Eurocopter held its own in 2009

 - February 15, 2010, 4:41 AM

Last month during Eurocopter’s annual press conference in Paris, CEO Lutz Bertling announced the company received 344 net orders in 2009, down from an expected 450, but was able to keep deliveries at a high level. Efforts to cope with the economic downturn are ongoing, he said, including a recently launched cost-cutting program dubbed Shape.

Last year, the French helicopter manufacturer inked contracts for 449 gross sales but had 105 orders cancelled. During 2008, Eurocopter’s second-best year, it received 715 net orders.

In value, last year’s order intake remained high, at €5.8 billion ($8.1 billion). This was due to the military sector doing well and numerous sales of medium helicopters in the civil sector. The offshore oil and gas sector is exploring new fields, Bertling explained, which is spurring orders for the Super Puma family. Light helicopters were down substantially, with the EC120 receiving eight orders versus 85 the year before. Civil helicopters accounted for only 30 percent of total 2009 bookings. “Normally, this is closer to 50 percent,” Bertling commented. At the end of 2009, the backlog stood at €15.1 billion ($21.4 billion). This represents approximately 1,300 aircraft, according to senior executive v-p Philippe Harache.

During 2009, 558 aircraft were delivered, conforming to previous Eurocopter predictions. Eurocopter’s total 2009 revenues amounted to a record €4.6 billion ($6.4 billion). The civil sector accounted for 52 percent of these revenues. Bertling would not specify the company’s profit or loss. “Given the difficult 2009, I am more than satisfied with our [earnings],” he said.

For this year, Bertling expects net orders will remain steady. “Civil sales are expected to remain low,” he said. Asia is the only region expected to counter the downturn. The oil and gas segment is also predicted to fare well. However, Bertling deemed this year to be unpredictable.

Despite the not-so-gloomy picture in the current market conditions, Eurocopter officials fear a delayed impact of the crisis might lie ahead. Harache wondered if bigger challenges are coming. At a minimum, the hoped-for recovery will be slowed by the high number of helicopters available on the second-hand market. There are more than 1,000, Bertling said, most of them delivered between 2007 and 2009.

To help customers obtain financing, Eurocopter has created a dedicated subsidiary: Eurocopter Financial Services, which is based in Ireland. As Harache put it, the idea is to adapt credit terms to customer needs. “Sometimes customers do not know how to explain what their financing requirements are, simply because this is not their job,” he said.

The Shape cost-reduction program is well under way. One target is to achieve annual savings of €200 million ($280 million). “We are on track for 2010,” Bertling said. In addition, he estimated that a 30-percent shortening in the lead time from order to delivery is achievable. Another target is to reduce inventories by €500 million ($700 million) this year, Bertling promised this will not affect customer support.

The reduction in inventories is about production parts, not spare parts, he clarified. To the contrary, U.S. customers are said to be enjoying improved spares parts distribution. “Although they are hit by the downturn, they are very happy with the resulting increased aircraft availability,” Bertling said.

A new software program is being installed worldwide, as part of the Ripart (right part at the right time) project. Ripart adds increased flexibility by managing parts inventory globally. For example, a part can be delivered from a warehouse in Malaysia to an operator in the U.S. in 24 hours.

Bertling expressed confidence that the X4, the successor of the Dauphin medium twin, would benefit from low-rate funding  that Eurocopter could receive via a French government economic stimulus package. “We would have gone ahead with the X4 anyhow but without the extra money, we would not have brought the level of innovation so high; it would have been too risky,” Bertling explained. He emphasized that the X4  should greatly improve environmental friendliness and safety of operations. The X4 program, now in the predevelopment phase, is scheduled for launch by June.

Moreover, Bertling predicted that two first flights will occur this year. Another official disclosed to AIN these will be one demonstrator and one prototype. There are no radical architecture changes in the offing, the official added. He said Eurocopter is not working on a tiltrotor or tandem-rotor configuration, but researchers are investigating hybrid power with electric tail-drive. Eurocopter plans to spend 20 percent more on research and development this year, which will bring the expenditure to €200 million ($280 million).