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Saturday, May 1, 2004

Downright Giddy

The Rotor & Wing Editorial Team

Attendees of HAI's Heli-Expo reported burgeoning order books, valuable contacts on the show floor and a general feeling that good times may be returning to the helicopter industry.

HAI's Heli-Expo 2004 highlighted what exhibitors and attendees said is a turning point for the helicopter industry. Against the background of depressed gatherings at the annual event since the 2001 terrorist attacks, this year's trade show and exhibition was a veritable celebration of optimism and vigorous business.

"It was very energetic," said Peter Wright Jr., vice chairman of Keystone Helicopter Corp., agreeing with the assessment of others that this year's event topped all other trade shows-including NBAA, EBACE and the Airborne Law Enforcement Assn. annual-in the last five years.

Almost without exception, that echoed the sentiments of Heli-Expo exhibitors, visitors and industry wags encountered in Las Vegas by Rotor & Wing's editorial team-Editor-in-Chief James T. McKenna, Managing Editor Douglas W. Nelms, and Defense and Homeland Security Editor John R. Guardiano.

Several undercurrents buoyed those sentiments.

One was what Heli-Expo participants described as general optimism that the recovery of the U.S. economy is picking up steam, although that was tempered by lingering caution against spending and investments.

Another was what they said are increasingly solid indications that corporate and emergency medical service operators-two mainstays of aircraft sales, completions and modifications-are ready to invest in new and upgraded helicopters. A third was a perception that the U.S. Army's cancellation of its $14-billion Comanche program has freed up funding that will spur new and innovative aircraft development programs.

"There's a feeding frenzy going on," said Joseph H. Lubenstein, president of Kaman Aerospace Corp., with industry executives dusting off old ideas or proposing new ones for aircraft and systems that can meet U.S. military requirements with Comanche now dead. Even if the Army keeps only 75-80 percent of Comanche's $14 billion in its aviation programs, "in the end it's going to spark a lot of creativity."

Lubenstein said Kaman has discussed with Pentagon officials the contributions it could make in meeting the Army's newly defined requirements. These include possible application to Army needs of its K-Max helicopter version being developed for the U.S. Marine Corps' Broad-area Unmanned Responsive Resupply Operations concept.

Separately at Heli-Expo, Kaman signed on to the Lockheed Martin-led US101 bid to supply the next U.S. presidential helicopter. Kaman will supply structures and engineering work to the AgustaWestlandBell joint venture set up to provide the EH101 for that bid.

The show opened in the tradition of recent years, with engine makers giving their near- and long-term projections for future helicopter business. Honeywell, Rolls-Royce, and Pratt & Whitney Canada reported expectations that sales should improve steadily over the next several years, driven by demand from corporate, emergency medical and law-enforcement/public agency operators. Most of that demand will continue to come from North America.

The projections of Honeywell and Rolls were tempered; each said their forecast of new aircraft sales was slightly lower than those offered last year. Pratt, on the other hand, foresees deliveries of PW200 and PT6 turboshaft engines rising 30 percent this year, boosted by its selection by many operators of light-twin helicopters last year.

"The PW200 continues to increase its share of the light-twin market," said Alain M. Bellemare, Pratt & Whitney Canada's president, noting that it recently has been selected for 47 new light-twins. In the last few years, he claimed, the PW200 has powered about 70 percent of new light-twin deliveries.

The PT6B, C and T also had significant wins last year, selected in orders for the Agusta A119 Koala, Bell Agusta AB139 and Bell 412.

Honeywell excluded military demand for civil helicopters in its forecast for the first time, producing what it said is a "pure" civil number. The forecast is based on the engine maker's queries of 949 chief pilots and flight department managers of companies operating nearly 3,047 helicopters worldwide. It surveyed the types of aircraft they operate and their specific plans to replace or add to their fleets with new aircraft.

For the five years through 2008, Honeywell projects that 2,350 new, turbine-powered civil-use helicopters will be delivered. That would put sales 6.8 percent higher than for the five-year period that ended in 2003.

Sales will be spurred by increased demand for light single and intermediate twin-engine models offering newer technology, according to Lynn Brubaker, vice president of Honeywell Commercial Aerospace, who presented the forecast results. Other factors spurring near-term sales will be the "bonus depreciation" tax provision in the United States as well as a strong economy there, he said, and booming economic conditions in Asia.

Although helicopter sales in 2003 were flat compared to 2002, Brubaker said they are likely to increase about 8 percent this year compared to last. Corporate, EMS and law-enforcement helicopters collectively will account for almost two thirds of new civil sales through 2008, the forecast indicates.

In the longer term, Honeywell sees turbine aircraft sales inching up 2 percent a year through 2014.

