MD Helicopters back in the black after a turbulent year

 - August 5, 2008, 7:05 AM

The light at the end of the tunnel is not a train bearing down on MD Helicopters Inc., said chairman and CEO Henk Schaeken. Rather, it illuminates a return to profitability for the Mesa, Ariz. helicopter manufacturer. Problems with three major programs put strains on operations and finances last year.

Schaeken conceded in a July 17 press conference that 2002 “obviously was not a great year. We are looking at a much better one this year. The last few months have seen a return to the black.” MDHI delivered 11 helicopters in the first half of this year, compared with just two in the same period last year due to a combination of engineering, development and certification delays with MD Explorer programs for the Dutch national police and the German state police. Export financing problems stalled MD 600N shipments to Turkey. In all, 15 MD helicopters rolled out of the Mesa plant last year.

Six of the eight Dutch police Explorers were earlier scheduled for delivery this year, but now MDHI expects to ship four. The program was delayed pending certification performance tests for the higher gross weight required to accommodate all the mission equipment ordered by the Dutch. The MD 902 is currently JAA certified at 6,250 pounds and 6,500 pounds under its FAA ticket. MDHI sales chief Colin Whicher announced delivery of the first German police Explorer, one of five to be delivered this year.

“For all of this year we anticipate delivering in the neighborhood of 40 aircraft,” Schaeken stated. For next year, he added, “We’re probably looking at the mid-40s to low-50s in total deliveries,” which would equal or exceed 2000. He said the exact number for this year “will be determined largely by how many for the Turkish national police we will be able to deliver.”

Schaeken, asked about a reportedly prickly relationship with Kaman, one of MDHI’s major subcontractors, replied, “It is fixed. In all honesty, the relationship was never broken.” He said payment issues have been resolved and “we are on good terms with Kaman. We now have an agreement with them on the annual number of helicopter fuselages they will build for us.”

Whicher noted that MDHI’s chances of being chosen to provide MD 500Es for the U.S. Border Patrol and Drug Enforcement Agency (DEA) appear bright. Border Patrol trials early last month near El Paso, Texas, “went very well,” he said, calling them the agency’s way of “making sure your aircraft will do what you say it will do.” The Border Patrol is seeking a direct replacement for its ex-military OH-6s, built by MDHI’s ancestor, Hughes Helicopters. A decision is expected in October, leading to an order Whicher said is likely to be for 50 aircraft and options for 50 more. He added that the DEA is likely to begin taking deliveries “in the September time frame” under a program to replace 38 OH-6s.

MDHI’s 2003 order book and delivery schedule tilt heavily toward law enforcement, with 80 percent of this year’s U.S. and international shipments destined for that market.