Heli-Expo 2002: Does slow growth mean survival?
Florida is a land with a reputation for competitions with contested results, and that tradition continued at HAI’s 2002 edition of its annual trade show and convention as two major rotorcraft makers debated over who has global domination of the vertical-takeoff flying machine market, while a third major player announced its plans for getting back into the game.
Depending on how you look at the numbers, AgustaWestland is number one in the world, packing a self-professed $6.8 billion order backlog. As substantial as that may sound, however, it represents business with deliveries spread over several years and is especially top-heavy with military business.
The Anglo-Italian consortium, which was celebrating the first anniversary of its merger last year, did manage last year to ship 173 helicopters worth $2.1 billion. Nearly all of them (167) were twins.
Producer of rotorcraft such as the EH 101 and NH 90 tactical transports, AgustaWestland is poised to make a strong move into the intermediate/light helicopter market with its forthcoming AB139. A workaday utilitarian rotorcraft whose cockpit will see the first rotorcraft use of Honeywell Primus Epic avionics, the AB139, a joint-venture project with Bell, is drawing increasing buyer attention as it nears its expected year-end certification.
With all three prototypes busy in flight test, AgustaWestland represented the machine at Heli-Expo 2002 with a pair of mockups, one configured for the executive transport role, the other for offshore/ search-and-rescue. A reported 50 AB139s have already been ordered. Expect that number to grow as it enters service and its projected low operating costs are validated.
Despite the number of big twins in its order book, one of the few singles produced by Agusta is accounting well for itself. The A119 Koala, powered by just one big meaty 1,002-shp Pratt & Whitney Canada PT6B-37A, is now in full production with 37 spoken for (two of those sales were announced at the show).
An Apples and Oranges Thing
If AgustaWestland is obviously doing so well, why is there any doubt about who is number one? Well, it’s an apples and oranges thing. While AgustaWestland claims the top slot in terms of sales revenues (albeit much of them pending and in today’s business environment, eminently subject to cancellation…just ask Boeing), Eurocopter grabs the gold medal in terms of worldwide sales of turbine helicopters, claiming 57 percent of the 495 civil helos delivered and registered worldwide last year. Alongside that business, Eurocopter stacks what it claims is 25 percent of the world’s military helo business conducted under firm contract, deliveries numbering 78 military machines.
In the U.S., American Eurocopter Corp. (AEC) delivered 60 helicopters (43 percent of the turbine market), taking over the number-one position from Bell Helicopter, according to figures AEC attributed to Air Track International AeroMarketing, publisher of the Rotor Roster. Bell held 35 percent of the market, MD Helicopters and Agusta had 6 percent each, Sikorsky had 4 percent and all others achieved 6 percent. Total deliveries numbered 140. In 2000, when 155 were delivered, Eurocopter took 39 percent of the U.S. turbine market while Bell had 42 percent, MDH 7 percent, Agusta 6 percent, Sikorsky 1 percent and others 5 percent.
Eurocopter delivered 335 helicopters last year, with 45 percent to the civil and parapublic markets and 55 percent to the military market. Total turnover was $2.243 billion, of which $978 million was revenue from delivered aircraft and $761 million was from customer support. Contributing to Eurocopter’s optimism were the 375 civil and 315 military helicopters ordered last year. Significant military sales include the selection of the NH 90 by Portugal, Finland and Sweden. Already this year Eurocopter inked its first Tiger attack helicopter export sale (22 to Australia) and added Norway to its NH 90 roster.
Centerpiece on Eurocopter’s show booth was a mockup of its long-awaited EC 145. The nine-seat helo was officially (and very quietly) certified by the French and German aeronautical authorities on Dec. 28, 2000, and received its FAA certification at Heli-Expo 2002 on February 14. That marked the real beginning of Eurocopter’s Western Hemisphere sales efforts for the roomy, boxy twin that’s essentially a stretched edition of Eurocopter’s fantastically popular BK 117 utility twin with some major dynamics improvements.
