What's happening in CHC?
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Payday millionaire and Pitts. Why is it that you seem determined to take some kind of joy from trashing a Company like CHC. I worked for them for a fair while and the Company has many dedicated and hard working Managers, engineers and Pilots. All big organistations have problems and its a bit one dimensional to think that the oil price does not affect everybody in the offshore world and to believe it will make that much change. Organisations across the globe are trying to make sure the Companies and employees absorb the costs and continue to provide a safe high end service.
So lets hear a bit of solidarity for a change for all our colleagues who continue to dig in and work hard in challenging times.
Offshore pilots always winge. The Management would grow very nervous if they stopped winging. That's normal and anyone who has worked offshore helis knows this.
CHC ABZ can't be doing too bad as they just splashed out on some nice new uniforms and crisp white shirts for the boys! (Take cover....incoming)!
DB
So lets hear a bit of solidarity for a change for all our colleagues who continue to dig in and work hard in challenging times.
Offshore pilots always winge. The Management would grow very nervous if they stopped winging. That's normal and anyone who has worked offshore helis knows this.
CHC ABZ can't be doing too bad as they just splashed out on some nice new uniforms and crisp white shirts for the boys! (Take cover....incoming)!
DB
Pitts. Why is it that you seem determined to take some kind of joy from trashing a Company like CHC. I worked for them for a fair while and the Company has many dedicated and hard working Managers, engineers and Pilots. All big organistations have problems and its a bit one dimensional to think that the oil price does not affect everybody in the offshore world and to believe it will make that much change. Organisations across the globe are trying to make sure the Companies and employees absorb the costs and continue to provide a safe high end service.
So lets hear a bit of solidarity for a change for all our colleagues who continue to dig in and work hard in challenging times
So lets hear a bit of solidarity for a change for all our colleagues who continue to dig in and work hard in challenging times
Actually you only need to read the first line to see that I say good luck. My post was not even related to the prior one from the guy suggesting there were some poor feelings.
I merely wanted to point out the way the stock is viewed by the people who own it... which guess what? That is rather important and the stock trades $1.30 for a reason.
If only hard work was all that mattered by the guys at the coal face I suppose we could list a 1000 companies that would still be in business... but as long as new uniforms are the metric by which people view a companies ability to fund itself, grow and make profit it will be OK.
I could point the way to earnings transcripts where the company bemoans the additional burdens of the EC225 adventure but I rather think the price of crude at $40 overtook that one in the league table of woes.
Pitts I will not feed your inner Troll!
Our Strategy - CHC Helicopter
In fact for Q3 2014 they it seems the decline in CHC earnings was all 225 related.
This quarter, EBITDAR was $119 million, down one percent year over year. This decline was partially driven by the impact of the EC225 return to service cost as we completed flight resumption of the remaining aircraft in Q3. In addition, we also incurred higher industrywide ongoing inspection costs of the EC225 aircraft, which are required as a part of the interim safety remediation. We will incur these additional costs until the permanent fix is rolled out to the industry by Airbus Helicopters in fiscal 2015.
The permanent fix comes out sometime in the summer, and then it’ll take us probably close to a yearto have all of our aircraft retrofitted. So, it’ll be another probably four to six quarters before we’re completely done with incremental cost. And again, those are industrywide costs for anybody flying the 225s.
That’s small in magnitude compared to the impact that the 225 had last year.
I think the 225 issue checked good momentum but there are a few others which are killing CHC at the moment:
1. Idle aircraft. CHC have over 90% leased and lots of ac sitting around doing bugger all. This means they pay lease costs whether they work or not. If a good chunk of your fleet is idle (15% ish) then you;re going to struggle to make any money.
2. This is compounded by CHC not having a winning bid strategy. There are ongoing themes around the world in terms of nationalisation and investing in ground work for future work. BRS showed what could be done on the east coast of Africa and that model can work for other big operators.
Without a coherent actual strategy, other carriers (I'll call them local or regional operators) are able to grow into a void. I'm thinking Westar, Heliconia, Everett etc who have OGP compliant standards (in general) and have new ac. CHC hasn't looked at a new market for ages and seemingly has no strategy to actually invest and then dominate anywhere. Grow or die.
