Heli-Expo 2009 Preview

 - January 29, 2009, 8:20 AM

Attendees who make their way to Anaheim, Calif., for the Helicopter Association International’s (HAI) Heli-Expo later this month will encounter the usual crowded and noisy convention-center floor occupied by companies unveiling their latest wares. But the event may lack some of the energy and exuberance of recent shows given the dreary economic picture. Based on early numbers there will be fewer companies exhibiting at this year’s convention compared with last year’s record total of 565, and there may well be fewer attendees as well. Last February’s Heli-Expo in Houston drew more than 17,000 visitors, a record that will be hard to top.

The one-two punch of a slow economy and plunging oil prices means Heli-Expo regulars might have to adjust to a more subdued atmosphere for the three-day event, which starts on February 22. Relatively few big sales announcements are expected, and there perhaps will be only one or two new helicopters introduced at the show. Still, forecasts predict the longer-term health of the rotorcraft industry remains sound and still call for billions of dollars worth of business in the next decade. In other words, helicopter makers are down but they certainly aren’t out.
 
The helicopter segment of aviation has been a relatively happy and optimistic part of the broader business landscape for the last few years as oil exploration, EMS, police and corporate uses of rotorcraft translated into a steady flow of new orders. But with the sudden turnaround in the economy and in the face of a spate of high-profile aeromedical helicopter crashes in the last two years, some of the luster of this high-flying industry appears to have worn thin. Still, perhaps these are apt reasons why now may be the ideal time to host Heli-Expo and bring together rotor aficionados for a Kumbaya moment in Southern California.

The current situation marks a stark, if not wholly unexpected, turnaround from a year ago, when the biggest problem facing executives at helicopter manufacturing companies was the inability to build and deliver products fast enough. We now know that the economy had already slid into recession by the time the doors opened to last year’s show, but orders nonetheless poured in at an impressive rate. Eurocopter alone announced firm orders and options at Heli-Expo 2008 for more than 200 new helicopters valued at around $1 billion. Others added hundreds of millions more to the tally and boosted the overall mood. Sales backlogs should help buoy manufacturers through the current slowdown, but only if market conditions do not deteriorate further, analysts say.

The upheaval in the rotorcraft industry–a business that is used to battling for its survival–could spell danger for some smaller suppliers and even one of the major helicopter manufacturers. MD Helicopters had been on the brink of collapse in mid-2005 when private equity firm Patriarch Partners came to the company’s rescue. A specialist at buying and fixing troubled enterprises, Patriarch poured an estimated $200 million into MD, renegotiated the manufacturer’s plant lease, replaced the management and got the production line moving again. Although Patriarch claims these moves transformed MD into a profitable company, the economic downturn comes at a precarious time. An erosion of confidence could jeopardize the impressive gains made in the last three years. Customers will be anxious to hear Patriarch Partners CEO Lynn Tilton at Heli-Expo describe how the company is weathering the downturn.

As for the broader industry, times could be worse, executives say. Orders for new helicopters from nonmilitary customers slowed in the fourth quarter of last year, and as a result all of the manufacturers have taken at least some steps to scale back production. But most appear not to have seen a precipitous drop in business since the financial meltdown hit Wall Street in the fall. To cope with slower sales, Bell Helicopter has initiated a four-day, 32-hour work week at its Mirabel assembly plant near Montreal, but the company has no plans to lay off workers or make other significant changes to its operations, according to officials. A major focus for Bell remains converting options to firm orders for the company’s new Model 429 medium twin, certification of which is expected by mid-year.

For the most part helicopter makers appear content to focus on development programs in the certification stage while they ride out the bad economic news and look ahead to better times. Eurocopter, for one, had been facing challenges related to its production backlog, which stood to grow significantly with last year’s introduction of the EC 175. But the company said order cancellations through 2008 remained at a “normal” level despite the impact of the financial crisis, with the figure put at around 30. Eurocopter warned the number could climb this year, but it also said that orders for military variants of its helicopters will take up the slack until civil demand rebounds.

Sikorsky can also count on military sales to fuel its growth in a civil downturn, although the impact of a slowdown appears not to have been acutely felt as of yet. The company last month listed more than 100 job openings at its main plant in Stratford, Conn., even as many other companies in the area sought to slash payroll.
While Sikorsky’s big news splash at last year’s Heli-Expo came in the form of its X2 technology demonstrator unveiled on the show floor, of more immediate importance is its S-76D, which the company expects will make its first flight before the start of this year’s show, followed by U.S. certification late this year.  
 
Besides quietly working on a 9,000-pound-class helicopter to fill the gap between the Grand and AW139, AgustaWestland continues to ramp up capacity at its North American home near Philadelphia and put a greater focus on the test program for the BA609 tiltrotor. Four BA609s in all will be used in the development and certification flight-test program headed by the Bell/Agusta Aerospace joint venture. Two are flying now, one with Bell in Texas and the other with AgustaWestland in Italy. Three more years of flight and certification tests are planned, making 2011 the current target for certification. The date of the first customer delivery has not yet been decided as Bell and AgustaWestland work out the production details. Current orders for the BA609 stand at more than 80, according to its developers. Customers have paid refundable deposits of $150,000 to hold a delivery position and will find out the final price of their aircraft 25 months before the expected delivery date.

Robinson at long last appears ready to let the world see its newest product, the turbine-powered R66, up close for the first time. The Rolls-Royce RR300-powered helicopter has been flying for more than a year at Robinson’s base in Southern California, and could take some time out from its certification schedule to make an appearance at Heli-Expo. Robinson is promising to give AIN a full update and briefing of the new model on the eve of Heli-Expo in time for a report at the show. For now the company will say only that the R66 remains on track for certification late this year. 

As usual, Heli-Expo will feature educational sessions, as well as committee meetings to be held before, during and after the convention. Pilot courses will cover such topics as decision-making, mountain flying and wire and obstacle avoidance. Important events scheduled at Heli-Expo this year include the HAI safety symposium, scheduled to be held on February 21, and the membership breakfast on February 22. HAI will also hold its annual job fair on February 22 in the convention center’s Anaheim Ballroom. HAI member companies interested in exhibiting at the event can contact the association by e-mailing jobfair@rotor.com or calling (703) 683-4646.