HI Uplift: ‘A lot’s going to change in heli markets’ – Rotortrade
“A lot of things are to going to change in helicopter markets.” Philippe Lubrano’s assessment of the global rotary industry on the brink of significant change is backed by 30 years’ experience stretching back to his time at Aérospatiale (now Airbus Helicopters). That inside market knowledge is guiding him to refocus Rotortrade in key sectors and markets.
But let’s begin with a snapshot of Rotortrade today before moving on to its plans for business development. A global helicopter dealer, Rotortrade specialises in the acquisition and sale of pre-owned helicopters. Its business is built in three key areas. The first two are: pre-owned helicopter distribution and pre-owned helicopter maintenance, repair and overhaul (MRO) as well as technical project management. The third area is pre-owned helicopter leasing and financial solutions.
The company is the sole global distributor for Leonardo Helicopters and an authorised worldwide reseller of Airbus Helicopters. Rotortrade also partners with Bell Helicopters with a memorandum of understanding (MOU) for pre-owned and trade-in cooperation. Plus, it is a certified pre-owned distributor of Pratt & Whitney engines and has new upcoming strategic partnerships including with Safran Helicopter Engines.
Deficit of new helicopters
So, what big changes are in the air? Lubrano, the company’s CEO puts it like this: “I can see a lot of things are going to change in global helicopter markets.” A growing deficit of new helicopters is the key factor shaping the changing helicopter landscape.
“The main driver is that manufacturers will not increase their production capabilities. They cannot double their production capabilities,” he tells Helicopter Investor.
Cannot or will not? Wary of past mistakes, manufacturers appear unwilling to significantly increase production as they did in the past. “Everybody, including manufacturers, has learnt the lessons of the past. The industry has a long memory,” says Lubrano. “And, if you talk to aircraft manufacturers, they will tell you that still today they have issues with the supply chain.”
Aside from apparently capped production, it’s not difficult to spot why there are more buyers than new aircraft to buy. Military demand for helicopters is climbing amid a world in turmoil, with conflicts in Ukraine and the Middle East and geopolitical tensions elsewhere boosting demand for defence vertical lift.
Natural emergencies
Then, there is the rising tide of natural emergencies – including wildfires and floods growing in frequency and intensity fuelled by climate change – all demanding helicopter support. Plus there’s rising demand for vertical lift from the expansion in offshore energy markets and emergency medical services in addition to helicopters for VIP and sight-seeing flights.
“General helicopter fleets are ageing worldwide and all the operators are renewing their fleets and all the defence organisations are renewing their budgets,” he says. “For example, the capability of Airbus and Leonardo to deliver regularly is influenced by the massive increase in defence contracts.”
It’s a net result that is shaping Rotortrade’s plans for business development – both in Europe and North America. “We think the shortage of aircraft will lead to an appreciation of the pre-owned market. And that suits us,” says Lubrano.
Rotortrade’s fully owned inventory already stands at $100m. Public and private sectors are increasingly choosing pre-owned helicopter contracts to meet immediate needs, with government sales now accounting for a majority of total sales due to aging fleets and increased budgets for surveillance and disaster response.
“In this business, you can do a lot if you have the inventory,” he tells us. “If someone is in trouble, they have a contract and need to deliver, so he has to access the assets that are available.”
North America
Against this background of an industry in flux, Rotortrade has made the strategic decision to boost its MRO services in Europe and North America, consolidate its dealerships worldwide and re-appraise its helicopter leasing business.
The company is making major investments in its MRO facilities on both sides of the Atlantic. Over the summer, the company opened a big new paint shop at its core European facility at Tallard in southeastern France. The facility will specialise in MRO for single and twin-engine helicopters.
After obtaining Part 145 certification a few weeks ago, Rotortrade can perform comprehensive maintenance on EC120 and AS350/H125 series helicopters. In line with the company’s strategic growth plan, Rotortrade will shortly extend its Part 145 certification to include Airbus H145, Leonardo AW139, and AW109 helicopters.
There are plans to double the 1,500sqm footprint to 3,000sqm by 2028. “Our Tallard location offers the perfect location with a strategic labour pool,” said Lubrano. “And it’s ideally located just 30 minutes by air from Airbus and two hours from Milan [home to Leonardo] enhancing potential subcontracting opportunities.”
Destined for THC
MRO activities are central to both sales (distribution) and operations, according to the company. The Tallard factory plays a key role in accepting and finishing helicopters destined for The Helicopter Company (THC) from both manufacturers before export to the Kingdom of Saudi Arabia.
Lubrano sees MRO as a major opportunity for revenue growth on both sides of the Atlantic. “Current internal demand from THC sustains MRO activities, but future growth will be driven by external demand,” he says.
Developing the company’s MRO capabilities offers an opportunity to insulate the company from some of the vagaries of the supply chain. Perhaps controversially, he believes alleged supply chain challenges can be used as “an excuse to lift prices” by some industry players. “There’s always a way to secure parts if you are ready to pay the right price,” he says.
Worldwide challenge
But there is a genuine worldwide challenge in securing qualified pilots and airframe and powerplant (A&P) technicians, he concedes. A problem Rotortrade is remedying by forging closer links with universities and schools to attract the next generation of staff.
Driving global sales will be the company’s 12 dealerships in key locations. Those include sales sites in: Kuala Lumpur, Los Angeles, Melbourne, Mexico City, Montreal, Philadelphia, Riyadh, Singapore, Sarajevo, Shanghai and Valencia.
Lubrano is keen to highlight that Rotortrade is a dealer, not a broker, which enables the business to provide tailored solutions to its customers including after-sales services and support such as maintenance, warranties and repairs. It achieves about 50 average transactions per year with clients in 180 customers worldwide.
Aircraft leasing
While aircraft leasing is not a key revenue driver for Rotortrade, the company believes this market has significant potential to grow its earning potential. The company is evaluating this market before taking a decision next year on its future involvement.
Rotortrade has already achieved mid-year revenues of $180m in 2024 and is on course to reach a a full year total of $200m in revenues by the end of 2024.
Lubrano sums up Rotortrade’s business proposition in a fast-changing world like this: “With helicopters in increasingly short supply, we offer an opportunity to jump manufacturers’ long queues for new aircraft – backed by our growing MRO services.
“If you want a new aircraft, we have one in our hangar. They come, they fly it, they like it and they take it away.”
Meanwhile, Rotortrade is set to reveal a big new partnership at the European Rotors 2024 event in Amsterdam next week. Lubrano remained tight-lipped about the collaboration this week, so stay tuned for more details next week. If you enjoy our newsletters please encourage colleagues to sign up here.
HI Uplift Dashboard: Helicopters for sale
Multi engine
- Total for sale/lease: 295 – six fewer than last week
- Percentage for sale/lease: 3.99
- Absorption rate: 5.35
- Total fleet: 7,400 – four more than last week.
Single engine
- Total for sale/lease: 420 – three more than last week
- Percentage for sale/lease: 3.68
- Absorption rate: 4.36
- Total fleet: 11,490 – two fewer than last week.
Source: Amstat, November 1st, 2024.