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Saturday, March 1, 2008

Rotorcraft Report: Silver State Fleet Not Expected To Swamp Market

PRODUCTS | AIRFRAMES

Silver State Helicopters’ pending liquidation will put 215 helicopters on the used market, but that is not expected to swamp the market or sink used-aircraft prices.

There are two reasons for that.

One is that the market is hungry for good used aircraft, with airframe manufacturers reporting waits of a year or more for new aircraft delivery slots. Demand for Robinson Helicopters R22s and R44s, which make up the bulk of Silver State’s fleet, is strong.

Another is that nearly all of Silver State’s aircraft are pledged as collateral for loans. That means a couple of things: their disposition will be tied up in the operator’s Chapter 7 liquidation proceedings in U.S. Bankruptcy Court, and the creditors to which those aircraft are pledged will be keen to avoid flooding the market so they can maximize the sale price of the aircraft.

Robinson Helicopter Vice President Kurt Robinson said that manufacturer was stunned by the shutdown. "We were really taken by surprise," he told Rotor & Wing. "Our people started calling the normal people they call [at Silver State] and nobody picked up the phone."

Robinson had recently completed assembly of about a dozen R22s and five R44s in Silver State colors, and had long since notified the operator they were ready for delivery. "I don’t suspect they’re going to pick them up now," he chuckled.

Robinson doesn’t expect the demise of Silver State will adversely affect sales of the R44, mostly due to the huge backlog of orders. "We’re sold out on the R44’s through next December," he said. "We got a lot of calls already from people" who want to buy the undelivered Silver State aircraft.

Likewise, liquidation of Silver State’s 15 turbine helicopters of various makes and models is not expected to significantly impact the market. — Ernie Stephens

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