State of the Industry
More bad news: https://helihub.com/2020/08/06/brist...News+Update%29
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This is an interesting article, as it demonstrates the strategies that a business might utilize in a fight to grow market share in a shrinking market, put a Competitor out of business, or drive further consolidation through the acquisition of Babcock by an Organization even more desperate to remain in business than Babcock's stated goal of getting out of it. It is always worth considering that having a contract and operating it at a loss may be a better (cheaper) option than owning the assets and infrastucture and continuing to pay the cost of maintaining, insuring, and staffing it, with no revenue generation. This may trigger the next consolidation round, as the simplest mechanism to maintain pricing, is to reduce excess capacity and limit the Competition in the marketplace. It may be too late to recover the pricing in the short term, but just still being in business may be the ultimate survival goal of all the offshore operators. It's really starting to have major impacts now, beyond all the incredible things that have already happened in the last couple of years, and the almost unbelievable things that have happened so far this year. https://www.energyvoice.com/oilandga...pter-contract/
14/10/2020, 12:01 am
© Babcock
Babcock has started a North Sea helicopter contract with Total which rival CHC criticised as “unsustainable pricing”.
In August, Babcock won the long-term contract from CHC to transport Total workers to its central North Sea platforms.
The US helicopter firm took a thinly-veiled swipe at Total over loss of the work, saying “unsustainable pricing, will ultimately see an end to future industry investment in technology, safety improvements and the next generation of engineers and pilots.”
Babcock has now started flights using its fleet of S-92 helicopters, with over a hundred men and women having safely been flown offshore in the first week.
Contract performance manager Michelle Innes said: “It’s great to see this contract get underway smoothly and efficiently. We’re looking forward to continuing to work with Total for years to come.”
Babcock is an established helicopter operator and Total already has first-hand experience of working with the company in the UK North Sea.
Flights to the Culzean and Gryphon fields are currently provided by Babcock under a separate agreement. Total has operated both fields since its acquisition of Maersk Oil in 2018.
Babcock will begin another contract to transport Total workers in Denmark in January, which has also been subject to criticism.
NHV, which lost out on the Danish deal, said in August that Babcock and Total were engaging “in a race to the bottom”.
Despite not having a presence in Denmark, Babcock undercut NHV in its bid, including the promise of new aircraft.
NHV CEO Steffan Bay said: “What I can say is that Total got what they wanted, even cheaper rates than they already had.
“Similar to CHC we had to give concessions to Total in the past, so it was not a very profitable contract for us anyway, hence the surprise that Babcock could perform it at even lower rates.”
Babcock did not respond to either CHC or NHV’s remarks.
Babcock begins Total helicopter contract after rivals criticised ‘unsustainable pricing’
Babcock has started a North Sea helicopter contract with Total which rival CHC criticised as “unsustainable pricing”.by Allister Thomas14/10/2020, 12:01 am
© Babcock
Babcock has started a North Sea helicopter contract with Total which rival CHC criticised as “unsustainable pricing”.In August, Babcock won the long-term contract from CHC to transport Total workers to its central North Sea platforms.
The US helicopter firm took a thinly-veiled swipe at Total over loss of the work, saying “unsustainable pricing, will ultimately see an end to future industry investment in technology, safety improvements and the next generation of engineers and pilots.”
Babcock has now started flights using its fleet of S-92 helicopters, with over a hundred men and women having safely been flown offshore in the first week.
Contract performance manager Michelle Innes said: “It’s great to see this contract get underway smoothly and efficiently. We’re looking forward to continuing to work with Total for years to come.”
Babcock is an established helicopter operator and Total already has first-hand experience of working with the company in the UK North Sea.
Flights to the Culzean and Gryphon fields are currently provided by Babcock under a separate agreement. Total has operated both fields since its acquisition of Maersk Oil in 2018.
Babcock will begin another contract to transport Total workers in Denmark in January, which has also been subject to criticism.
NHV, which lost out on the Danish deal, said in August that Babcock and Total were engaging “in a race to the bottom”.