Brubaker said Honeywell found little expectation among respondents to its survey that they would trade up. Rather, they indicated that more than 80 percent of new purchases will be to replace older aircraft in the same size/capability and price class. About 7 percent of operators said they plan to trade down to less expensive machines.

New helicopters remain in greatest demand in North America, which Honeywell's data shows accounting for almost 46 percent of expected future purchases. (That is off slightly from last year, a drop the company attributed to reduced expectations for law enforcement aircraft to support homeland defense and border patrol missions. More than 60 percent of future new aircraft purchases in North America are expected to be light singles.

About 23 percent of new turbine-powered helicopter sales are expected to occur in Europe. Honeywell said evolving regulations on what can be flown over populated areas would result in two-thirds of future new turbine helicopter sales in Europe being twin-engine aircraft.

Based on the percentage of fleets to be replaced or expanded, Honeywell said, the Asia-Pacific region, Africa and Middle rank highest. Operators in those regions expect to purchase helicopters equal to almost 22 percent of current fleets in the next five years. That compares to 18.7 percent for Europe, 16.2 percent for North America and 14 percent for Latin America.

"Over the next five years," Brubaker said, "we estimate that nearly 23 percent of total world new helicopter sales will be to customers" in the Asia-Pacific region, Africa and the Middle East."About 60 percent of that demand will be for multi-engine craft, he said, with two-thirds of that percent focused on acquisitions of intermediate aircraft. Nearly 32 percent of expected purchases in those regions will be for offshore oil applications, much higher than for any other regions, he said.

Honeywell sees Latin America accounting for only about 9 percent of demand for new helicopters, with more than 80 percent of that for single-engine aircraft.

Rolls-Royce teamed with The Teal Group of Fairfax, Virginia, an industry-forecasting specialist, to develop its annual 10-year forecast of worldwide turbine helicopter deliveries. Presented by Stuart Mullan, Rolls-Royce's president-Helicopters, the forecast includes turbine-powered civil and military aircraft as well as rotary-wing unmanned air vehicles in all size classes.
Through 2013, the forecast partners project deliveries of 10,724 of those aircraft worldwide. They expect substantial growth in the military helicopter market and slight softening of the civil helicopter market in the near term due to what they called "the prolonging of the current economic downturn."

Record Attendance

The Rolls projection said civil helicopter deliveries will total 5,165 over the next 10 years, a forecast relatively unchanged from last year.

They expect single-engine aircraft (at 57 percent of deliveries) and light twins (at 22 percent) to dominate the market, with intermediate-class helicopters to make up 17 percent. Mullan said deliveries are expected to grow slowly, from a low of 480 units this year to a peak of 531 in 2013.

In the 10 years, they expect 5,559 military helicopter deliveries, a 6-percent increase over last year's forecast. Military sales should benefit from substantial re-equipment in that time, the forecasters said, and the eventual entry into service of rotary-wing UAVs. Those trends should be offset by cutbacks in big-ticket programs like the Boeing-Sikorsky RAH-66 Comanche. Approximately 46 percent of all unit deliveries will be multi-engine medium rotorcraft (primarily troop transports and maritime patrol helicopters), Rolls and Teal project, with 25 percent being intermediate twins (such as light-attack and tactical/utility helicopters).

Shipments of military rotorcraft are forecast to rise substantially over the next five years, Mullan said, then level off for the next five.

With projections for slow but steady growth as a background, a record number of more than15,000 visited Heli-Expo 2004's exhibits. Some came to pick up aircraft; others came to buy.

One highlight of the show was Sikorsky's delivery on March 15 of the first S-92 to Petroleum Helicopters, Inc. That company plans to place two of the aircraft into service this year supporting energy drilling and production in the Gulf of Mexico.

PHI President and CEO Lance Bospflug said the company picked the S-92 for its safety features; the operating costs to which Sikorsky has committed; and its payload, speed and range performance that give the aircraft "its ability to go deepwater." Energy companies increasingly are pushing operations further out into the Gulf of Mexico.

Sikorsky's senior vice president for marketing and commercial programs, Jeff Pino, said the company now has orders for 22 S-92s.

Sikorsky also booked an order for a third S-70 Firehawk from the Los Angeles County Fire Department. The acquisition of the advanced technology firefighting and paramedic aircraft followed a busy wildfire season in Southern California last year.

The Stratford, Connecticut helicopter maker also displayed the mockup of the VVIP interior for the S-92, which it displayed at the Dubai Air Show in December.

