IBA’s Alastair Fallon, Helicopter Aviation Analyst, joined the Helicopter Investor Town Hall Forum on Tuesday 9th June. Within the 60-minute session, the panel of industry experts assessed the health of the helicopter market and discussed how Covid-19 is affecting the different heli markets worldwide.
In this short overview, Alastair outlines the session’s key takeaways:
The helicopter OEM order book
The big four helicopter OEMs; Airbus, Leonardo, Bell (Textron) and Sikorsky (Lockheed Martin) do have an order backlog, their most popular models such as the Airbus H145 and Leonardo’s AW139 having 18 month + wait times. Their main focus is on military contracts and they will continue production, modifying commercial output according to need.
Leasing V Buying
A significant proportion of annual new helicopter deliveries, currently totalling around 600, go to lessors. In today’s uncertain environment, operators favour leasing over buying: it enables them to conduct business with less risk and more cheaply. The asset’s cost burden lies with the lessor, the debt-free lessee returning the asset at lease end. Lessees enjoy greater security should markets deteriorate, utilisation reduce or contracts, such as those supporting the offshore oil industry, expire.
The helicopter parts market
IBA foresees appetite for used parts being high and pricing strong. OEMs best service their interests by selling new design helicopters, so would rather see older models withdrawn and replacement parts scarce in the market they control. Entrepreneurs could benefit by buying old, retired helicopters and harvesting them for high value parts to equip similar, in-service models and keep them flying.
Current Market Values
Today’s softening market features few buyers and sellers and Market Values are consequently low. A helicopter’s economic life lasts longer than 30 years, however, and Base Values are therefore more accurate indicators since they remain constant throughout the life cycle barring dramatic events.