Eurocopter sees growth in Asia, services

 - February 23, 2011, 7:15 AM

Eurocopter took in more revenue last year than in 2009 but its order book did not fare as well, the company reported in late January. While the number of deliveries increased–buoyed by the more lucrative medium-twin segment–orders dropped below a six-year average.

Total revenues grew by 6 percent to €4.8 billion ($6.6 billion) last year and Eurocopter delivered 527 helicopters, versus 528 in 2009. “The crisis has impacted light helicopters, but we handed over more medium twins and our service business grew as well,” CEO Lutz Bertling reported at the company’s annual press conference in Paris on January 24. Referring to the ongoing downturn in the helicopter industry, Bertling characterized the company’s 6-percent growth as “not a bad result in this environment.” Parent company EADS is scheduled to reveal Eurocopter’s profits later, but Bertling said the helicopter manufacturer’s margin was in the black and above the EADS average.

Helicopter production contributed 53 percent of revenue at EADS, services accounted for 36 percent and the remainder was earned from ancillary activities such as Airbus door production. Services include training and logistics as well as maintenance, repair and overhaul (MRO). Civil and parapublic activity accounted for 54 percent of the turnover.

Bertling thus claims 49-percent market share in civil and parapublic helicopters, based on global deliveries.

While the value of total orders written last year decreased from 2009’s figures by 25 percent to €4.3 billion, the number of net-ordered helicopters was positive at 346 versus 344 in 2009. Unlike 2009, the figures for 2010 include no high-value military contract. Last year the Super Puma/Cougar was the best sales performer, Bertling said, as “the oil and gas market did well.” Order cancellations typically number between 30 and 35; Eurocopter reported between 35 and 50 cancellations for last year.

In terms of value, services accounted for 42 percent of orders, reflecting Bertling’s confidence in that sector. EADS plans to strengthen its service offerings this year, with the addition of flight simulators in the UK, France, Brazil and several Asian countries. The company is also expected to acquire an MRO.

Growing Asian Market

Geographically speaking, last year saw a significant reshuffle. Asia was number one and Latin America number two in helicopter sale value, at €811 million ($1.1 billion) and €497 million ($680 million), respectively. Asia is expected to keep the lead or, at least, to remain a major contributor to revenues. Bertling singled out China and emphasized that, given the size of the country, the 200-or-so civil helicopters flying there is a tiny number, compared with the some 10,000 civil rotorcraft flying in the U.S. Therefore, Eurocopter is considering building a final assembly line in China.

Historically, Europe (including the CIS) and North America are the two regions that have accounted for most sales, and yet, combined, they just equaled Asia’s share last year. Olivier Lambert, senior v-p for sales and customer relations, told AIN that he is hoping traditional markets for light helicopters will pick up again late this year or early next year. However, the glut of new light helicopters on the second-hand market (estimated to be 1,000 helicopters globally) creates an obstacle to new helicopter sales.

Bertling said he expects deliveries to decline by 5 to 10 percent this year. Increased service sales and sales of the more expensive medium twins, however, should offset the decrease in deliveries. Orders are predicted to remain steady in units and grow in value.

The ongoing Shape reorganization plan aims to save the company €200 million ($270 million) annually, and company officials estimate they achieved half of this target last year and expect to reach the full objective this year. They also pledged organizational simplification, notably with quicker decision processes.

According to CFO Dieter John, Eurocopter’s employment rolls have grown by 2,000 over the last two years, but some 700 to 800 temps had to leave the factories. He anticipates the current 16,000-strong workforce will be stable this year. There will be fewer support employees but more engineers, he noted.

Program Progress

Eurocopter is about to launch the X4, a replacement for the AS365 Dauphin/EC155 medium twin in the 9,000- to 10,000-pound category. The process under which the French state is expected to support Eurocopter’s research and technology efforts financially–the X4 being the first application–has taken longer than expected, hence the delay. The manufacturer had previously hoped to launch the X4 last year.

Eurocopter is waiting for the government’s decision before choosing which technologies it will incorporate in the X4. Usually, a technology has to be at readiness level 5-6 (rig tested) to earn a place on a program. This time, a technology readiness level of 2 (TRL 2, concept study) might be acceptable. “The French government will bear part of the risk,” Bertling said.

Bertling noted that his company already has partners in the program–engine maker Turbomeca, avionics specialist Thales and aerostructures firm Daher. He promised the X4 will be “a game changer,” offering “a new way of flying.” The cockpit will be quite different from those of today’s rotorcraft. Moreover, AIN understands fly-by-wire controls may be part of the features.

The X4 will also be the first program to take shape under Eurocopter’s new development process, which aims to reduce time to market by 30 percent.

The X3 compound demonstrator is doing “surprisingly well.” It reached 180 knots at “reduced power” in November. The first test phase is complete and the engineers have been examining all critical parts. The main gearbox is being upgraded to handle the full output of the two RTM322 engines. Fadec software is also being modified. The first application of the X3 concept may be in service six years from now, Bertling estimated.

Eurocopter plans to increase its research-and-development budget by 20 percent this year, bringing it to about €240 million ($330 million). Finally, Bertling announced that “a new helicopter version” will make its maiden flight this year.