Despite not having a presence in Denmark, Babcock undercut NHV in its bid, including the promise of new aircraft.
NHV CEO Steffan Bay said: “What I can say is that Total got what they wanted, even cheaper rates than they already had.
“Similar to CHC we had to give concessions to Total in the past, so it was not a very profitable contract for us anyway, hence the surprise that Babcock could perform it at even lower rates.”
Babcock did not respond to either CHC or NHV’s remarks.
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[QUOTE
NHV, which lost out on the Danish deal, said in August that Babcock and Total were engaging “in a race to the bottom”.
Despite not having a presence in Denmark, Babcock undercut NHV in its bid, including the promise of new aircraft.
NHV CEO Steffan Bay said: “What I can say is that Total got what they wanted, even cheaper rates than they already had.
“Similar to CHC we had to give concessions to Total in the past, so it was not a very profitable contract for us anyway, hence the surprise that Babcock could perform it at even lower rates.”
Babcock did not respond to either CHC or NHV’s remarks.[/QUOTE]
What REALLY amuses me is that the ones who actually initiated the race to the bottom in the North Sea running contracts at a loss (ie Den Helder with Wintershall for example) now are criticizing the competitors.....go figure......
NHV, which lost out on the Danish deal, said in August that Babcock and Total were engaging “in a race to the bottom”.
Despite not having a presence in Denmark, Babcock undercut NHV in its bid, including the promise of new aircraft.
NHV CEO Steffan Bay said: “What I can say is that Total got what they wanted, even cheaper rates than they already had.
“Similar to CHC we had to give concessions to Total in the past, so it was not a very profitable contract for us anyway, hence the surprise that Babcock could perform it at even lower rates.”
Babcock did not respond to either CHC or NHV’s remarks.[/QUOTE]
What REALLY amuses me is that the ones who actually initiated the race to the bottom in the North Sea running contracts at a loss (ie Den Helder with Wintershall for example) now are criticizing the competitors.....go figure......
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With the Bristow financials released last week, they don't paint a particularly rosy picture and in fact, look very similar to the information that was coming from the pre-merger Bristow. The stark realities of how much cash and assets are left and how fast they are burning through it, reveals that little has changed in the realm of business overhead, and the realities of a finite survival strategy which is now pretty much "all-in". It's a very challenging time for the entire O&G industry, which coupled with Covid, makes for an extremely challenging environment just to survive. Who's going to be next to Merge?
https://www.bristowgroup.com/investo...r-2021-results
https://d1io3yog0oux5.cloudfront.net...ion%281%29.pdf
https://www.ainonline.com/aviation-n...licopters-2021
- February 8, 2021, 6:37 PM
Global helicopter services company Bristow Group announced a widening net loss in the fourth quarter and confirmed its intention to seek $400 million in new financing to pay down high-cost debt, some of which comes due in 2022. CEO Chris Bradshaw also said he didn’t see Bristow’s core offshore energy business improving until next year.
The new debt will be secured by 93 pledged aircraft from its fleet and “substantially all of the other tangible and intangible property assets of the company.” Debt proceeds combined with company cash will be used to repay term loans of $152 million from Macquarie Bank and $203.9 million from Apollo unit PK AirFinance, as well as $132 million in 7.75 percent senior notes due next year.
For the quarter, Bristow posted a loss of $57.1 million on operating revenues of $300.3 million, compared to a loss of $27.9 million on revenues of $295.7 million in the preceding quarter. Almost all of Bristow’s most recent quarterly losses were attributed to “impairment charges” related to the company’s investment in Canada’s Cougar Helicopters ($51.9 million) and helicopters held for sale ($1.4 million). That compared to impairment losses of $17.6 million in the preceding quarter related to inventory write-down and helicopters held for sale.
Bristow is continuing to “right-size” its aircraft inventory, disposing of five Sikorsky S-76C++ medium, two Bell B412 medium, and seven Bell B407 single-engine helicopters, in addition to one Airbus H225 simulator, for cash proceeds of $14.4 million. During the preceding quarter, the company sold 10 Airbus H225 heavy, nine S-76C++ medium, and 12 Bell 407 single-engine helicopters for cash proceeds of $40.5 million.
