Helicopter Investor London 2015 Live Blog: Day One
More than 250 aviation professionals are gathered in the room for Helicopter Investor London 2015. The big discussion point of the next two days is going to be oil. With oil now at $65 a barrel compared to $120 last year, the helicopter finance market is worried that this will hit helicopter values.
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17.20 Good news everybody: 70% of delegates say they feel happier about the helicopter industry after today’s conference.
17.15 McGinn says: “As an ex-banker I became a pessmist as a result of lending money to optimisists.”
“Fundamentally there is always a demand for new helicopters. You can sleep tonight: this industry is robust,” he adds
17.10 CHC Helicopter’s Clark McGinn is closing the day with a one-man session that is as generous on jokes as it is on financial insights.
17.00 In our latest audience poll, oil company demand is voted as our delegates’ worst helicopter-related nightmare.
16.30 47% of the room say helicopter finance is available for most first time buyers. 53% say it is available only for major operators.
16.20 Audience poll: Should all OEMS price helicopters in dollars?
16.00 Audience poll: How optimistic are you about global growth?
Very optimistic: 0%
Slightly optimistic: 74%
Slightly pessmistic: 22%
Very pessimistic: 5%
The results are slightly awkward for John Sheldom, director of LCI Heleocpters, who claimed prior to the audience vote that he was very optimistic.
12.45 Audience poll: Will super mediums hit the heavy twin markets?
It seems like the panel largely agrees with the room.
12.40 Ian Gurekian, chief risk officer at Waypoint Leasing, says that with his fixed wing background, he finds it hard that some helicopters trade in dollars while others trade in euros
Desfor says that the EC225 is the only helicopter that sells and trades in euros, but says the AW139 will soon switch over.
Chris Wills, valuations manager at Ascend, says: “Helicopters are not particularly volatile; if they were linked more to currency there would be more volatility.”
12.35 “Helicopters are still trading,” says David Crick, partner at Lloyds Asset Services. “The expectations are high from the seller’s perstive, but buyers have more choice.”
Desfor says: “I’ll agree that helicopters are definitely a buyer’s market.”
12.30 Usman Ahmed, senior aviation analyst at IBA, says falling oil prices could trigger an increase in charter activity.
12.20 “The price of oil has always been affiliated with helicopter values,” says Sheron Desfor, president of HeliValue$. “Short term, I think you’ll see some drops in values.”
11.25 Van de Vuurst says “pretty much all” transactions are closed using escrow. “You trust your wife and your priest but that’s it,” he says. His sentiment is also shared by Exner.
11.10 Zik: “There was a very famous case involving Zoom in Canada. When the airline collapsed they had an aircraft impounded here in the UK. The lessor was made to pay over 2 million; there was nothing they could do. They went to the High Court but they lost.”
11.00 Delegates are now listening to a panel on import tax.
Panellists are Melva Exner, director of legal affairs and corporate secretary at AgustaWestland; Tom Kelly, vice president of tax at Waypoint Leasing; Bruce Marshall, executive vice president and general counsel at AIC Title Service; Robert Van de Vuurst, shareholder at Baker Donelson; and Zohar Zik, consultant at Holman Fenwick Willan.
10.40 Definitely one of this year’s buzzwords:
— TerrySpruce (@Terry_Spruce) February 11, 2015
10.20 Douglas Westwood’s average contract length is three years. They see that incumbent operators tend to have a 90% success at renewal rate. When incumbents are re-tendered they tend to have a 50% win rate.
Douglas Westwood forecasts 1% growth in North Sea oil production between 2015-2019. Africa: 17%; Asia: and Australia: 16%; South America: 15%; Gulf of Mexico: 21%.
Hart says that offshore helicopters worth $24 billion will be needed between 2015 and 2019. They estimate that medium type helicopters will be 61% of market.
Operators in Africa will need around $3 billion of financing. US will be $3.8 billion and Europe $7 billion.
10.10 David Hart, research analyst at consultancy Douglas Westwood, is presenting a session on world offshore oil and gas helicopter market forecast. He is expecting rebound in prices but not until 2017-2018. More than 7,000 fixed platforms plus 60 floating rigs. Some 17,000 new offshore wells to be drilled by 2020. Offshore output 30% of all oil and gas supply. At current prices many offshore projects are nonviable but offshore projects are rarely cancelled.
Drilling and seismic exploration projects are being delayed. Hart is forecasting recovery in exploration from 2018 onwards.
9.35 Audience poll: Three years from now, the number of helicopter lessors will be?
Wolf says that comparing helicopter leasing with commercial aircraft leasing is not helpful. Maunder says that one market missing is China and predicts that Chinese leasing companies will enter market.
9.30 Audience poll: One year on from now helicopter lease rates will be?
Jenkins and other panelists say that interest rates big driver of this. Waypoint raised $1 billion of debt in 2014 and that its cost of capital fell.
09.10 Speakers for first panel are: Crispin Maunder, executive chairman, LCI Helicopters; William Wolf, president and CEO, Lobo Leasing; Alan Jenkins, CFO, Waypoint Leasing. Kipp Dawcett, managing director, Nomura is moderating.
— Lobo Leasing (@LoboLeasing) February 11, 2015
All of the panelists stress importance of picking right assest. Wolf says that increasing model specialism makes leasing more challenging. Maunder says LCI waiting for EC225E as feels range makes it standout from super-medium competitors. Wolf agrees that it will become important niche.