Why 2018 is a year of change for helicopter leasing

insight

by Alasdair Whyte

24 November 2018

The year 2014 was clearly the top of the cycle, 2018 is now showing all the signs of being the turning point for offshore helicopters. It is clearly a year when the market is being fundamentally reshaped, ready for stronger times. The bottom of the market has been reached.

This has, of course, been claimed before. Some hoped that CHC’s exiting Chapter 11 in 2017 might be the start of the upturn, but the effect of its cutting its fleet (and returning aircraft to lessors and lenders) is still being felt.

But 2018 is different. In the past few weeks we have seen Bristow acquire Columbia Helicopters for $560 million (its biggest ever acquisition) and Jonathan Baliff, Bristow’s CEO, announce his resignation; Babcock International write-down the value of some of its helicopters (it acquired Avincis in 2014) and next week it looks as if Waypoint Leasing will write a new Chapter (11) in its history with a new investor.

Bristow’s Columbia deal is about diversifying away from oil and gas (something Bristow has been working on for years) but there are also positive signs in the off-shore market. If you ignore today’s $60 oil price, there have even been encouraging signs for the off-shore market. Rates for jack-up oil rigs are up significantly and oil companies are issuing tenders for deep-water projects in 2020.

There are a lot of rumours about who will buy Waypoint, with Fortress Investment the favourite. This makes a lot of sense. Fortress has a strong track-record in backing leasing companies – it launched Aircastle, an aircraft lessor it listed on the NYSE in 2006, and bought out BAE Systems Asset Management (formerly British Aerospace) in July 2011 creating Falko. Fortress also invests in offshore assets.

Fortress is not the only investor looking at helicopters. Thora Capital, a Chicago aviation investor, is raising a helicopter fund.

There may only be just over a month left before the new year, but 2018 is definitely a year that will be remembered. There are green shoots out there. But, like bamboo, the green shoots start underwater.

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