Despite the most recent losses, Bristow ended the calendar year with $345 million in “total liquidity” and CEO Chris Bradshaw said the company was moving in a positive direction. “The company continues to make significant integration progress following the merger of Era and Bristow in June 2020. We are pleased to announce a further increase in the amount of identified synergies to at least $50 million of annualized cost savings, of which projects representing $27 million of annualized synergies have already been completed," he said.
Bradshaw said he didn’t expect President Biden’s recent executive orders suspending new oil and gas leases on federal lands/in federal waters to have a material impact on the company as its current offshore activities are heavily weighted on supporting existing production. Offshore is not likely to increase this year, he said, but is primed for a rebound in 2022, he told stock analysts.
“For calendar 2021, we're really not counting on any broad-based significant increase above where things are today…Where we start to be more constructive on additional spending from our customer base is in 2022 and beyond. We know there needs to be another spending cycle here because today's level of underinvestment is not sustainable. It's going to result in higher commodity prices and that we'll see we think more dollars go to work in deepwater projects around the world and that should benefit our business.”
According to Bradshaw, the industry could benefit from further consolidation and continued development of offshore wind power. “We continue to believe that the industry needs and would benefit from additional consolidation," he commented. "A lot of the rationale that underpins the logic of the Bristow Era merger would apply in other combinations in different parts of the world where there is an excess amount of capacity, too much equipment, too many operators.”
With regard to offshore wind, Bradshaw called it a “strategic priority” for Bristow, particularly in Europe, and that the U.S. market would likely develop later. “We do not have any exposure in the U.S., that's because the one operating wind farm today is so close to shore that it's supported by boats, but the new wind farms that are scheduled to be developed are going to require offshore helicopter support.”
https://www.bristowgroup.com/investo...r-2021-results
https://d1io3yog0oux5.cloudfront.net...ion%281%29.pdf
https://www.ainonline.com/aviation-n...licopters-2021
Bristow Sees No Recovery for Offshore Helicopters in 2021
by Mark Huber- February 8, 2021, 6:37 PM
Global helicopter services company Bristow Group announced a widening net loss in the fourth quarter and confirmed its intention to seek $400 million in new financing to pay down high-cost debt, some of which comes due in 2022. CEO Chris Bradshaw also said he didn’t see Bristow’s core offshore energy business improving until next year. The new debt will be secured by 93 pledged aircraft from its fleet and “substantially all of the other tangible and intangible property assets of the company.” Debt proceeds combined with company cash will be used to repay term loans of $152 million from Macquarie Bank and $203.9 million from Apollo unit PK AirFinance, as well as $132 million in 7.75 percent senior notes due next year.
For the quarter, Bristow posted a loss of $57.1 million on operating revenues of $300.3 million, compared to a loss of $27.9 million on revenues of $295.7 million in the preceding quarter. Almost all of Bristow’s most recent quarterly losses were attributed to “impairment charges” related to the company’s investment in Canada’s Cougar Helicopters ($51.9 million) and helicopters held for sale ($1.4 million). That compared to impairment losses of $17.6 million in the preceding quarter related to inventory write-down and helicopters held for sale.
Bristow is continuing to “right-size” its aircraft inventory, disposing of five Sikorsky S-76C++ medium, two Bell B412 medium, and seven Bell B407 single-engine helicopters, in addition to one Airbus H225 simulator, for cash proceeds of $14.4 million. During the preceding quarter, the company sold 10 Airbus H225 heavy, nine S-76C++ medium, and 12 Bell 407 single-engine helicopters for cash proceeds of $40.5 million.
Despite the most recent losses, Bristow ended the calendar year with $345 million in “total liquidity” and CEO Chris Bradshaw said the company was moving in a positive direction. “The company continues to make significant integration progress following the merger of Era and Bristow in June 2020. We are pleased to announce a further increase in the amount of identified synergies to at least $50 million of annualized cost savings, of which projects representing $27 million of annualized synergies have already been completed," he said.
