HAI Convention News

Eurocopter’s focus is on cash conservation

 - February 22, 2009, 6:42 PM

Eurocopter CEO Lutz Bertling rebuffed concerns about how his company would fare in the face of the ongoing global economic crisis by stressing the company’s market dominance and its commitment to conserving euros. “Cash is king,” he said, adding that Eurocopter has improved its cash position and dramatically reduced production lead times–by 35 percent–over the last year and that the company has “exceeded our efficiency goals.”  

Bertling opened a news conference here yesterday by taking a direct shot at competitor Bell Helicopter, whose sale continues to be rumored due to the financial difficulties of its parent company, Textron. “Eurocopter is not for sale,” he joked.

Emphasizing Eurocopter’s strong 2008 results compared to 2007, Bertling said worldwide sales jumped from $5.46 billion to $5.85 billion and the number of units delivered grew from 488 to 588. Sales in the U.S. grew from $571 million to $750 million–a 31.3-percent increase–fueled largely by the U.S. Army’s UH-72A program.
Eurocopter has delivered 50 UH-72As to date and 133 more are on order. The Army may eventually buy more than 300, he said, adding that UH-72A production represents 14 percent of all current annual U.S. military rotorcraft procurement.

Eurocopter now has 51.1 percent of world market share and 48 percent of U.S.
market share. Sixty-five percent of Eurocopter’s revenues continue to come from the export market (defined as being outside France, Germany and Spain), 55 percent is from helicopter production and 55 percent is from the civil sector. Bertling said the company had an $18 billion backlog distributed over 1,500 helicopters, but acknowledged that new helicopter orders dropped from 802 in 2007 to 715 in 2008 and that the downward trend would likely continue and accelerate in 2009.
However, he maintained that most of the existing backlog is safe because 71 percent of its value is dedicated to military or other government customers who are less likely to defer or cancel deliveries compared to those from the civil sector.

While acknowledging that new orders were falling, Bertling said an increasing number of new helicopter orders are for more expensive ships such as the heavy EC 225, a current mainstay of the deep-water offshore oil and gas industry, or the new medium/heavy EC 175, slated to enter service in 2012. He reported that the EC 175 program is on track and that the helicopter would make its first flight by year-end. The company is also continuing to develop the KHP military transport in partnership with Korea Aerospace Industries.

Although Eurocopter is practicing “careful cash management,” Bertling said the company continues to invest in new development programs, as well as new training, maintenance and logistics facilities worldwide. He revealed that it is working on diesel power for a light helicopter, most likely the EC 120, and that company wide, research-and-development spending increased by 43 percent from 2007 to 2008. He predicted that Eurocopter would fly a diesel helicopter within 30 months and said the company is working on upgrades of existing programs and the “preliminary design” of a new helicopter.

Bertling also said Eurocopter continues to be plagued by ongoing customer-support issues, mostly related to parts availability, but that considerable progress has been made by the company’s Ripart program, which has achieved a 93-percent parts availability rate. The company also is continuing to expand its training and service capability worldwide.

However, American Eurocopter president Marc Paganini said the company had no immediate plans to expand its owned service centers beyond those in Grand Prairie, Texas, and Long Beach, Calif., as well as its joint venture with Rotortech in Palm Beach, Fla. “Certainly not this year,” he said.