The OGP helicopter market is very commoditised from an oil co point of view, operators meet OGP standards with new ac and therefore the common differentiation is often price. CHC should spend more time on focusing on the benefits and differentiators that a large company can bring and take some risk in new markets.
Boils down once again to lack of leadership.
1. Idle aircraft. CHC have over 90% leased and lots of ac sitting around doing bugger all. This means they pay lease costs whether they work or not. If a good chunk of your fleet is idle (15% ish) then you;re going to struggle to make any money.
2. This is compounded by CHC not having a winning bid strategy. There are ongoing themes around the world in terms of nationalisation and investing in ground work for future work. BRS showed what could be done on the east coast of Africa and that model can work for other big operators.
Without a coherent actual strategy, other carriers (I'll call them local or regional operators) are able to grow into a void. I'm thinking Westar, Heliconia, Everett etc who have OGP compliant standards (in general) and have new ac. CHC hasn't looked at a new market for ages and seemingly has no strategy to actually invest and then dominate anywhere. Grow or die.
The OGP helicopter market is very commoditised from an oil co point of view, operators meet OGP standards with new ac and therefore the common differentiation is often price. CHC should spend more time on focusing on the benefits and differentiators that a large company can bring and take some risk in new markets.
Boils down once again to lack of leadership.
Without a coherent actual strategy, other carriers (I'll call them local or regional operators) are able to grow into a void. I'm thinking Westar, Heliconia, Everett etc who have OGP compliant standards (in general) and have new ac. CHC hasn't looked at a new market for ages and seemingly has no strategy to actually invest and then dominate anywhere. Grow or die.
It's not just an adventure....
it's just a job!
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In my humble opinion, CHC has gone down the toilet. New Ownership may help but not for some years.
I expect CHC to be sold off bit by bit. The strongest component is Heli-None.
I expect CHC to be sold off bit by bit. The strongest component is Heli-None.
offshoreigor, while the toilet analogy may or may not be right, the parts of the business in Aberdeen, Norway, Brazil and Australia and even Africa are actually quite functional. The issue lies almost exclusively with decisions made centrally which have proved to be catastrophically bad in my opinion.
I bang on about leadership all the time because most of the people who I meet at CHC are good and competent. Somewhere it lost it's way and that coincides nicely with coming into contact with the previous owners and the management team they imposed.
I do agree that it might take some time to work these problems out though.
My 5c worth anyway.
I bang on about leadership all the time because most of the people who I meet at CHC are good and competent. Somewhere it lost it's way and that coincides nicely with coming into contact with the previous owners and the management team they imposed.
I do agree that it might take some time to work these problems out though.
My 5c worth anyway.
Last edited by nowherespecial; 23rd Mar 2015 at 17:30. Reason: typo
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pittsextra, really? I have not been on here for over a year but like a good daytime soap I missed nothing! Still the 225 song. If the 225 is the main cause here there are a lot of companies that missed the boat?
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The OGP helicopter market is very commoditised from an oil co point of view, operators meet OGP standards with new ac and therefore the common differentiation is often price. CHC should spend more time on focusing on the benefits and differentiators that a large company can bring and take some risk in new markets.
I see the disconnect every day between what the helicopter companies want to offer and what the OGP industry really wants. The helicopter industry needs more operational focus in leadership teams and less business and accounting people.