Bradshaw said he didn’t expect President Biden’s recent executive orders suspending new oil and gas leases on federal lands/in federal waters to have a material impact on the company as its current offshore activities are heavily weighted on supporting existing production. Offshore is not likely to increase this year, he said, but is primed for a rebound in 2022, he told stock analysts.
“For calendar 2021, we're really not counting on any broad-based significant increase above where things are today…Where we start to be more constructive on additional spending from our customer base is in 2022 and beyond. We know there needs to be another spending cycle here because today's level of underinvestment is not sustainable. It's going to result in higher commodity prices and that we'll see we think more dollars go to work in deepwater projects around the world and that should benefit our business.”
According to Bradshaw, the industry could benefit from further consolidation and continued development of offshore wind power. “We continue to believe that the industry needs and would benefit from additional consolidation," he commented. "A lot of the rationale that underpins the logic of the Bristow Era merger would apply in other combinations in different parts of the world where there is an excess amount of capacity, too much equipment, too many operators.”
With regard to offshore wind, Bradshaw called it a “strategic priority” for Bristow, particularly in Europe, and that the U.S. market would likely develop later. “We do not have any exposure in the U.S., that's because the one operating wind farm today is so close to shore that it's supported by boats, but the new wind farms that are scheduled to be developed are going to require offshore helicopter support.”
"During the preceding quarter, the company sold 10 Airbus H225 heavy, nine S-76C++ medium, and 12 Bell 407 single-engine helicopters for cash proceeds of $40.5 million."
Surely that can't be correct, can it? If so, I can see why they're bleeding money.
Surely that can't be correct, can it? If so, I can see why they're bleeding money.
There would have been a time when 10 x H225’s was worth >$200 million?
Key words are "cash proceeds". Sold aircraft were probably mortgaged, so that has to be paid off.
Key words are "cash proceeds". Sold aircraft were probably mortgaged, so that has to be paid off.
Last edited by industry insider; 12th Feb 2021 at 09:17.
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Major activity in the Leasing business today. It looks like this deal may actually be executed after the previous attempts became unglued prior to concluding. Still an awful lot of impaired asset values, no matter the spin you put on it. The GECAS-Milestone relationship is obviously one of the important ones from the helicopter side, as well as the CHC angle from the assistance with the exit from Chapter 11. The helicopter business shrinks into insignificance in the overall scale and impact of a deal of this magnitude but is still an important feature due to the large number of parked and devalued helicopters within the portfolio.
https://www.aerotime.aero/27414-aercap-gecas-merger
on 8th March 2021
Image : AerCap
RYTIS BERESNEVICIUS
?subject=Merger%20of%20biggest%20lea...p-gecas-mergerGeneral Electric (GE) is near a deal to merge its aircraft leasing subsidiary General Electric Capital Aviation Services (GECAS) with AerCap, another leading aircraft leasing company.
The deal, estimated to have a market valuation of around $30 billion, would combine GE’s aircraft leasing arm GECAS and AerCap, an Ireland-based aircraft lessor. The two companies are one of the largest aircraft lessors in the market, as GECAS owns or has on order approximately 1,650 airctaft. Meanwhile, AerCap, which also acquired International Lease Finance Corporation (ILFC) in 2014 to grow into one of the leading companies in the market, with 939 owned and 286 aircraft on order.
The two companies should announce the deal, if it will happen, on March 8, 2021, reported the Wall Street Journal (WSJ), citing sources familiar with the matter.
Aircraft lessors suffered throughout the COVID-19-induced crisis, as drying revenue streams within airlines have resulted in pleas to defer lease payments. As of January 2021, GECAS has a $400 million deferral balance, as customers have paid 84% of their invoices. In addition, the leasing company had 27 Aircraft on Ground (AOG), which was primarily driven by repossessions, according to GE’s latest financial results announcement. GECAS ended 2020 with a loss of $786 million, including an $836 million Goodwill charge booked at the end of Q2 2020. A year prior, the aircraft lessor ended 2019 with a net profit of $1 billion.
