HI Uplift: NHV says ‘Upcycle offers opportunity for profit (and growth)’

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by Mike Stones

13 April 2024

NHV is looking to diversify its operations from oil and gas. (Photo credit: NHV).

A vital opportunity to generate profit and to plan growth. That’s how Thomas Hütsch, CEO, NHV Group sums up the opportunity offered by the current upcycle in offshore helicopter markets.

“The biggest opportunity is in the oil and gas market,” Hütsch tells Helicopter Investor. “There’s been a dramatic change in the past 12 to 15 months compared with five years ago when we saw, what we call, the rally to the bottom.”

Hütsch attributes improving business conditions to two main factors. They are rising energy demand – especially in Europe but also in West African countries such as Ivory Coast and Nigeria – and the short supply of helicopters.

The specialist business-to-business helicopter services company is well placed after renewing its fleet with AW139s, H175s and AW169s, he says. There remains a critical shortage of heavy helicopters with little availability of S-92 helicopters. Also, embargos following the invasion of Ukraine continue to deny the industry access to Russian aircraft. That has intensified interest in western-made helicopters, particularly super-mediums such as the H175 and AW189 – not to mention the long-awaited Bell 525 Relentless.

More favourable contract terms

It adds up to a landscape which offers an opportunity to renegotiate more favourable contract terms with oil companies and to restore financial resources that were run down in the lean years of the past industry downturn. “Capacity wise, we are now at pre-Covid levels and price-wise we are already above 2019,” he tells us.

“For the past five years, it has proved to be a customers’ market, where they could dictate contract terms and conditions,” says Hütsch. But that’s now changing as a stronger demand and a shortage of helicopters means the balance of market power is shifting. “Now, it’s our turn. We are pushing for more sustainable pricing levels and better terms and conditions [with and end to cancellation for convenience clauses],” he says.

NHV is focusing on reasonable price expectations. “We look at a longer-term vision of partnership,” says Hütsch. “But if they [customers] want to have a sustainable business and a safe operation, they need to pay a decent price and our profit expectation is not extreme.”

The company wants to use this latest revenue opportunity to fund expansion. “To be more competitive we need to grow a bit more – either organically or by combining our resources with another company,” he tells us. There are companies on the market in Europe and elsewhere, he notes. But UK Competition Commission rules are likely to prevent a merger or acquisition in Britain. The business also plans to expand its fleet of 30 helicopters in order to be more efficient and benefit from more leverage with the OEMs.

NHV’s strategy

NHV’s strategy is to diversify its operations away from over reliance on the oil and gas sector, which currently accounts for about 80% of the company’s business. The company also diversified into helicopter maintenance,training (both Part 147 engineer training as well as ATO pilot training), offshore wind, plus maritime services, such as marine pilot transfers and some search and rescue (SAR) in the Netherlands.

“Our long-term plan is to have 50% of our operations business in oil and gas – or energy as we now call it – and a bit less than half in offshore wind – especially in Europe,” he says.

Wind generation contracts show particular potential, according to the company. As economic pressure encourages, the industry is likely to ditch its preference for transport by surface vessels in favour of helicopters. “When they have economic pressure, they will realise it’s cheaper to put 16 people on an H175 and fly them out to a platform in minutes rather than having expensive engineers sitting and waiting on a boat for the 100-kilometre journey to a platform.”

Aside from flying operations, a significant part of NHV’s business lays in maintenance, repair and overhaul (MRO) and in maintenance training. Unusually, the current upcycle in the civil helicopter market has been matched – or perhaps amplified – in the military and parapublic helicopter sectors. And that is creating fresh opportunities for NHV, according to the company.

Maintenance contracts

“In Europe, the military has recently bought hundreds of helicopters,” says Hütsch. The German defence forces bought heavy transport helicopters from the US plus more than 60 H145s. The French defence forces bought 200 H145s and H160s in recent years with Belgium defence forces buying similar types. This has led to line and base maintenance contracts with the German Bundeswehr (armed forces) and the French Navy.

It’s a synergistic partnership in which NHV positions the helicopters on flight lines and, after the day’s flying, retrieves them for refuelling, cleaning and daily maintenance. “This enables them to focus on training and operations and not put their resources into maintenance and so on,” he says. It’s a partnership said to lead to significant improvements in helicopter availability. Typically, defence organisations can have a fleet availability rate of below 50%. But NHV typically achieves rates of between 80% to 90%, according to the company.

Supply chain challenges remain significant but are gradually improving, according to NHV. Sourcing materials such as titanium has suffered from the Russia embargo and securing supplies of semi-conductors and electronics from Taiwan and Japan can also be problematic. One widely adopted strategy is to double source vital components. While this adds to costs and introduces delays – at least initially, it does help to guarantee supplies.

‘Supply your OEM with good data’

“The difficulties [in the supply chain] are definitely getting better,” says Hütsch. Helicopter companies can help by accurately forecasting their parts requirements, he says. NHV stages regular meeting with original equipment manufacturers (OEMs) and part suppliers to review the availability of parts. “If you supply your OEM with good data, there’s less short-term demand on parts.”

One local challenge is retaining pilots and aircraft engineers in the highly competitive market of Aberdeen, Scotland, which services the North Sea oil fields.

Hütsch joined NHV in July 2019 as chief operating officer. Backed by more than 30 years of leadership experience in several fields of the helicopter industry, including Airbus Helicopters. He also worked at ADAC; the large German automobile club where he managed helicopter emergency medical services (HEMS operations) with more than 50 helicopters providing emergency medical services. He was appointed CEO of NHV in November 2021.

Finally, he chooses to close our conversation by re-affirming NHV’s commitment to safety. He thinks short chain communications within the Group and the experience of most senior staff in operations and engineering help to keep safety always front of mind.

“Our company is managed by people from operations,” he says. “We all used to sit in a helicopter and so feel directly liable for what we do.”