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Friday, March 1, 2013

Eurocopter Flies to €6.3 Billion Turnover; Customer Support Activity Exceeds Production

By Andrew Drwiega

With the self-assured confidence that is the hallmark of Eurocopter’s president and chief executive officer, Lutz Bertling, announced at the company’s annual media gathering in Paris, France this January that yet another Houdini act had been achieved in 2012. While Eurocopter’s overall helicopter deliveries continued their steady decline from a high of 588 in 2008, dropping to 475 in 2012, revenues hit an all time high of €6.3 billion, or approximately $8.4 billion USD (a growth of 15 percent on the €5.4 billion achieved in 2011). There has been an average turnover growth rate of 9 percent since Bertling took over the company from Fabrice Brégier in 2006.

As Bertling himself stated, many companies have not achieved successful growth like this in “traditional industry in this period of time—it is the proof that European cooperation can work.” The organization’s strategy has been to focus on selling bigger helicopters while investing in services, which are then offered to operators. “This has proved to be the right track. We have taken off since 2011—proof that our strategy works,” he added.

Vector Aerospace has been an example of Eurocopter’s buy-in to grab market share of the service sector, not only for its own products by with an eye on maintaining those of other helicopter manufacturers by exploiting its well establish business and reputation. With 42 percent of turnover now being found in customer support services, Bertling views this activity as “not only profitable but crisis resilient [with] the service business giving stability in a crisis as long as they [customers] keep flying.” He admits that his strategy has been to increase services. Even the oblique manufacture of carbon fiber doors for the A350 jetliner adds a useful technological element to the company’s repertoire—a new “string to the bow” as it were.

Customer support (47 percent) has also exceeded production (45 percent) in terms of activity. Military represents 31 percent of activity against the 69 percent of civil business. The export market—that which lies outside of Eurocopter’s home countries (France, Germany and Spain)—accounted for 72 percent of business.

Repeating last year’s analysis on market potential, Bertling once again highlighted the strengths of Asia, Latin America and Eastern Europe. He said that by the middle of the decade Asia would become “the biggest potential market in terms of units,” due in no small part to the continued growth of the oil and gas industry, especially offshore. The expansion of the Chinese market still lay with the opening of airspace flying restrictions by the government. He considered that the relative slowness towards this ambition was, in part, to allow the indigenous industrial aerospace industry to mature and grow (such as Eurocopter’s partner AVIC, or China Aeronautics Industries Group).

As ever Bertling was upbeat about what the future had in store for the company, and the way that it has been guided through the recessions sweeping over Europe in the last few years it would be a brave move to bet against them. However he was cautious when asked about the recently announced Sikorsky/Boeing plan to team over the U.S. Department of Defense’s ambition for a Joint Multi Role helicopter which will result in the Future Vertical Lift (medium) platform—the basis for the eventual replacement of around 4,000 Black Hawk and Apache helicopters. He said that it was difficult to read whether Boeing would be limiting its ambition here to the potential Sikorsky partnership, as it already had an existing teaming agreement with Bell Helicopter over the Osprey (with tiltrotor technology also a potential contender for the JMR). He added that Eurocopter’s own offer for the JMR would be “extremely attractive” but did not elaborate further.

The first delivery of the EC175 should take place at the end of the year in Q4 with the launch customer thought to be Bristow. The prospect of developing the X3, maturing the X4 and looking ahead to X6 and X9 projects occupy Eurocopter’s forward planning. Of the X3, Bertling said that the simulation models were too conservative with fuel consumption lower than predicted. He said that an aircraft of this type had its own certification challenges also declared the possible interest of between 50-60 customers, although the X3 has always been stated as a technology demonstrator.

The crashes of the EC225s have caused Eurocopter one of their biggest collective challenges. While Bertling stated that a large part of the EC225 fleet continued to fly, the North Sea fleets flying from the UK and Norway were still waiting for the company to clear their aircraft, which Bertling expects to do around early April. He stated that the investigation has proved “more technically difficult than anything in the past” and that the project had been given a Priority 1B status, giving it priority within Eurocopter over resources. “It has had a severe impact on one of the most important customer groups we have,” he said. Bertling explained that it was necessary to “define safety barriers to ensure it does not happen in flight.” Using the HUMS systems to monitor vibration provided a way to detect irregular vibration and he stated that there was “clear link between one vibration source and this issue.”

Bertling’s vision imbued by his company is: “we are selling mission capabilities, not helicopters. If you could do the same mission with a truck, you would buy the truck. Everyone has a mission which is more than the helicopter—it includes training, safety, spare parts—everything that surrounds the helicopter which creates mission success.”

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