Bristow Sees No Recovery for Offshore Helicopters in 2021

 - February 8, 2021, 6:37 PM

Global helicopter services company Bristow Group announced a widening net loss in the fourth quarter and confirmed its intention to seek $400 million in new financing to pay down high-cost debt, some of which comes due in 2022. CEO Chris Bradshaw also said he didn’t see Bristow’s core offshore energy business improving until next year. 

The new debt will be secured by 93 pledged aircraft from its fleet and “substantially all of the other tangible and intangible property assets of the company.” Debt proceeds combined with company cash will be used to repay term loans of $152 million from Macquarie Bank and $203.9 million from Apollo unit PK AirFinance, as well as $132 million in 7.75 percent senior notes due next year. 

For the quarter, Bristow posted a loss of $57.1 million on operating revenues of $300.3 million, compared to a loss of $27.9 million on revenues of $295.7 million in the preceding quarter. Almost all of Bristow’s most recent quarterly losses were attributed to “impairment charges” related to the company’s investment in Canada’s Cougar Helicopters ($51.9 million) and helicopters held for sale ($1.4 million). That compared to impairment losses of $17.6 million in the preceding quarter related to inventory write-down and helicopters held for sale. 

Bristow is continuing to “right-size” its aircraft inventory, disposing of five Sikorsky S-76C++ medium, two Bell B412 medium, and seven Bell B407 single-engine helicopters, in addition to one Airbus H225 simulator, for cash proceeds of $14.4 million. During the preceding quarter, the company sold 10 Airbus H225 heavy, nine S-76C++ medium, and 12 Bell 407 single-engine helicopters for cash proceeds of $40.5 million. 

Despite the most recent losses, Bristow ended the calendar year with $345 million in “total liquidity” and CEO Chris Bradshaw said the company was moving in a positive direction. “The company continues to make significant integration progress following the merger of Era and Bristow in June 2020. We are pleased to announce a further increase in the amount of identified synergies to at least $50 million of annualized cost savings, of which projects representing $27 million of annualized synergies have already been completed," he said. 

Bradshaw said he didn’t expect President Biden’s recent executive orders suspending new oil and gas leases on federal lands/in federal waters to have a material impact on the company as its current offshore activities are heavily weighted on supporting existing production. Offshore is not likely to increase this year, he said, but is primed for a rebound in 2022, he told stock analysts.

“For calendar 2021, we're really not counting on any broad-based significant increase above where things are today…Where we start to be more constructive on additional spending from our customer base is in 2022 and beyond. We know there needs to be another spending cycle here because today's level of underinvestment is not sustainable. It's going to result in higher commodity prices and that we'll see we think more dollars go to work in deepwater projects around the world and that should benefit our business.”

According to Bradshaw, the industry could benefit from further consolidation and continued development of offshore wind power. “We continue to believe that the industry needs and would benefit from additional consolidation," he commented. "A lot of the rationale that underpins the logic of the Bristow Era merger would apply in other combinations in different parts of the world where there is an excess amount of capacity, too much equipment, too many operators.” 

With regard to offshore wind, Bradshaw called it a “strategic priority” for Bristow, particularly in Europe, and that the U.S. market would likely develop later. “We do not have any exposure in the U.S., that's because the one operating wind farm today is so close to shore that it's supported by boats, but the new wind farms that are scheduled to be developed are going to require offshore helicopter support.”