Analyst: Helicopter sales to require greater justification
Aerospace analyst Brian Foley says future helicopter sales will receive greater scrutiny by accounting departments, and require a strong business case to be made. Still, there are strong sales to be had.
“Most if not all will require an indisputable, virtually airtight business-case justification. This could prolong the sales process, so smart buyers and sellers will plan further ahead,” Foley said. His remarks came in advance of the Helicopter Association International’s Heli-Expo this month in Dallas.
Helicopter manufacturers will need to make a strong case for fleet replacement, addressing such issues as ownership costs, cutting expenses, and increasing revenue, Foley said. Foley concentrates on the general aviation market.
Foley said search-and-rescue and law enforcement markets are facing tighter budgets, requiring future purchases to be deliberate and pragmatic. Search-and-rescue services, as well as emergency medical services, will become more selective and purpose-oriented, he said. He also had a warning for those who feel the oil exploration market can be counted on for huge orders.
“This market is both huge and hugely misunderstood,” Foley said. “Given the industry's enormous profits, one might conclude that these companies can buy new aircraft on a whim. In fact, their procurement process is probably the most disciplined and analytical of any segment, made possible by their vast management and data resources. If it's not saving or making money, they're not interested."
Foley noted that saving time trumps cost as an issue in the corporate helicopter market. Still, even the largest corporations were affected by the economic downturn and many are continuing to postpone decisions.
In the United States military market there are plans to cut $600 billion over the next decade, creating uncertainty in an area that traditionally sustained the helicopter industry during hard economic times both directly and indirectly. Military services will become more value-driven and opt for off-the-shelf solutions when they can, Foley predicted.
Overall, Foley’s view is upbeat. “We anticipate future helicopter sales will trend upward nicely over the next few years. But that's contingent upon the manufacturers' ability to help customers with all the necessary information and justification needed to make their numbers work. Value will remain the future quest and mantra guiding helicopter purchases—you can quote me on that.”
February 8, 2012