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Wednesday, February 26, 2014

Airbus Helicopters (Formerly Eurocopter) Regroups In Times of Uncertainty

New man at the helm; new approach to the media.

By Andrew Drwiega, International Bureau Chief

At his company’s annual “state-of-the-nation” briefing to journalists in Paris during January, new Airbus Helicopters President & CEO Guillaume Faury was less informative, less detailed and more cautious than his predecessor, Dr. Lutz Bertling. The usual document – which last year contained 28 pages of presentation notes – was replaced with one that contained only four sheets of data.

Not surprisingly Airbus Helicopters has had its confident march forward knocked back by a sequence of accidents over the last couple of years that has dented its image, not least within the offshore community. North Sea operations of the EC225 remained grounded until August following two ditchings in 2012, one with fatalities. Just as that exile ended, the company suffered from a further two fatal crashes before the end of the year. Yet again, one in the North Sea when a Super Puma AS332L2 went down off the Shetland Islands on August 23 with four people lost, and a police helicopter EC135 T2 which crashed through the roof of a Glasgow pub during the evening of Friday, Nov. 29, with 10 fatalities and others taken to hospital. Bond Air Services operated both of these latter aircraft.

While Faury unsurprisingly didn’t dwell on the crashes, heavy emphasis was made of the EC225 returning to operations with a succession of pilots in a promotional video proclaiming their faith in the helicopter. The EC225/EC725’s are a significant part of the company’s offering and while Airbus resolutely confirms the problem that caused the crashes has now been fixed, the damage has been done. He said that the investigation into the Glasgow crash would take a long time.

Early in the briefing, Faury addressed the Airbus Group reorganization that saw Eurocopter transform into Airbus Helicopters, stating that it was “a change that goes through to our core DNA.” To what extent and in what form this “DNA change” will be visible in terms strategy needs to be discernible in the coming months, if indeed there is a difference to show. With the falling-off of the defense sector now giving real cause for concern over future earnings, compounded by the very limited opportunity for any growth with the U.S. Department of Defense (albeit the UH-72 Lakota is back in the acquisition fold), the civil market has to be where the growth will come from – together with an increase in revenue from services and training (sectors into which all of the OEMs are now seeking to expand).

During 2013, Faury revealed that Airbus Helicopters had delivered 497 helicopters, 22 more than in 2012. He said that his company was the leading manufacturer of helicopters in terms of units sold.

“We obtained 46 percent of the civil market and 11 percent of the military market,” he remarked. Unlike previous years, Faury said that the Airbus Group’s annual results would not be published until the end of February and expectation was that they would be revealed during Heli-Expo 2014.

While the consolidated turnover figures per activity have not yet shown any major divergence from the previous year’s reporting (military has dropped one percent from 46 to 45 percent), export and domestic market shares remain at 72 percent and 28 percent, respectively. Total bookings decreased from 469 in 2012 to 422 in 2013.

One of the main “disappointments” in the figures, said Faury, lay with the under-ordering of the new EC175. The delay in the EC175 certification, now confirmed by EASA, was largely responsible, he said, but new customers would be one of the organization’s priorities for 2014. Certification by the end of the year was expected for both the EC145T2 and the AS365 N3e.

There were 803 military helicopters delivered in 2013 with a 9 percent growth in the military market dominated by American and Russian helicopter manufacturers. “We are witnessing a contraction in Europe and the United States… but there is still a market for medium and heavy helicopters,” he noted.

Airbus Helicopters CEO President & CEO Guillaume Faury during a January press event. Photo by Andrew Drwiega
While existing Airbus Helicopters military programs remain strong in terms of continuing the roll-out of the NH-90, reaching development milestones for the Tiger (especially for Spain) and putting weight behind further sales of the EC725, the longer term future is less clear now that the U.S. DoD has backed away from short-term commitments. Airbus Helicopters had already withdrawn its from the Armed Aerial Scout 72X (EC645) program before it was shelved and also pulled away from the Joint Multi Role (JMR) competition. Of the X3 technology demonstrator, Faury said that testing technologies on the program had been successful and that they would move forward with market studies to look at how such a platform could be used and when that time was likely.

In the civil market, there were 799 helicopters delivered worldwide of which Airbus Helicopters had a 46 percent share, followed by Bell Helicopter on 21 percent then AgustaWestland with 19 percent. Offshore is one sector that is certain to show growth: “We have seen investment in offshore exploration and production double in the past decade. More than 190 deepwater deposits have been discovered since 2009 notably in Brazil, Australia, the United States and Norway. By 2020, more than 109 new offshore platforms are likely to be constructed and in most instances requiring access by helicopter,” he stated. Faury underlined the fact that the EC175 had certified with two vertical speed records to 6,000 m at 6’ 54”, and 3,000 m 3’10”. “We will deliver helicopters to our three launch customers this year he confirmed (those being NHV, UTAir and Heli-Union).

With regard to the world’s largest potential market, China, he stated that “the skies are starting to open and that is raising high hopes.” He explained that for a country of 1.4 billion people, the current count of around 350 helicopters leaves massive room for expansion. With only 25 helicopters delivered into the country last year, he believes that by 2020 that number could increase to around 220 helicopters annually. Other sectors for growth include servicing offshore wind farms and the emergence of leasing companies working with operators. “We have set reasonable growth targets and we will focus on completing deliveries to customers as a key priority.” He also saw increased growth for EMS and other services in countries that do not currently have them.

In terms of further developing the X4, X6 and X9 projects all enthusiastically promoted by ex-CEO Bertling, the note was one of caution in that while they remain a priority in terms of development, that would not necessarily translate into an urgent requirement to field them.

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