AerCap ended the year with a net loss of $299 million, while in 2019, it managed to achieve a net profit of $1.1 billion. Comparing the results of the two years, AerCap lost $519 million of revenue alone. Furthermore, it had to write-off a $1 billion asset impairment charge that was “related to lease terminations and sales transactions and were partially offset by related maintenance revenue,” read the company’s 2020 result announcement.
Nevertheless, 2020 still had a few bright spots for aircraft leasing companies as 49.6% of the world’s active aircraft were operated under an operating lease, increasing by 1.8%, inching ever closer to the 50% mark, according to Cirium Fleets Analyzer Data. Furthermore, Sale and Leaseback (SLB) active was relatively similar to levels seen in 2019, despite the fact that during 2020, manufacturers delivered fewer new aircraft and the absolute aircraft fleet has not grown in size.
Still, out of lessors with more than 50 aircraft in its fleet, neither AerCap nor GECAS had more than 65% of its aircraft active as of February 2021, ch-aviation.com data pointed out. To further complicate the situation, Ascend by Cirium analysis pointed out that the aviation industry will see a significant feet surplus through late-2022 at best, minimizing opportunities for lessors to remarket their aircraft.
https://www.aerotime.aero/27414-aercap-gecas-merger
on 8th March 2021Image : AerCap
RYTIS BERESNEVICIUS
Merger of biggest leasing companies GECAS and AerCap on the horizon?
Share this news ?subject=Merger%20of%20biggest%20lea...p-gecas-mergerGeneral Electric (GE) is near a deal to merge its aircraft leasing subsidiary General Electric Capital Aviation Services (GECAS) with AerCap, another leading aircraft leasing company.The deal, estimated to have a market valuation of around $30 billion, would combine GE’s aircraft leasing arm GECAS and AerCap, an Ireland-based aircraft lessor. The two companies are one of the largest aircraft lessors in the market, as GECAS owns or has on order approximately 1,650 airctaft. Meanwhile, AerCap, which also acquired International Lease Finance Corporation (ILFC) in 2014 to grow into one of the leading companies in the market, with 939 owned and 286 aircraft on order.
The two companies should announce the deal, if it will happen, on March 8, 2021, reported the Wall Street Journal (WSJ), citing sources familiar with the matter.
Aircraft lessors suffered throughout the COVID-19-induced crisis, as drying revenue streams within airlines have resulted in pleas to defer lease payments. As of January 2021, GECAS has a $400 million deferral balance, as customers have paid 84% of their invoices. In addition, the leasing company had 27 Aircraft on Ground (AOG), which was primarily driven by repossessions, according to GE’s latest financial results announcement. GECAS ended 2020 with a loss of $786 million, including an $836 million Goodwill charge booked at the end of Q2 2020. A year prior, the aircraft lessor ended 2019 with a net profit of $1 billion.
AerCap ended the year with a net loss of $299 million, while in 2019, it managed to achieve a net profit of $1.1 billion. Comparing the results of the two years, AerCap lost $519 million of revenue alone. Furthermore, it had to write-off a $1 billion asset impairment charge that was “related to lease terminations and sales transactions and were partially offset by related maintenance revenue,” read the company’s 2020 result announcement.
Nevertheless, 2020 still had a few bright spots for aircraft leasing companies as 49.6% of the world’s active aircraft were operated under an operating lease, increasing by 1.8%, inching ever closer to the 50% mark, according to Cirium Fleets Analyzer Data. Furthermore, Sale and Leaseback (SLB) active was relatively similar to levels seen in 2019, despite the fact that during 2020, manufacturers delivered fewer new aircraft and the absolute aircraft fleet has not grown in size.
Still, out of lessors with more than 50 aircraft in its fleet, neither AerCap nor GECAS had more than 65% of its aircraft active as of February 2021, ch-aviation.com data pointed out. To further complicate the situation, Ascend by Cirium analysis pointed out that the aviation industry will see a significant feet surplus through late-2022 at best, minimizing opportunities for lessors to remarket their aircraft.