The EC 145 retains the same main rotor system as the BK 117C-1 but bolsters that performance via a new rotor system boasting a wide-chord-tip design created by French research board Onera. The new blade boosts performance both in terms of higher speed and augmented lift.
Have an Apple, or an Orange…
So just who is first in world rotor sales? It all depends on how you keep score. Over in Euless, Texas, Textron and Bell Helicopter recently settled on a different way to keep score, one that’s giving the much vaunted helicopter maker cause to conduct some highly visible housecleaning and pledge a new commitment to its core business: building new civil and military designs while maintaining and adding value to its previous designs.
“The new Bell is back,” John Murphey, Bell CEO and president, told reporters at his Heli-Expo press conference, his slip of the tongue perhaps conveying accurately the gist of what he meant to say: namely that the hands-on commitment to its customers that has long drawn business to Bell is back in a big new way. “We’ve had some real struggles over the past few months,” Murphey said. “We put in new leadership throughout our company in a special effort to restructure our commercial business.”
There is a certain irony to its customer-service reorganization, which involved the movement of dozens of senior and middle management. While Bell claims it was receiving increasingly critical comments from customers over what they regarded as a slipping level of aftermarket support, a recent reader survey from Professional Pilot magazine placed Bell in first place in its customer-support survey for the eighth consecutive year. Despite this accolade, Bell was sufficiently disquieted by the feedback it was receiving on its own to initiate a major shakeup.
Concerns about Bell’s commitment to the civil side of its business began early last year when Murphey’s predecessor, then-CEO Terry Stinson, said in an interview that Bell’s major market would always be the military (which means the V-22 Osprey tiltrotor and AH-1 Cobra helicopter programs), which didn’t shock anyone familiar with the company. However, Stinson later said that if he had to make the decision today, he wouldn’t opt for the commercial market at all. This raised hackles both within Bell and its customer base. Before long, he was gone.
Given American Eurocopter’s strong sales showing in 2001 (some 282 new turbine helos delivered worldwide against Bell’s self-confessed 122), Bell would seem to have a two-pronged mission before it. On the military side of the business, shake the kinks out of its fault-plagued military programs (both the MV-22 tiltrotor and, to a lesser extent, the AH-1Z have suffered from widely publicized performance and reliability issues).
On the civil side, Murphey hopes to improve customer satisfaction and introduce new models. “We should have a new product to introduce every three years or so,” Murphey said. Quietly revealed at Heli-Expo 2002 was a “concept” helicopter, tentatively known as the JRX. Few details were forthcoming, indeed, and Bell is looking to its clientele to fill in the blanks on this model in much the same way that Eurocopter’s “Tiger” and “Blue” teams of helicopter owner/operators helped shape its strong-selling EC 135. In a very preliminary way, Bell described JRX as a larger, wider, heavier, more powerful follow-on to the phenomenally successful Bell 206-series JetRanger/LongRanger.
As far as its delayed BA609 civil tiltrotor program goes, Bell management acknowledged the controversy surrounding the program, at the same time offering assurances that the design will be flown the first time this summer, perhaps as early as June following engine runups to begin next month.
As for the military MV-22 Osprey, Murphey disclosed that the military seems ready to resume test flights this spring, barring any other untoward surprises. Meanwhile, another in-house Marine Corps investigation affecting the battered program is under way, this one prompted by an anonymous letter from within the Marines and faulting the techniques used in the Corps’ investigation of the Maranas, Ariz., Osprey crash (a fatal mishap that took the lives of 18 Marines in 2000). Although the investigation is ongoing, it is not an inquiry into the aircraft itself, which is expected to return to flight test sometime in the middle of next month, according to Murphey.
Textron has agreed to consolidate Bell alongside Cessna to formulate a new aircraft products division within the Textron empire, all of it under former Cessna chairman and CEO Russ Meyer, highly regarded in aeronautical circles as an able and inspired leader and troubleshooter. Bell’s Murphey plucked a friend and colleague from retirement, selecting former Bell president Webb Joiner to serve as a special assistant reporting directly to Murphey. During his years as head of Bell, Joiner was well regarded as a production-oriented executive who got things done.
