14-Oct-2016 Source: Allan Blake
I met up with Mark Kelly at Helitech 2016. He was appointed Executive Vice President and Managing Director of Lobo Leasing in January 2016. Mark worked in his family’s engineering business in Ireland for ten years, self-sponsored his way to a pilot’s license and then joined CHC as a co-pilot on the Puma fleet in Aberdeen. He flew at CHC for 10 years ending up as their Managing Director in Ireland and winning the Irish SAR Coastguard contract for them. Mark’s interest in the leasing business started while working for CHC in Ireland, a country which has very favourable tax and legal framework for leasing companies. He helped CHC establish CHC Leasing Ireland and was one of the two Directors. Before starting his new role at Lobo Leasing Mark had two years with LCI, another helicopter leasing company.
Lobo has 37 helicopters on lease, 25% in Europe, with a wide range of types from the S-92A to the Bell 206L4, but no onerous H225s or AS332L2s. Although the helicopter leasing market is very tough at present he sees opportunities to penetrate the market in Asia, particularly China which Lobo has just visited. However, the Russian market is more of a challenge and it clearly isn’t in his immediate sights.
On the return of the H225, Mark’s view is that this will be a gradual process, building up confidence in the type again, probably starting with SAR aircraft first as this is the greatest need. He considers the return to service “does change the demand dynamics” in the leasing market but is clear that Lobo as a small niche leasing business with a varied fleet can differentiate itself from its larger competitors.
Lobo doesn’t speculate on acquiring aircraft and currently has a 97% utilisation rate. This is despite receiving two S-76C+ helicopters back from CHC as part of their Chapter 11 rationalisation, with one more AW139 pending. Lobo has six helicopters that remain with CHC, a medley comprising S-92A, AW139 and S76’s and he is confident that they will remain there. However, CHC have about another 40 aircraft to release yet to achieve their now revised and higher target of 90 aircraft and it looks very likely that they will have a preferred lead lessor in Milestone by early November with the court date for considering the Chapter 11 Plan Support Agreement set for 2nd November. Mark doesn’t see this as a threat to Lobo’s business though believing that there will still be a demand for a combination of lessors supporting the major offshore operators and that Lobo provides a necessary diversity of provider.
Mark has only been in his MD position at Lobo since January, and has taken the role on at an incredibly tough time for helicopter lessors focusing on the offshore sector. He is clearly thinking of new markets and ideas to lead Lobo though this period, and has experienced the cyclical nature of the offshore business at the raw end of operations in the North Sea. Lessors, like helicopter manufacturers, need to spread their bets across the 90% of the turbine market that is not linked to oil and gas and therefore across different helicopter types. The projected new total turbine rotor market over the next ten years projected by Flight Ascend is for 9,150 helicopters with just under 1,000 of these in the offshore market. Mark’s desire to develop Lobo’s Asian strategy also sits well with the forecast by Flight Ascend that it is this market which will grow fastest in the next ten years.
One concern during what admittedly was a relatively short meeting was a perceived lack of urgency, but I put that down to his very calm and confident Irish personality more than any unwillingness to move quickly and strategically when necessary. Lobo is small enough in this market to move very fast and be flexible; this can be turned into a considerable strategic advantage in the current market.
Copyright and full responsibility for the content of this article remains with Allan Blake, an independent Aviation Consultant. He was Regional Director (Asia Pacific) with the Bristow Group for seven years. He is also the author of “Dynamic Directors: Aligning Board Structure for Business Success” (Macmillan).