Eurocopter reported racking up 39 orders at Heli-Expo, including some that company officials said were walk-up orders taken on the exhibit floor. Air Methods ordered 10 EC135s, and CJ Systems Group ordered six. Helinet placed six orders for AS350B2s and took six options, which could be exercised for those aircraft or EC130s. Vanderbilt Medical Center in Nashville, Tennessee ordered three EC145, the aircraft Eurocopter introduced to the U.S. market at the show, and Taylor Energy ordered three EC130s. The manufacturer also received individual orders for EC120s from Pacer Communications and a corporate customer, Bob Russell, and single orders for AS350s from Creekside LLC and Heli-Express (which will take B3s) and Sundance Helicopters (which will take a B2).

The president of American Eurocopter, Marc Paganini, said his company captured a 49-percent share of the U.S. civil and para-public market in 2003. He said the company's goal now is to become a full-service supporter of Eurocopter customers, offering maintenance, completions and training services as well as aircraft sales.

"We don't have a good share of the market for supporting our own aircraft," he said.

Bell Helicopter made its own news-some intentionally, some perhaps not. The company booked signed sales orders and purchase agreements for more than 45 new aircraft, including 10 orders for 412 from Aeroservicios Especializados S.A. ASESA will use the aircraft, some of which already had been delivered at the time, for offshore oil and gas support in Mexico.

Responding to Customers

Bell also reported orders for 11 of the upgraded IFR-certificated 427 and one for the 210 re-manufacturing upgrade of UH-1s. Bell CEO Mike Redenbaugh announced plans for those upgrades at Heli-Expo.

"We've spent time talking to hundreds of customers," Redenbaugh said. "We've redirected our efforts to specifically respond to the needs of our customers today."

One thing customers want, he said, was an IFR-capable 427. He said Bell is in final negotiations with potential partners on development of such an aircraft, which he said should be certificated in the fourth quarter of 2006. The aircraft will include a 14-in. stretch of the cabin, dual hydraulic and electrical systems, an upgraded transmission and an upgraded rotor.

The current competition to supply new utility aircraft for South Korea's military has been a driver of the 427IFR, he acknowledged. But customers in North America, Latin America, Europe and Asia also expressed the need for such an aircraft.

"Bell needs a good, solid IFR-capable light twin, he said. VFR 427 sales have been picking up, he added, noting Bell has sold six in the last several months. "In conversations with customers, they tell us that, yes, they want VFR- and IFR-capable 427s."

The IFR equipment would include an integrated avionics system, a fully-coupled three-axis autopilot and a redesigned instrument panel.

Redenbaugh said the 210 builds on Bell's Huey 2 concept. Its goals include an 11-percent increase in internal maximum gross weight over the UH-1H, an 18-percent boost in external max gross weight and a 40-percent decrease in directing operating costs, which he said would mean a drop from $880 per hour to $530. Other goals for the 210 are a 20-percent speed increase and a doubling or tripling of inspection intervals, including a 5,000-hr. time between overhaul for its engines.

Bell will continue to sell the Huey 2 upgrade to operators of UH-1s built outside the U.S. for whom receipt of the 210's FAA certificate might be difficult, company officials said. Re-manufacturing to the 210 configuration would require 3-5 months, Redenbaugh said.

Other Bell sales included 11 407s for international customers, four 427VFRs, a 430, 412s and 206Bs.

Redenbaugh also vowed to proceed with development of Bell's long-discussed Modular Affordable Product Line, or MAPL. The goal of that effort is to generate a family of new small helicopters by the end of the decade, including a light single, an intermediate single and a light twin based on the same platform.

Slip of the Lip

The Bell CEO may have let some news slip at Heli-Expo when he said that the US101 would be built at its Amarillo, Texas plant if its venture with AgustaWestland and partner Lockheed Martin wins the competition to provide the next U.S. presidential aircraft.

Officials had previously revealed that the Bell Agusta Aerospace AB139 will be built in Amarillo, which promises to become a major manufacturing site. Bell assembles the U.S. Marine Corps' V-22 there, and it is the future site of Marine UH-1W and AH-1Z upgrade work. But revelation of the US101's possible future in Amarillo caught program officials by surprise.

Bell Agusta officials for their part appeared to be thrilled to show off their aircraft.

The No. 6 AB139, which has been undergoing avionics and systems integration work at Honeywell's facilities in Arizona, performed flight demonstrations for current and prospective customers during Heli-Expo. Most of those who spoke with R&W said they are impressed with the AB139's airspeed and performance.

Bell Agusta booked orders for the AB139 at Heli-Expo.

Honeywell, which is providing the Primus EPIC integrated flight deck avionics for the aircraft, ordered one.

The Los Angeles County Fire Department also placed an order for the aircraft, which will be fitted with an Air Methods medevac interior, a Breeze Eastern hoist and other equipment to let it perform firefighting and medevac missions.

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