Declining to shoehorn its hulking S-92 into Orlando’s Orange County Convention Center, Sikorsky instead opted to show its S-92 some miles away, parking it for static display on the ramp outside Ranger Aviation at Kissimmee Municipal Airport about 12 mi south. Ten years ago, Sikorsky committed to creation of the S-92, and now, a decade later, the big 26,150-lb mtow helicopter is nearing civil certification, set for later this year.
“We’ve built a big box and wrapped the highest-performing helicopter we could around it,” said S-92 chief project pilot Bob Spaulding.
The S-92 is powered by two GE CT7-8 turboshaft engines rated at 2,520 shp for takeoff and 2,043 shp for max continuous operation. One-engine inoperative ratings are 2,740 shp (30 sec), 2,523 shp (two minutes) and 2,400 shp (continuous). Never-exceed speed is expected to be 165 kt, max cruise speed 152 kt and best-range speed 137 kt. No-reserve range is estimated at 538 nm; hover out of ground effect, 6,370 ft; and hover in ground effect, 10,700 ft. (All these performance figures at mtow, SL and ISA.)
Direct operating cost is estimated as $2,376 per flight hour (year 2002 $). This consists of direct maintenance cost, $887; depreciation, $817 (based on a $15 million price); fuel, $277 (178 gal/hr at $1.55 per gal); pilot salaries, $195; and insurance, $200.
Fatigue life for the rotor head is estimated at 50,000 hr and a minimum of 30,000 hr for the airframe. The engines, rotors and avionics will be on-condition. The dynamic components were derived from the H-60 and designed to be easily retrofittable on the H-60 fleet. According to Sikorsky, the U.S. military is exploring a UH-60X, which will be backfit with the S-92 drivetrain.
Sales Still Pending
The progress of the flight-test program notwithstanding, firm sales of the S-92 remain somewhat ephemeral, with Sikorsky officials admitting only to letters of intent and deposit agreements signed by a number of civil operators. Cougar Helicopter, a Canadian offshore operator, has reserved the first production S-92 and signed a deposit agreement for up to five. Era Aviation of the U.S and Aircontractgruppen have signed deposit agreements for three and six S-92s, respectively. Letters of intent have been signed by Helijet of British Columbia and Copterline of Finland.
Several military entities are also interested, with the Irish Air Corps the “most firm” at this time, having selected the S-92 for search-and-rescue service and specifying an initial order for three and an option for two more. The Republic of Ireland “has agreed to begin negotiations for the purchase,” according to Sikorsky. The U.S. Air Force is similarly interested in the model for combat search-and-rescue, but Sikorsky officials said this has yet to enter the request-for-proposal stage.
Although none of these is a firm order, Sikorsky is apparently confident enough in the market to have ordered long-lead items for two production lots–20 aircraft–covering deliveries through 2004. The cabin section for S-92 number six, the first to be delivered to a customer, is nearing completion at Mitsubishi Heavy Industries in Japan.
On the other end of the rotorcraft spectrum, Frank Robinson, creator of the best-selling line of petite rotorcraft that bears his name, reported that last year’s sales were down “a bit” from those of the year before.
The downturn, Robinson maintained, was “probably not so much due to the recession as to the strong dollar, since we still export most of our helicopters.” Despite this news, Robinson still managed to move a volume of product that would bring tears of joy to the eyes of other manufacturers. Sales last year were down 62 units from the year before (328 in 2001 vs 390 in 2000). Of those Robinsons sold last year, 194 were R44s and 134 were R22s. Export sales totaled 176, representing 54 percent of total shipments. Robinson’s most popular overseas markets were (in descending order) the UK (30 aircraft), Australia (20), Brazil (16), South Africa (16), Japan (12) and Canada (11).
Those who could squeezed into the Robinson press conference, where interested showgoers far outnumbered media. This Robinson retinue has become a fixture of recent Heli-Expos as the popularity of both the man and his machine grows exponentially. Other program milestones Robinson was marking this year: the R44 has become the first U.S.-made helo to receive Russian type certification; and the landmark sale of four R44s to the Estonian air force, where they will serve as security aircraft.
