What do we learn from trade shows? That financiers like helicopters

If you want to see into the future of the helicopter market, look at today’s trade shows, says Barry Desfor, managing director at HeliValue$.
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Trade shows are more than a place to meet and greet old friends and business associates. Trade shows tell us the health of an industry, and, more important, they help to tell us who, and what, will be important in the near future.  The Helicopter Association International’s (“HAI”) “Heli-Expo” held in Dallas, Texas earlier this year gave the helicopter industry more than it needed to know about how we are doing.  Taking up the most convention center floor space than ever before (more than one million square feet), with more exhibitors (close to 700), and with what seemed like more attendees coming through the doors to attend the numerous seminars, complete the courses of instruction, and see the endless rows of exhibits, we know this was truly “the big show”!

But the heart of the matter is that we have all come to realize that helicopters, and helicopter operations have finally moved into position where they are recognized to be a large, expensive and consistently profitable portions of the aerospace
business.

In fact, we predict that in 2012, the helicopter industry may well prove to be the one of the most important “engines” which powers many countries economic recovery.

Can you believe it?  It’s almost a real-life Cinderella story!  Here’s the helicopter industry in the real world: and it is actually discarding the impression which has held that it’s the “step-child” of aviation, and therefore not to be taken seriously as investment-quality assets.  Yes, and not only that, but helicopters, their builders, their owners and operators, their vendors and suppliers, their maintenance and logistics infrastructure corporations, have all suddenly blossomed into the open to take center stage before an impressed audience.

And the audience is filled with the “heavy hitters” of aerospace: Finance and leasing wizards, operations and contracting moguls, and even fixed-wing airline promoters.  Many of them may not have cared much about helicopters. Now, it’s as if Prince Charming has kissed them and awakened them to a whole new world!  What’s really happening is that big banks around the world have to shift assets and make major changes to their own balance sheets. Assets that they once may have been heavily invested in may have to been removed from their portfolios.  In some cases, their “home office” governments made these decisions, not giving the banks any opportunity to show how well the helicopter loan portfolio had performed.  So, that could help to explain why many of the “too big to fail” mega-banks around the world who used to deal with helicopter have been replaced on the scene.  Now the new players have come to the table: not to gamble, but to put their money into what they know to be a durable, solid, predictable and responsible profit-oriented industry.

Guess what? It’s only taken about ten to 15 years, but the financial world has finally realized an embarrassing (for them) fact: After each financial meltdown, or, after each grave political or military crisis, there was NEVER a commercial helicopter parked next to the hundreds of commercial airliners sitting in the dirt of the “bone yards” in the state of Arizona in the southwest part of the US.  Every crisis of this type put the world’s commercial airlines further and further into the financial emergency room, with many of them becoming permanently addicted to monetary life-support.

In HeliValue$’s experiences at this recent Heli-Expo, we can attest to the fact that this new breed of funding seems to be many things – they are:

  • Highly educated about aviation in general, and very understanding of how and why helicopters are such a different investment vehicle than commercial and private (fixed wing) airplanes;
  • Realising that no “national” helicopter-operating company has been “bailed out”, and then kept running, by its government;
  • Genuinely interested in providing the large amounts of money needed to assist the fleet owners acquire their “latest and greatest” new helicopters;
  • Not afraid of older-technology machines, nor are they automatically afraid to consider older (calendar-) age units;
  • Not adverse to allow some of their collateral go on contracts where there may be unstable military and/or political situations;
  • Sometimes willing to take parts, components, accessory kits, and tools as valid collateral;
  • Able to make decisions quickly.

It’s not that the “old school” banks and leasing companies could not do any of these things during the time when they held (and dealt) most of the cards at the helicopter-funding buffet table.  It’s just that most of them simply would not do all of these details all of the timeSo, now that there seems to be some bright prospective paths for the helicopter industry to explore.  Will the “new kids on the block” eventually place us on a strict diet, again leaving the industry to become lax and listless while waiting for the next transfusion?  Or, will these new funders keep their positive attitudes and be able to sustain the helicopter industry’s constant appetite for dependable capital sources?  Of course, only time will tell if and how the industry’s money supply will keep up with demand.  But, judging from the substantially-positive numbers from this most recent Heli-Expo, the helicopter industry is showing it’s “out-performing” virtually every other segment of the aerospace industry, so how well can the “money-dealers” keep up with the players?

Terry Spruce

Terry is Senior News Editor and writes for both Corporate Jet Investor and Helicopter Investor. He is also responsible for our helicopter guides. Terry has been an aviation enthusiast since the early 1970s. He is a lapsed Private Pilot and ex-Piper Cherokee owner. He has flown a number of light aircraft and is comfortable sitting in the co-pilot's seat or the back of any aircraft. Before moving to journalism he was a banker for 20 years. You can contact him at: terry@corporatejetinvestor.com or follow him on twitter @Terry_Spruce

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