Heli-Expo 2015: a strategic summary

Heli-Expo 2015: a strategic summary

12-Mar-2015 Source: HeliHub.com

With time to reflect following the end of Heli Expo, Andrew Drwiega gives a quick summary of some of the key points that were made by OEMs during the show.

Now that the dust has settled from Heli Expo, Florida, for another year what, if anything, did we learn from the world’s biggest helicopter exposition?

The underlying theme among the industry’s helicopter OEMs is one of consolidation while looking ahead to future prospects. What is meant by that? Well, let’s examine ‘the usual suspects.’

Airbus Helicopters

Airbus Helicopters has just been through a transition into the corporate structure of the Airbus Group. That has meant not only the obvious change of name, but as chief executive Guillaume Faury admitted, “last year was the first year of Airbus Helicopters with new priorities of customer satisfaction, quality and safety, and competitiveness. These were the drivers for all our decisions, whether selecting people, making decisions for investments, product policy, and for services.”

The company still managed to increase turnover to €6.5 billion, slightly up on the previous year. He said that 2014 was an important year for bringing new products to market including certifying the H175, H145 T2 and the H135 T3/P3.

Airbus Helicopters also had the big reveal of the show in the new medium twin helicopter, the H160 (X4). This is the successor to the old EC155/AS365 Dauphin range that has been at least five years in development. Although started in 2011, the language being used left no doubts that the success of AugstaWestland’s AW139 was going to be challenged.

AgustaWestland

“Our strength is about having the family [AW139, AW189, AW169] and everything we do is now focused on this.” So began AgustaWestland’s CEO Daniele Romiti’s pre-show brief to the media. Although the arrival of the last member of the family, the AW169, will happen this year, the family concept through a variety of weight classes “would keep our competitors in areas that are safe for us,” said Romiti.

“We were the leader in the offshore segment last year,” he said, adding that their belief was that the products being launched would mean that the company could sustain its position during the length of the downturn and beyond.

Overall the company’s product strategy is targeted on three areas: helicopters [sharing commonality]; tiltrotors (their vision for the future); and unmanned which Romiti said would be a significant part of their future portfolio (especially optionally piloted vehicles).

Romiti revealed: “Tiltrotor is our vision for the future. The AW609 is not the same aircraft as we got from Bell…the industrial stage has started and the main experiment flights have been successfully delivered including autorotation [for which the test pilots were given an award by the Society of Experimental Test Pilots].”

The first line of assembly will be at AgustaWestland’s facility in Philadelphia, followed by a second line in Vergiate, Italy. A real development though was Bristow CEO Jonathan Baliff’s signing of a wide-ranging Memorandum of Understanding (MoU) with the OEM which is aimed at increasing the customisation of the tilt rotor, particularly for offshore energy and SAR sectors.

Although no orders have been signed, the public backing by such an important global operator has changed the perception of the AW609 from experimental to truly developmental. Certification for the AW609 has been predicted for 2017 with orders starting to be fulfilled a year later.

AgustaWestland has even announced its intention to build a bigger version of the AW609 that would hold 22 passengers. Romiti stated that the operation of Bell/Boeing’s V-22 is proof that the tilt rotor is a scalable entity.

Bell Helicopter

“The industry has faced headwinds…geopolitical unrest…and some economic malaise have clearly contributed to 2014 being off for industry, although we gained market position,” said Bell Helicopter CEO John Garrison referring not least to the drop in oil prices worldwide. Garrison nevertheless picked out the Bell 429’s success in Europe with over 50 sold. Prague is the OEM’s European base, announced last year, from which it hopes to mount a come-back in the European markets (particularly among older eastern European fleets that need to be replaced).