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Many very astute points and it again highlights the disconnect between management and their customers. When an owner sees the business purely as an investment venture and not as a provider of a service, they inevitably employ a very accountant heavy management. No matter how good and capable they are at business theoretics, the aviation industry is quite different to an average business model. There is far more more emotion involved and customers require confidence in those providing the service. In my opinion the centralisation of large portions of decision making away from the business units to a central operation in the USA further isolates and alienates the customer from who they see as should be providing the service. The local business units are the ones dealing with the customers on a daily basis and are in the best position to develop an effective working relationship with them. The customers value this immensely and it allows for far greater flexibility and more effective decision making. In short, to use an old military term, mission command. The commander on the ground, given the proper support and backup is often the best man with the most up to date situational awareness to make a decision. Whilst the centralisation of all decision making and removal of control from individual business units may appear on the surface to be the most cost effective approach, it ends up being far too restrictive and ill informed to cope with the demand of customers in the complex and dynamic environment we live in. Further to that it removes the all important personal contact with the customer. This in the end will prove to be vastly more expensive as results are showing. Contracts are lost or run inefficiently, with the business units unable to react quickly, resulting often in unnecessary financial penalties and inefficient running of individual contracts and very frustrated customers. Flexibility is the key to aviation.
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I thought flexibility was the key to 'bendyness'?
I certainly agree with the analysis that CHC has proven to be inflexible.
The figures look awful because of the Asset Impairment charge (where they stopped putting a ridiculous financial value on their 'goodwill') However, even if you discount this then CHC still managed to lose 20 m USD a month in the last reported quarter to end of Jan 2015.
The CEO said exploration had been hit hard but it only accounted for 20% of their business. Assuming the CHC profit cross section is similar to the other large operators then exploration accounts for significantly more than 20% of their profits and their cash cow has stopped producing!
So 20m USD loses a month and you have cash reserves of 217m USD (excluding your credit line). Here is my question to rotorheads: How would you turn this company around in 10 months in todays market?
I certainly agree with the analysis that CHC has proven to be inflexible.
The figures look awful because of the Asset Impairment charge (where they stopped putting a ridiculous financial value on their 'goodwill') However, even if you discount this then CHC still managed to lose 20 m USD a month in the last reported quarter to end of Jan 2015.
The CEO said exploration had been hit hard but it only accounted for 20% of their business. Assuming the CHC profit cross section is similar to the other large operators then exploration accounts for significantly more than 20% of their profits and their cash cow has stopped producing!
So 20m USD loses a month and you have cash reserves of 217m USD (excluding your credit line). Here is my question to rotorheads: How would you turn this company around in 10 months in todays market?
26500 - chapeau Sir, well said.
10 month turnaround ideas:
1. Hand back all available idle ac to leasing companies. All ac leases will not be renewed. The short term cost of moving ac around to fill gaps will pale vs the medium term of lower fixed costs.
2. Shut down the Ops Centre in Dallas, not fit for purpose.
3. (this one will not be popular at all) default on debt and get it restructured so it can be repayed at not such horrendous interest rates. Bankruptcy law in the USA allows for this. At this point I suspect most of the institutional money invested in CHC has given up anyway and so might not fight it too much. The people who own the debt will be angry but as it's likely to be mainly FR and they don't run CHC anymore, I don't care.
4. Grow some balls and go after a new market, esp ones that are not saturated already or ripe for a lazy incumbent to be dislodged. Plenty of them around.
5. Partnerships with decent local/ regional RW players modeled completely on BRS and Everett. Can work all over the world.
6. Fire at least 50% of the VPs and 30% of the directors in the company. Far too many chiefs at CHC (check Linkedin if you want to see). Paying people $200k+ a year (plus all other costs which are huge) to run a team of 5 people is enough to make us ex military types (and probably most investors) want to cry...
7. Rationalise the fleet. Give customers idle new ac and get rid of legacy types. Painful again but the hidden costs of having the logistics and spares etc for old etch ac will mitigate a lot of that and customers will be happy they got something for nothing. Then kill off the old types, sell, mothball whatever.
I like this thread. Corporate turnaround, PPrune style.
10 month turnaround ideas:
1. Hand back all available idle ac to leasing companies. All ac leases will not be renewed. The short term cost of moving ac around to fill gaps will pale vs the medium term of lower fixed costs.
2. Shut down the Ops Centre in Dallas, not fit for purpose.
3. (this one will not be popular at all) default on debt and get it restructured so it can be repayed at not such horrendous interest rates. Bankruptcy law in the USA allows for this. At this point I suspect most of the institutional money invested in CHC has given up anyway and so might not fight it too much. The people who own the debt will be angry but as it's likely to be mainly FR and they don't run CHC anymore, I don't care.
