It’s Saturday 25th January 2020 and a foggy start to the day in Anaheim, California. On entering the hotel lift (‘elevator’, if you prefer) to go down to breakfast and offering a “good morning” to the others present there is immediately a sense of unease and many eyes staring at my head. I’m the only person in the lift not wearing a pair of Mickey Mouse ears.
In two days’ time the HAI HELI EXPO 2020 will open its doors (and the people on the sidewalks and elevators around the convention center will no-doubt be sporting fewer sets of Mickey Mouse ears.) Many of those that are active in the offshore rotorcraft business will perhaps have underlying concerns about the industry, gnawing at the back of their mind like an inescapable omni-present rodent.
There’s certainly no shortage of reasons to be concerned – all three of the top heavy helicopter operators offshore have been through Chapter 11 restructuring in the current downturn, climate change (and the need for fuel switching) is headline news on a regular basis and US onshore production continues to set new records. Not to mention the fact that the E&P companies are making good money (in terms of free cash flow) but not spending it on new projects in the same proportion as they were previously.
However, things may be starting to change in the heavy helicopter market. While the surfers happily pack the beaches in California, the predicted ‘wave’ of consolidation amongst the offshore helicopter operators has yet to properly develop and crest, but the first ripples have finally appeared with the announcement of the Bristow and Era merger yesterday morning.
S-92 Fleet as of Dec 2018 (left hand side) and now, showing post Bristow Era position.
What does this mean for the heavy helicopter crew transfer market? Aside from the operational efficiencies and management changes for Bristow as noted already in their press release, the impact on the overall structure and fleet ownership concentration is actually fairly limited as can be seen above. Bristow were already the largest S-92 operator and whilst this deal does increase their share of the S-92 fleet it doesn’t make a particularly sizable difference (the increase accounting for circa 2% of the overall units). In fact, similarly large movements in the fleet have gone un-noticed in the press in recent months, with Babcock MCS returning at least four S-92s to lessors (as contracts with the likes of BP and Premier came to an end in 2019.) Perhaps the most dramatic outcome of the merger is that it will encourage many in the industry to think that this will be the first of many. We watch with continuing interest.
The above chart does of course raise some questions about how the various offshore S-92 operators have fared against each other over the last year and how many of these units are currently being used? We will be writing more on that next week…. Watch this space!
Steve Robertson, Director
Air & Sea Analytics