aviall is dedicated to enhancing the helicopter and rotorcraft market with its many supply chain solutions, including the forecast and on-time delivery of products to support this need.
For the commercial market, we’re seeing a transition in typical flying time for rotorcraft, one which is moving toward long-haul missions. For rotorcraft operators around the globe, long-distance missions challenge the traditional requirements for these aircraft. Selecting the appropriate parts and support is crucial for the success of these types of operations. Aviall’s LIFT program adds value for helicopter operators by reducing costs and improving efficiency with benefits that include more product lines, local stocking of high-demand parts, inventory management, electronic ordering and the support of Aviall personnel in our 40 customer service centers around the world.
Perhaps the most exciting development is the interest in expanding the V-22 Osprey tilt-rotor military aircraft in the international defense sector. The Osprey represents a utility aircraft that this segment has yet to fully employ. Aviall will work closely with our parent company Boeing to provide support to this program, and we are currently evaluating how we can leverage our vast international footprint to support growth in this area.
BLR Aerospace, Dave Marone, Vice President of Sales and Marketing
Our industry will face significant issues in the year ahead. The current downward trend in the cost of fuel should have a short-term profit boost for many operators, but will likely constrain the oil and gas sector. The reality of reduced military spending is becoming more apparent and this trend is expected to continue until the next, inevitable, geopolitical instability. At the same time, the U.S. economy is rebounding, and Europe and other regions are likely to benefit from prosperity in the world’s biggest economy. The rotorcraft industry will be watching these issues in 2015. They are important, but any of them can turn on a dime. To deny the current strengthening trend would be pessimistic…to predict stable, sustainable growth may be rose-tinted. Basically, fly it and watch it.
There are other fundamental challenges — things we as an industry can actually influence — that also merit our time and attention. The helicopter industry was built on the shoulders of hard-working entrepreneurs. Many of them left military service, paired their helicopter flying skills with affordable technology solutions, and found success. Back then you could buy a new Bell JetRanger for less than $170,000. Today, a civil helicopter in the light or intermediate category is a multi-million dollar investment, and operators are systematically being squeezed out of the market. Unless you are a large enterprise or have very deep pockets, a rotorcraft-based business is rapidly moving out of reach.
Performance and new technologies are wonderful luxuries, but can we afford them? When Frank Robinson selected a low-cost reciprocating engine and simple rotor system for the R44, he discovered a winning formula for a new helicopter with lower operating and acquisition costs. Data from GAMA suggests that Robinson’s cost-effective solution continues to serve 50 percent of the light helicopter demand, globally. He found an intelligent balance between performance and risk and fundamentally changed the game. Now it’s time for another market rationalization and a step change in cost economics. We as an industry must start thinking outside the box and take a more mature approach to risk mitigation, explore options to mitigate the high-cost of turbine engines, consider new approaches to insurance programs, for example, better correlation of mission risks to premiums, and continue an aggressive review of human factors that continue to drive risk, and cost, spiraling upward.
We need to keep innovating. We applaud advances like the Bell Tiltrotor, Sikorsky X2, and Airbus Helicopters X3, as well as ever-more capable unmanned and “piloted” autonomous-controlled aircraft. To be clear, this is our future, but our innovation should not be one-dimensional, with a technology-only focus. Challenging assumptions and questioning the status quo, like Robinson did, helped to ensure viable business models at the entry level of our industry. Today, these same principles provide a strong foundation for moving us forward into a more successful and shared future. To use an analogy, if the automotive industry discontinued low cost entry-level cars, our roadways would be filled with large trucks, high-end sports cars…and horses.
Cobham Aerospace Communications, John Payne, General Manager
RW: What is your forecast for the next 12-24 months, and why?
Cobham Aerospace Communications anticipates continued healthy growth in 2015 in civilian, commercial, and special mission rotorcraft sectors for our communication, navigation, and information management systems, as well as our antennas, lights and slip rings based on multiple factors:
• Steady forecasted production rates by the major helicopter manufacturers
• Continued economic recovery in the United States, with GDP growth estimated at over three percent, will positively impact the rotorcraft OEM and retrofit markets in multiple segments, including airborne law enforcement, helicopter emergency medical services, fire suppression, offshore oil & gas transport, training, and state National Guard units
• The pressing need for total communication interoperability by federal, state, and municipal agencies
• The ongoing replacement of outdated and heavy avionics with lighter, more compact, more power-efficient, and feature-rich components by integrators and operators
• Cobham’s decision to expand our suite of audio communications products by pulling over 200 items back from sunset status to address operator and mission requirements
We foresee another healthy year for the rotorcraft sectors in which we have a presence, and for our technologies as a result. We’re strongly positioned to offer innovative products and superior service to the OEM and retrofit markets.
Composite Helicopters, Peter Maloney, Director and Chief Designer
The helicopter manufacturing industry is on the cusp of a very exciting evolution. Helicopter manufacturers globally are beginning to experiment with composite technology because they recognize the benefits these advanced materials provide.
With Composite Helicopters International’s revolutionary EvoStrength Technology, the company has fully embraced this state-of-the-art composite technology by designing, engineering and manufacturing the world’s first helicopter with a monocoque fuselage made entirely from composite materials. This represents a distinct departure from the use of aluminium and steel tube framing that traditional helicopters are manufactured from.
