HAI Convention News

Helicopter Lessor Waypoint Sees Offshore Sector Bouncing Back

 - March 2, 2017, 2:55 PM
Waypoint Leasing says the lease rates for new aircraft, such as this Leonardo AW139, are now receiving. [Photo:Waypoint Leasing]

Rotorcraft leasing group Waypoint sees improved demand from the offshore oil-and-gas-support sector, which has been a weak point in the helicopter market for the past three or four years. According to Waypoint CEO Ed Washecka, business confidence in the offshore sector is markedly improved since Opec’s December 2016 agreement to cut oil production in a bid to reverse weak pricing. Oil prices have since moved up and remained above $50 per barrel.

“We’ve seen a good improvement [in demand for helicopters] since the low point around March 2016,” Washecka told AIN. “At that time, oil companies were still cutting [offshore exploration and production activity], and no one knew when that would stop. Now we’re certainly positive about 2017, but it won’t be a phenomenal year.”

At the same time, Waypoint reported increasing demand for other helicopter roles, including search-and-rescue, emergency medical service and humanitarian projects. On March 1, the company announced it is to deliver a pair of Airbus Helicopters H135s to Australia’s Mackay Helicopters, which will use them for transferring marine pilots to ships.

In the offshore energy sector, the financial difficulties experienced by CHC Helicopter have been a symbol of market insecurity. However, according to Washecka, CHC, which in October 2016 restructured through a $450 million recapitalization plan, is set to emerge from bankruptcy protection. “[In March 2016] CHC said it would reduce the size of its fleet from 230 aircraft to just 75, and that made people very nervous,” he said. “Now its fleet is closer to 140 aircraft and they are talking about growing again. In fact, CHC asked to keep some of the aircraft that they had planned to give back to us.”

Quite apart from the boost from Opec’s production decisions, Waypoint sees other factors driving recovery in demand for helicopter capacity. “What we’re seeing follows a classic oil industry cycle from the past, and there always comes a point where the reserves are depleted to the extent that producers need to consider investing again,” explained Clark McGinn, senior vice president for sales and relationship management. “Some of our lessees are now doing their first exploration work in 18 to 24 months. During the most recent boom, there was almost a bubble in exploration activity, so when the downturn came, the reduction in [flying] activity related to this was as much as 20 percent, whereas it more typically would have been just 12 to 15 percent.”

While acknowledging that there is still excess capacity for older helicopters, Waypoint reported that demand for the Sikorsky S-92 and Leonardo AW139, in which it mainly deals, is now “back in balance.” Washecka reported a recovery in lease rates for these two types.

However, Waypoint has also taken steps to ensure that it can be more nimble in reassigning helicopters to other roles to respond more quickly to shifts in demand. “When I was raising money to launch Waypoint one of the key selling points for investors was that helicopters could function for a long time for different missions, with parts being continually replaced,” Washecka stated. “This is allowing us to hold costs down for operators and end users, because we can keep helicopters operating for long periods of time. [In different regions of the world and with different applications] we can get 20 years of use from an aircraft after the initial use. This is very ecological and sound lifecycle management.”

Ireland-based Waypoint has expanded geographically with new offices in Brisbane, Australia; Rio de Janeiro, Brazil; and Cape Town, South Africa.