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MIlestone under new ownership as well.
https://www.swfinstitute.org/news/85...ation-services
AerCap Holdings N.V. (NYSE: AER), a major company in the aircraft leasing space entered into a definitive agreement with General Electric (NYSE:GE) under which AerCap will acquire 100% of GE Capital Aviation Services (“GECAS”), a GE business.
The combined company will have over 2,000 owned and managed aircraft, over 900 owned and managed engines, over 300 owned helicopters and approximately 300 customers around the world. The deal between Ireland’s AerCap and GECAS would create the largest buyer of Airbus and Boeing planes.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of AerCap and GE, GE will receive 111.5 million newly issued AerCap shares, US$ 24 billion of cash and US$ 1 billion of AerCap notes and/or cash. Upon completion of the transaction, GE is expected to own approximately 46% of the combined company and will be entitled to nominate two directors to the AerCap Board of Directors.
GE will transfer US$ 34 billion of GECAS’ net assets, including its engine leasing and Milestone helicopter leasing businesses, to AerCap. Current GECAS purchase obligations will transfer to AerCap, and GECAS’ more than 400 employees also will transfer to AerCap upon completion of the transaction.
Citi and Goldman Sachs have provided AerCap with US$ 24 billion of committed financing for the transaction.
AerCap expects to maintain its current investment grade credit ratings with S&P, Moody’s, and Fitch Ratings.
The transaction is subject to approval by AerCap shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to close in the fourth quarter of 2021. The combined company will retain the name AerCap, and GECAS will become a business of AerCap.
GE claims the transaction simplifies GE and focuses it on its industrial core—Power, Renewable Energy, Aviation, and Healthcare—while significantly reducing GE Capital assets and generating proceeds to further de-risk and de-lever.
PJT Partners LP, Goldman Sachs, and Evercore acted as financial advisors, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, Clifford Chance LLP, and A&L Goodbody acted as legal advisors to GE on the transaction.
https://www.swfinstitute.org/news/85...ation-services
AerCap Holdings to Buy GE Capital Aviation Services
Posted on 03/10/2021AerCap Holdings N.V. (NYSE: AER), a major company in the aircraft leasing space entered into a definitive agreement with General Electric (NYSE:GE) under which AerCap will acquire 100% of GE Capital Aviation Services (“GECAS”), a GE business.
The combined company will have over 2,000 owned and managed aircraft, over 900 owned and managed engines, over 300 owned helicopters and approximately 300 customers around the world. The deal between Ireland’s AerCap and GECAS would create the largest buyer of Airbus and Boeing planes.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of AerCap and GE, GE will receive 111.5 million newly issued AerCap shares, US$ 24 billion of cash and US$ 1 billion of AerCap notes and/or cash. Upon completion of the transaction, GE is expected to own approximately 46% of the combined company and will be entitled to nominate two directors to the AerCap Board of Directors.
GE will transfer US$ 34 billion of GECAS’ net assets, including its engine leasing and Milestone helicopter leasing businesses, to AerCap. Current GECAS purchase obligations will transfer to AerCap, and GECAS’ more than 400 employees also will transfer to AerCap upon completion of the transaction.
Citi and Goldman Sachs have provided AerCap with US$ 24 billion of committed financing for the transaction.
AerCap expects to maintain its current investment grade credit ratings with S&P, Moody’s, and Fitch Ratings.
The transaction is subject to approval by AerCap shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to close in the fourth quarter of 2021. The combined company will retain the name AerCap, and GECAS will become a business of AerCap.
GE claims the transaction simplifies GE and focuses it on its industrial core—Power, Renewable Energy, Aviation, and Healthcare—while significantly reducing GE Capital assets and generating proceeds to further de-risk and de-lever.
Advisors
Citi and Morgan Stanley acted as financial advisors to AerCap. Cravath, Swaine & Moore LLP, NautaDutilh NV and McCann Fitzgerald acted as legal advisors to AerCap.PJT Partners LP, Goldman Sachs, and Evercore acted as financial advisors, and Paul, Weiss, Rifkind, Wharton & Garrison LLP, Clifford Chance LLP, and A&L Goodbody acted as legal advisors to GE on the transaction.