Helicopter Owner CHC Pressured Amid Prolonged Offshore Drilling Slump; The Texas-based company has posted net losses since emerging from bankruptcy in 2017The Wall Street Journal
By Alexander Gladstone
July 24, 2019
CHC Group's helicopter leasing business is under pressure as costs rise and the continued stagnation in U.S. offshore drilling activity impacts the company's oil- and gas-producing customers.The Irving, Texas-based company, which emerged from chapter 11 in 2017, told investors this week that it remains unprofitable amid weak revenue growth and rising costs, continuing a record of net losses since the financial restructuring, according to a person familiar with the private disclosure.CHC is confronting a chronically slumping U.S. offshore drilling industry that provides most of the company's business. The company's revenue for the fiscal year ending in April were $876 million, a 3% annual increase. But CHC posted a $137 million net loss as costs rose, compared with the previous year's $120 million net loss, the person familiar with the matter said.The company finished the fiscal year with $866 million of debt and $87 million of total cash, the person said.
CHC didn't respond to a request for comment.
The company's core business is leasing its helicopters to offshore oil-and-gas drillers for use in ferrying personnel and equipment to deep-sea platforms. With Brent crude oil prices hovering around $65 a barrel, drilling companies have pulled back on initiating new offshore projects because they are not economical given the pricing environment.As a result, demand for helicopters has slumped. Last year, aircraft manufacturer Sikorsky sold just four heavy helicopters, compared with 42 in 2014, according to IBA Group, an aviation research company.CHC peers PHI Inc. and Bristow Group both filed for chapter 11 protection in recent months. Waypoint Leasing Holdings Ltd., a major helicopter leasing firm that CHC has contracted with, also filed for bankruptcy last November.CHC trimmed about $925 million in debt in 2017 while reducing its fleet of helicopters by roughly 100 during the bankruptcy.