HI Uplift: Big three OEMs look forward to stable growth

insight

by Mike Stones

9 June 2023

The three biggest helicopter manufacturers – Airbus, Bell and Leonardo – look forward to sustained and stable growth in the rotary industry despite an uncertain economic outlook. While acknowledging the “Golden age” of helicopter production for offshore oil and gas had passed, representatives from all three manufacturers predicted rising sales at Helicopter Investor’s recent Town Hall meeting.

Leonardo Helicopters’ Giacomo Zampetti, head of Marketing told delegates: “We will not see the Golden age of 100-plus helicopters delivered [to the energy market] that we saw in the 2014/2014 period. But we will see stable demand for 30 to 35 helicopters a year, with one third for wind farm operations and the remainder for oil and gas.”

Bell Flight shared agreed. “After the good times from 2005 to 2014, where the market averaged about 120 annual deliveries, we have lost about 70% of that value,” said Evgeny Sakhonko, senior manager, Market Analysis. “Now this market is about 35 aircraft a year for the oil industry.”

Airbus Helicopters said the recovery in the helicopter market started last year would continue throughout 2023. “Overall, we are not back to the level of bookings seen before the [pandemic] crisis but it is a recovering market,” according to David Prevor, head of Marketing.

Prevor highlighted the recovery in orders from the civil and parapublic markets driven by private and business aviation coupled with the increase in aerial work. He also noted “the first sign of rebound in the energy segment”, as did representatives from the other OEMs.

“The recovery [won’t be done in a year,” said Prevor. “We will be back to the normal level of order intake over the next two years from the baseline of 2019.”

Zampetti, at Leonardo, said new orders last year totalled about €6bn ($6.42bn) – up by about 39% year-on-year. This was driven by military and civil purchases. “Our revenues of €4.5bn [$4.82bn] were well balanced between helicopter sales accounting for two-thirds and customer support the remainder,” he said.

It’s a trend set to continue into this year and beyond. “For 2023 we see persistent market momentum from the civil side, as we recover from the Covid plunge,” he said. “Segments driving the [Covid] recovery were EMS [emergency medical services], SAR [search-and-rescue] and law enforcement and now oil and gas – across all platforms from intermediate upwards.” According to Leonardo, a “further high level of new orders” is expected in both the government and civil aviation segments together with the continued growth trend in deliveries and revenues.

Bell identified a range of positive factors continuing to drive demand. These included: rising oil prices – with West Texas Intermediate oil rising from about $70 a barrel in 2021 to $95 in 2022 and about $80 last month – and elderly helicopter fleets. “We see a fleet of about 200 ageing S92 aircraft that need replacement,” said Sakhonko.

Other key factors underpinning demand for oil were growing demand in China, after its emergence from lockdown, the fact that the expected recessions in North America and Europe appear to have been averted plus the war in Ukraine, which “contributes to the validity of the segment”. Bell reported increasing its share of deliveries from about 20% to about 30% in the past six years.

But all three OEMs noted factors braking orders in 2022, extending into this year. Bell identified headwinds as being: high inflation and interest rates, fluctuating energy markets, supply chain disruptions, uncertainty in investment markets and the strong value of the dollar against other currencies. For example, world real Gross Domestic Product growth is predicted to slow from 3% last year to 2.3% this year before picking up to 2.7% in 2024, according to Bell.

Airbus agreed macro-economic factors last year had delayed helicopter orders. “Uncertainties [about the global economy and the geo-politics] and inflation have postponed acquisition decisions in the civil and parapublic market due to the postponement of public services,” said Prevor. “But we haven’t seen this slow down in orders from the military.”

Europe remains the biggest civil helicopter market in the world, with North America the second largest market, according to Bell. Orders from Asia Pacific were struggling to return to pre-Covid levels, due to slower growth in China, although the re-opening of the country would spark further growth. Africa and the Middle East were struggling to return to pre-pandemic levels, but Latin America had demonstrated “outstanding growth” in 2021 to 2021. Bell is market leader in Latin America, accounting for 40% of deliveries, it claimed.

For Airbus, orders from orders from the Americas and Western Europe were exceeding pre-pandemic levels. The Latin America market was also showing strong growth after temporarily “fading away”.

Measured by global helicopter deliveries, Airbus occupied first place, Bell second and Leonardo third, said Bell’s Sakhonko.

Meanwhile, the Helicopter Investor Town Hall online meeting – The helicopter industry through the eyes of the OEMs – is available to watch again for free here. The Town Hall was sponsored by Aero Asset and hosted by its president Emmanuel Dupuy.

If you enjoyed reading this Helicopter Investor Uplift newsletter, please register for your free copy here (and please share the link with colleagues).