“Bell Helicopter is in its 80th year,” stated Garrison. Revenue last year was $4.2 billion (€3.9 bn). The company is currently doing well from its V-22 multi-year and H1 sales to the Department of Defense (DoD), but the civil business is now being addressed for improvement: “We know we need to be more globally responsive and more cost competitive and the last couple of years have been a challenge, but we have been hard at work ensuring that our underlying infrastructure and our cost position is such that we can compete in the global marketplace.”

Garrison said that the company was “bullish” about the market and that the conditions were favourable for a rebound in the civil market in 2015 and a return to growth. The company is also placing much belief in the success of its new products, the Bell 525 Relentless and the Bell 505 Jet Ranger. The latter is now expected to be priced at around $1 million while the 525 should have its first flight before the summer

MD Helicopters

Comfort for the operators of MD Helicopters 902 Explorer was ostensibly offered by company owner Lynn Tilton in her proposal that a team of retired designers was being re-engaged to effectively create a new version of the twin engine MD 902. Taking another ‘leaf from the automotive industry’s book’, Tilton wants to cut the costs incurred in the manufacture of parts by bringing them in-house.

However, the main focus of revenue generation for MD Helicopters is on the development of the MD 500 series of helicopters to take full advantage of the company’s status as a Foreign Military Sales (FMS) supplier to the DoD. The importance of this to any other aspect of the company cannot be over emphasised.

Sikorsky

Sikorsky’s CEO Mick Maurer said his big challenge was in the military market. The roll-out and first flight of the CH-53K is crucial to the company’s long term financial well being. The company has resolved the issues of its once ill-fated Canadian Maritime Programme. “We learned a lot from Canada and others that we are incorporating into our new product development, said Maurer.

“We are set up to grown,” said Maurer, citing four major wins in the Turkish utility helicopter programme and industrialisation supply line; the US presidential helicopter win; the Air Force CSAR helicopter; and the Joint Multi Role tech demonstrator which will fly in 2017. That total backlog is worth around $49 billion to Sikorsky!

The company’s lack of exposure to the decline of the civil market was noted by Maurer who nevertheless drew attention to the company’s commercial growth of around 12 percent. “The oil segment is the biggest and most important one to us,” he said. But added that the oil price had also been low in 2009 and that growth will return.

The S-76D will be “ramped up to full production” and the S-92 has a flagship operator in the UK Search and Rescue operator Bristow.

Additional observations

Missing from the show, although not a surprise given the geopolitical situation over the Ukraine, was Russian Helicopters who have been increasing their presence year-on-year over the past decade. While their military closed market remains strong, their freeze-out from participating in such a global civil area such as Heli Expo will inevitably be a huge set-back. This works both ways of course, with anticipated business opportunities for western companies with the Russian OEM being placed on indefinite hold.

Of note was Honeywell’s pre-show forecast of between 4,750-5,250 new civilian helicopter deliveries during 2015-2019. A moderate improvement over the next five years sees strengthening demand from North America taking a 34 percent slice of the market, with better prospects in Europe despite the Russian impasse.

Latin America is shown to have above average growth too, particularly in fleet replacement, while the Middle East and Africa with nearly a third of research respondents being slated for new helicopter purchases during the period. The BRIC countries (Brazil, Russia, India and China) are slated to ‘ebb and flow’ with India potentially being the most responsive to actual growth. Finally the Asia-Oceania region will account for around 14 percent of the five year figure.

Noting the research and development work into speed and range for the U.S military’s Joint Multi Role technology demonstrator, it is not beyond the wit of man to view the next generation of helicopters including coaxial compound verses tiltrotor designs. While many might deride this premise consider the following: both Bell Helicopter and AgustaWestland are now fully committed to developing tilt rotors.

And so to next year and a new location at the Kentucky Exposition Centre in Louisville, Kentucky (1-3 March 2016). The lack of international connections was a feature already being complained about by exhibitors and visitors in not-so-dark corners, particularly when one of those connecting hubs, La Guadria, was closed by a plane skidding off the runway due to snow and ice!

Andrew Drwiega – HeliHub.com

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