4. Grow some balls and go after a new market, esp ones that are not saturated already or ripe for a lazy incumbent to be dislodged. Plenty of them around.
5. Partnerships with decent local/ regional RW players modeled completely on BRS and Everett. Can work all over the world.
6. Fire at least 50% of the VPs and 30% of the directors in the company. Far too many chiefs at CHC (check Linkedin if you want to see). Paying people $200k+ a year (plus all other costs which are huge) to run a team of 5 people is enough to make us ex military types (and probably most investors) want to cry...
7. Rationalise the fleet. Give customers idle new ac and get rid of legacy types. Painful again but the hidden costs of having the logistics and spares etc for old etch ac will mitigate a lot of that and customers will be happy they got something for nothing. Then kill off the old types, sell, mothball whatever.
I like this thread. Corporate turnaround, PPrune style.
Last edited by nowherespecial; 24th Mar 2015 at 11:06. Reason: Added point 7
Assuming the CHC profit cross section is similar to the other large operators then exploration accounts for significantly more than 20% of their profits
CHC IRAN
I wonder if the return of Iran to the club will provide a lifeline ?
Only 3 months to wait and the North and South coasts of Iran will be ready for development again.
May work for CHC , as Bristow can't go back in.
Only 3 months to wait and the North and South coasts of Iran will be ready for development again.
May work for CHC , as Bristow can't go back in.
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CHC buying back and retreating from the stock market?
Looks like CHC are attempting to buy back shares from the shareholders according to latest on Yahoo Finance. Is this an attempt to bring it back under their own control and away from the investors who probably do not serve CHC’s best interests? An interesting and brave move by the new management. Could be exactly what CHC needed. Getting more control back over their own affairs and business might allow them to be more forward looking and less at the mercy of the short term gain orientated shareholders. It might just allow those who understand the industry and its complexities to make more decisions that will affect the long term strategy. The new leadership has a long way to go still to prove themselves, but if they are moving away from the LEAN and "save money at all costs” culture, they can begin to invest again in the short term for longer term stability, and this can only be a positive move. The squeeze has been tight recently and they have been more focussed on accounts than people, so maybe this is on the turn. Ultimately it is the people in any company that will make it a success. Look after them and the pathway is being laid for a more successful future. Hopefully a new more positive time ahead for CHC?
I'm not sure what you are reading but I don't see any equity buyback.
You may have read this? :-
News - CHC Helicopter
but that is simply it buying its own debt, the tradable equities in CHC are now broadly tracking the price of crude, but remain as depressed as ever - the stock closed at $1.24 and actually its not really traded that widely because liquidity is very poor in the name (for example it traded $500k worth all day yesterday).
What is the most concerning thing about this name is that its operating in an environment that is in a current downturn with an executive whose longest tenure is 1.5 years and Joan Hooper the CFO (Chief Financial Officer) holds a total of 80k shares and it would seem most of those come from options due to an employment contract! So that's how much she believes in the stock - her current disclosed compensation for 2014 was $1.7mil and she holds $107k of CHC common equity.
Joan if you believe in your company buy the stock!
You may have read this? :-
News - CHC Helicopter
but that is simply it buying its own debt, the tradable equities in CHC are now broadly tracking the price of crude, but remain as depressed as ever - the stock closed at $1.24 and actually its not really traded that widely because liquidity is very poor in the name (for example it traded $500k worth all day yesterday).
What is the most concerning thing about this name is that its operating in an environment that is in a current downturn with an executive whose longest tenure is 1.5 years and Joan Hooper the CFO (Chief Financial Officer) holds a total of 80k shares and it would seem most of those come from options due to an employment contract! So that's how much she believes in the stock - her current disclosed compensation for 2014 was $1.7mil and she holds $107k of CHC common equity.
Joan if you believe in your company buy the stock!
Pitts is right, buying your own debt is a good way to save money as you no longer pay interest money to external parties and can thus spend on other things. If you have cash to spare, makes good sense, esp on the notes they are buying at 9.375% interest.