Our EvoStrength technology has proven its strength and safety through rigorous testing. As a single piece composite structure, there are no rivets or bolts used in the assembly of our composite helicopter fuselage structure. The result is unparalleled corrosion, fatigue and impact resistance, resulting in lower operating costs and increased ROI for owners and operators.
The industry is witnessing an important development in helicopter manufacturing that will influence new designs for decades to come. We believe the helicopter industry globally is ready for a safer, stronger helicopter, such as ours.
Kaman Aerospace, Gary Tenison, Group VP Business Development
In 2015, Kaman anticipates a generally positive helicopter market for Kaman applications, although the slide in Blackhawk rates continues to present challenges. Kaman continually strives to satisfy market demands for cost and performance on helicopter platforms such as Sikorsky Blackhawk (cockpits), Bell AH-1Z Viper (cockpit and lower fuselage), Bell helicopter blades (skin to core), and MD Helicopter (composite blades), while supporting Kaman SH-2 and K-MAX helicopter users with engineered upgrades and support.
While Kaman Aerospace is a fully integrated aerostructures (Aerosystems) and advanced specialty bearings provider (Kamatics and RWG brands), our helicopter legacy remains strong. For 2015, Kaman continues work on remanufacturing and upgrading the Kaman SH-2G Super Seasprites for New Zealand (10 helicopters) and for Peru (five helicopters), contributing to a 40 percent increase in fielded units over a three-year period.
Kaman is advancing on three fronts for the Kaman K-MAX helicopter including Kaman’s military applications work in concert with our K-MAX partner, Lockheed Martin; supporting our existing fleet of K-MAX fire-fighting and logging helicopters, and soliciting interest in re-starting new production of the K-MAX helicopter.
Macquarie Rotorcraft Leasing, Jeff Pino, Chairman
There will always be a market for helicopters, because they do things that would otherwise be impossible. But the real question we all face every year is, “how many helicopters, and what types of helicopters, will be needed in the next 1-5 years and beyond?”
Everyone in the civil sector is continually monitoring the new helicopter forecasts. They drive pricing, production, employment, and most every facet of business for OEMs, suppliers, operators, and leasing companies like MRL.
It’s also why everyone is talking about oil, watching carefully as prices drop ($60 a barrel at press time). Oil is the No. 1 factor in helicopter demand.
Generally speaking, a drop in oil prices is not great news for the helicopter industry, yet we see near-term opportunities for clients and remain extremely optimistic about the industry and our potential over the medium and long term. Because we manage our business strategically and conservatively — with a long-term view — Macquarie Rotorcraft Leasing is very well positioned to navigate this dynamic market.
We’ve used methodical and proven processes to make strategic investments in new aircraft, but have not overspent on speculative orders. At the same time, as part of Macquarie Group, we have the capital and balance sheet strength our customers require. It’s also worth noting that while leasing helicopters is an important part of our business, it is really just one aspect of how we help our customers with broader financial solutions.
In the long term, Macquarie expects the helicopter market to resume its growth in 2016 and beyond, though we are keeping a close eye on Brazil. But in the short term, if oil prices continue to drop, it could bode well for the leasing community. Operators will likely require capital, and leasing companies like Macquarie will be available to help with sale/leasebacks and other creative solutions.
Also, while the leasing business has been growing, with a number of new players, this is likely to slow in 2015. We anticipate few new entrants to the leasing market. Instead, we expect that the existing companies will solidify their positions, and those that are not well capitalized may not survive.
Planning for the long term, maintaining cash flow, and strategic but conservative management are always important. This will be especially true for our industry in the coming year.
UTC Aerospace Systems, Tom Mepham, Senior Vice President of Power, Controls & Sensing Systems
RW: What is your forecast for the next 12-24 months and why?
The civil and military helicopter markets are facing a significant challenge for their helicopter fleets in the near term – improve the mission capability and availability of its aircraft while reducing the procurement and operating costs. This will result in fewer new helicopter development programs, but will open significant opportunities to upgrade current platforms. For example, in the U.S. Military the UH-60 BLACK HAWK, AH-64 Apache, and CH-47 Chinook all had significant extensions of their projected fleet lives that will require insertion of new technologies and capabilities. The civil helicopter market is expected to grow in the near term, and the need will be met by upgrading current models and introducing new models that are mainly derivatives of existing models, like the AugustaWestland family of AW1X9 helicopters.
Providing operators with helicopters that have improved safety and operational capability at the lowest price is driving airframers to partner with second tier suppliers to share opportunity and risk. Industry partners will see an increase in opportunities to provide “smart” products and systems that significantly increase aircraft availability and greatly reduce life cycle costs. Industry has made many forward-looking decisions to invest in future platforms and enabling technology. Programs like the U.S. Army’s Improved Turbine Engine Program (ITEP) and joint multi-role technology demonstrator (JMRTD) will bring a new level of safety, efficiency and affordability to helicopters. Many of the new technologies will appear in platform upgrades in the near term as well as long term development programs like the U.S. Army’s Future Vertical Lift (FVL).
UTC Aerospace Systems will continue to invest in its unmatched portfolio of products for the helicopter markets, and expand its role as an integrated system supplier. Investment in advanced modeling, analysis, and simulation capabilities and systems integration labs will reduce program cost and schedule risk in the validation phase of the program, ensuring that UTC Aerospace Systems’ systems and products perform “right out of the box.” In addition to technology development, UTC Aerospace Systems will continue to expand its worldwide support capability to provide customers with the most competitive sustainment programs.