HI Uplift: Why the industry is rising (and how to supply it) – LCI

Acquisition partners (L to R): Shinichiro Watanabe, senior managing executive officer, SMFL and Jaspal Jandu, CEO, LCI.

Never be late. That’s the first thing they teach you about interviews. I was on time for my appointment with Jaspal Jandu, CEO of lessor LCI until the lifts (elevators) refused to work. The hotel in downtown Dallas, selected for your meeting during the Verticon show, is blessed with seven KONE lifts. None of which consented to lift me to the 30th-floor meeting room. Ironically, (unlike me) the global helicopter industry is on the rise.

Jandu – fresh from announcing plans to acquire Macquarie Rotorcraft, the helicopter leasing division of Australian bank Macquarie, with joint venture partner Sumitomo Mitsui Finance and Leasing Corporation (SMFL) – explained the factors making the market.

“Ten years ago, we in the industry overheated ourselves,” the CEO told me. “There was a bubble and we lived with that correction for many years. But now, I characterise the industry as being more disciplined, much more responsible. And we are forming long-term relationships with long-term partners.”

‘Very complex probems’

Those long-term interests include talking to fleet managers about their capacity requirements in 2028, 2029 and 2030 across multiple helicopter models across different regions. Under discussion are not just airframes but a range of equipment needed for special missions, including emergency medical services (EMS) interiors, searchlights, cameras, winches and hoists for search and rescue (SAR). “We are trying to solve some very complex problems,” said Jandu.

To help, LCI draws on its independent advisory division LCI Analytics. Its research shows new stability in the supply/demand balance – with, if anything, a tendency to undersupply. Compared with 2018 – the last pre-Covid full year – the civil helicopter industry is about 300 to 350 deliveries short of expectations. Up to two years can separate a helicopter order and its delivery. It’s a deficit that will take time to remedy.

Plus, supply chain challenges – many stemming from the global pandemic – continue to plague the industry including the delivery of new aircraft. This is at a time when global tensions are leading governments worldwide to boost their orders of military aircraft, thus potentially limiting deliveries of aircraft destined for civil use. (Deliveries of fixed wing aircraft are between 3,000 to 4,000 short of earlier predictions).

Over the next 20 years, Airbus predicts demand for more than 42,000 new fixed wing aircraft deliveries. Alongside those figures, Jandu highlighted the forecast of about 16,000 new rotary deliveries at an approximate value of between $120bn to $130bn US dollars.

‘Full-service leasing platform’

“No individual party has access to that kind of capital,” said Jandu. “So, the requirement is great. In short, the supply side is relatively inelastic and constrained. That requires size, strength, and scale on the leasing side. So, it really pushes us to lean further into a full-service leasing platform to meet the requirements of customers.”

Part of the answer to this challenge was revealed earlier this month with the acquisition, by SMFL’s helicopter leasing joint venture with LCI, of Macquarie Rotorcraft. The terms of the deal remain confidential but the extra lift the acquisition delivers is clear. The agreement brings SMFL and LCI, Macquarie’s portfolio of about 120 helicopters, which operates in offshore transport, EMS, SAR and utility markets. It also adds six new types, 21 new customers and 14 new countries.

The joint venture partners will boost the number of aircraft owned, managed and on order to about 310 units to “pursue further expansion of its customer base and synergies with its existing businesses”, according to a press statement.

‘Something that most operators can’t do’

“It’s probably one of the most significant M&A trades in recent memory on the leasing and financing side,” Jandu told me. “It allows a leasing company to lean into possibly one of its USPs, which is the ability to raise finance and capital. The ability to be tied in with SMFL as shareholder and use all its knowledge, expertise and discipline to raise finance and deploy it into assets at scale, is something that most operators can’t do.”

Jandu sets the acquisition against a background of ageing fleets – especially in offshore operations – approaching the end of their primary working life and a looming replacement cycle. “In any real asset sector – it doesn’t matter if it’s ships, rail, fixed-wing or helicopters, in downturns, you generally find people use their existing equipment for longer and harder,” he says. This inevitably leads to a misallocation of assets. “During a downturn, you get very large helicopters, for example, flying on short missions with lower capacity because the businesses just need to keep on running.”

This strategy will also work in an upcycle (like now) – for a time, he says. But at some point, the end user, regulator or government will change the requirements. This may be for extra safety equipment, such as new navigational equipment or avionics, or payload requirements may increase. Plus, many older units, such as the Sikorsky S-92, after 15 to 20 years’ service, are approaching the end of their primary working lives. (Although Sikorsky argues its new S-92 Phase IV main gearbox, backed by a $100m-plus investment and due for FAA certification this year, will breathe new life into the venerable offshore workhorse).

Nevertheless, Jandu judged: “You can pause a replacement cycle, but you can’t ultimately run away from it. And you are seeing that now with many of the operators as we move into 2025 and the next decade.”

Greater demands

Particularly as helicopter requirements are becoming more demanding. Aside from established offshore oil and gas fields of North America, Europe and Brazil, and other parts of the world. Some of the offshore energy requirements, new fields in Guyana, Suriname and Namibia are increasingly further away from shore. This places greater demands on the type of helicopter lift needed to service these markets, according to LCI.

Dividing new helicopter orders between replacement demand and growth is tricky. But Jandu believes replacement accounts for about 60% of new orders and growth about 40%.

So, having raided its war chest to acquire Macquarie, does the SMFL and LCI joint venture have more targets in its sights? Jandu paused: “Every company is opportunistic and keeps an eye on the market. But right now, we are totally focused on closing and executing this latest deal.”

Interview over, I packed my notebook, said goodbye and headed for one of the hotel’s seven lifts. Then, remembering my awkward entrance, I looked for the stairs to the ground floor.

HI Uplift Dashboard: Helicopters for sale

Multi engine

• Total for sale/lease: 283
• Percentage for sale/lease: 3.78
• Absorption rate: 3.78 months
• Total fleet: 7,482.

Single engine

• Total for sale/lease: 426
• Percentage for sale/lease: 3.68
• Absorption rate: 4.09 months
• Total fleet: 11,581.

Source: Amstat, March 28th, 2025.