While some might describe the mood of the show with the standard clichés (“upbeat” or “cautiously optimistic”) the real feel of the emotional taste of those assembled was more like “happy to be alive.” Turnout was good, with 11,076 registrants rotating the Orange County Convention Center turnstiles, by no means a record but a respectable showing nevertheless.
Following the unnerving and, for some, catastrophic economic freefall most commercial operators experienced in the weeks that have been variously described as “no fly fall” or the “autumn of tears,” just showing up at Heli-Expo was a victory in itself.
In an unscientific sampling, AIN reporters fanned out throughout the convention hall for some attendee input on the current state of their part of the industry.
Fred Wagner, president of completions specialist HAS in Mt. Pleasant, Pa., said the early ban on helicopter flight prevented his company from test flying and slowed deliveries to a virtual standstill. With margins already razor thin in this business, a nationwide airspace shutdown inevitably took its toll.
“We had a major Bell 430 delivery to a state agency that was scheduled for September 13,” he explained. “It was held off until the end of November, along with payment, so that affected other jobs. We laid off 22 people in October and another 34 last month,” said Wagner. “Because of uncertainty, some of our customers are selling their aircraft, so while we’re losing their long-term business, we’re making commissions on used sales, and we’re optimistic in the sense that we see a surge in law-enforcement completions.”
Glen Frye, Paul Solomon and Jeff Small had held reasonably lucrative management positions at a helicopter company, but found themselves out of jobs after their company began laying off employees in September and was subsequently sold.
“A year ago, we had 85 people working for us,” Solomon said. “By the end of October, it was down to six.”
The three men, who all live in Central Florida, are freelancing to help clients get FAA Repair Station licenses and PMA.
Of course, one man’s snail can be another’s escargot. Chuck Colby and Harn Soper have for the past few years been developing an unmanned aerial vehicle (UAV) called Robo Chopper. “Today there is a strong interest in UAVs,” Soper said, “and we’re getting strong response.”
With the increasing need in both civil and military markets for surveillance vehicles, Colby and Soper are potentially in the right place at the right time.
Others, with business interests outside America, experienced little, if any, of the travails hampering U.S. companies.
“It didn’t affect us at all,” said Karl Kebert, chairman of Starlite Helicopter of Johannesburg, South Africa, which operates 59 helicopters in a variety of EMS, utility and law-enforcement roles. “The South African economy has held up well, although it could be better–our currency has devalued 40 percent against the dollar during the past year. That has hurt more than the terrorist attacks.”
Yorkshireman Steve Atherton, who operates a corporate MD 600N, said operations in the UK were not affected much by the events in America either. “There were a few days we were not allowed to fly, but things quickly got back to normal, and the economy doesn’t seem to be any different.”
Sven Erik Lorentzen captains a Super Puma in Norwegian offshore operations for CHC Helikopter Service AS. “North Sea operations were not affected or interrupted by the attacks,” he explained, “but security was strengthened. The economy? Not particularly affected.”
For EMS operator Ed McDonnell, it was almost business as usual. The director of flight operations for Mercy Flight of Western New York said that September 11 affected his company less than most because emergency flights were not restricted. “But our response times are longer now,” he said, “because we have to file with Cleveland Center before we leave. There has been no economic effect other than the fact that we couldn’t do a lot of FAA-mandated training in our aircraft because of non-EMS flight restrictions.”
If there was any sort of hard and fast line of demarcation between helicopter optimists and pessimists, it seemed to boil down to the newcomers being depressed by market conditions and the long-timers, used to living with the business cycles that regularly plague aviation, who adopt a more philosophical view. The difference appears to be an inverted form of a generation gap.
“There are people in this business–a lot of people–who have never had to go through a recession before,” observed Frank Lefebvre, president of FGL Associates, an aviation marketing support firm based in Boonton, N.J. “They don’t know what it’s like when things get tough. They’re not sure if they have what it takes to make it to the other side. “But they do. Almost everyone survives. And they’re here year after year, doing what they have to do to make their businesses succeed.”