Originally Posted by
tipsock
My observation (not sure I qualify to make a premise) is that the O&G companies are more interested in the effect this is having on their operations (it is), their employees (it is), and their quarterly results. The suggestion they would take a hit to collude with one of many possible suppliers (one of the more expensive ones), who they would quite happily drop if they could get a better deal elsewhere in the hope they can steer the sector towards stagnated T&Cs at a risk to their own share price and investors who are generally looking for a quick buck I think is a little far fetched.
I think it would be a very small client company if this strike would impact its quarterly results! Profits come from production (well, the sales of product, of course) which doesn’t stop because crew changes are delayed. There may be some very small cost increases from overtime etc, but a drop. Exploration costs money but doesn’t generate any in the near/medium term (although declared reserves do affect share price). If exploration runs longer than planned, due to a shutdown not being recovered quickly using helicopters to fly parts/specialists, then that adds to project budget. But, not enough to impact profits materially, and it’s likely other factors will impact the campaign more.
It’s true that contracts are awarded typically to the lowest bidder, but not in every case. However, every bidder is normally pre-qualified, so it’s not like contracts are awarded to incompetent operators vs competent ones. No jokes intended…..
Once the contract is running, the client is primarily looking at service delivery and safety - the latter, it could be argued, with a focus on incident statistics if one wanted to be cynical. If the operator is failing to meet its contractual availability obligations, or has a number of serious incidents - which then appear in the client’s statistics - it may be in danger of the contract being terminated. Normally an attempt at remediation would take place.
Whether operator cost increases from salary rises can be passed on to the client will depend on what escalation clauses are in the contract. Normally it is expected that the rates will take into account likely cost increases over the contract life, but there may be fixed percentage annual rises, or clauses to allow real-world inflation to be addressed. But, not all contractual relationships/structures are the same, and the personal working relationships between the contractor and contractee are a key element.
Bottom line is, I think BHL will have to absorb any salary rises, and I don’t think this strike is hurting the clients much financially (if at all) - just Bristow.
For reference, I used to manage a $400 million helicopter and FW contract, as the client, where strikes of up to 10 consecutive days were not uncommon. Also, zero aircraft availability was not unheard of……you find alternative solutions.