Babcock offshore contract.
Thread Starter
Join Date: Jun 2012
Location: Devon
Age: 66
Posts: 91
Babcock offshore contract.
Babcock new contract.
https://www.energyvoice.com/oilandga...orth-sea-deal/
https://www.energyvoice.com/oilandga...orth-sea-deal/
Join Date: Feb 2003
Location: Aberdeen
Age: 51
Posts: 237
Join Date: Sep 2010
Location: ...in sight of palmtrees
Age: 40
Posts: 103
Originally Posted by tu154
Was it the contract previously held by NHV Denmark? (at least for the danish part)
Join Date: Nov 2008
Location: UK
Posts: 88
I thought Babcock were finished in the Offshore O&G market?
I believe they have taken the TOTAL contract from CHC, a contract CHC had held for 25yrs.
Something drastic must have happened for CHC to lose such a long-standing contract. Either they are coming in too high on price (I would think unlikely in current market) or others are coming in too low and are onto inevitable loss making contracts just to keep some of their birds flying.
The downwards spiral continues. Saying that, great result for Babcock if they can make the contract profitable.
Devils advocate here though, I really hope the cost cutting measures from these oil companies into driving aviation to the bottom doesn’t affect safety as statistically speaking when looking at incidents and accidents in the North Sea over the last 10-15yrs, we are overdue an accident or serious incident now.
I believe they have taken the TOTAL contract from CHC, a contract CHC had held for 25yrs.
Something drastic must have happened for CHC to lose such a long-standing contract. Either they are coming in too high on price (I would think unlikely in current market) or others are coming in too low and are onto inevitable loss making contracts just to keep some of their birds flying.
The downwards spiral continues. Saying that, great result for Babcock if they can make the contract profitable.
Devils advocate here though, I really hope the cost cutting measures from these oil companies into driving aviation to the bottom doesn’t affect safety as statistically speaking when looking at incidents and accidents in the North Sea over the last 10-15yrs, we are overdue an accident or serious incident now.
Join Date: Jun 2005
Location: nowhere special
Posts: 404
My 10c worth here is that CHC and Babcock bid at the same profitability rates but B's overall lower cost structure from a cost of aircraft and corporate credit card perspective won the day. CHC's post Ch 11 strategy is to only take contracts they can make money on. It's just that their level of 'make money' is higher than some others. Seeing as no one has that many spare aircraft anymore, you would certainly hope that bidding is becoming more and more rational.
Join Date: Nov 2009
Location: southern half
Age: 34
Posts: 29
June 2020: But speaking on a full-year results call on 11 June, Babcock chief executive Archie Bethel said the “major problem area” in its aviation division “continues to be the offshore oil and gas business”.
“When you combine this with the likely impact of Covid-19, we no longer believe this to be an attractive long-term market for Babcock,” he says.
Bethel had warned in the February trading update that it did “not intend to invest further to stay in that [offshore] market” and said it would not chase the low pricing of its rivals, most of which had shed debts via US Chapter 11 bankruptcy protection.
August 2020: "We are committed to the offshore market "
...and I'll bet undercut CHC to get it.
“When you combine this with the likely impact of Covid-19, we no longer believe this to be an attractive long-term market for Babcock,” he says.
Bethel had warned in the February trading update that it did “not intend to invest further to stay in that [offshore] market” and said it would not chase the low pricing of its rivals, most of which had shed debts via US Chapter 11 bankruptcy protection.
August 2020: "We are committed to the offshore market "
...and I'll bet undercut CHC to get it.
Join Date: Mar 2016
Location: N of 49th parallel
Posts: 167
Originally Posted by Unregistered_
...and I'll bet undercut CHC to get it.
nowherespecial is probably on the money. CHC's overhead is still too large and that has to be paid for. The US based part of the organisation needs to be dismantled and a lean European based overhead established. If they don't do this then the European operations will always be carrying a financial disadvantage when bidding for work.
Join Date: Jul 2002
Location: UK
Posts: 2,837
Originally Posted by Chpprd
There is a piece on the Air & Sea Analytics website today with the NHV view
Join Date: Oct 2019
Location: York
Posts: 15
Sounds about right. It is fairly clear that Babcock bid on and were awarded the IAC contract in Shetland, and seemed to have no idea what they had won. They clearly bid cheap on a speculative finger in the air assessment, and then seemed shocked that they had won it, that it came with staff, that the salaries were more than they wanted to pay, that there was a new airfield that they had to set up and that they were not going to be able to make money doing it.
No wonder the big bosses at Babcock Group are getting frustrated!
No wonder the big bosses at Babcock Group are getting frustrated!
Join Date: Dec 2007
Location: UK
Posts: 389
Originally Posted by SpindleBob
Sounds about right. It is fairly clear that Babcock bid on and were awarded the IAC contract in Shetland, and seemed to have no idea what they had won. They clearly bid cheap on a speculative finger in the air assessment, and then seemed shocked that they had won it, that it came with staff, that the salaries were more than they wanted to pay, that there was a new airfield that they had to set up and that they were not going to be able to make money doing it.
No wonder the big bosses at Babcock Group are getting frustrated!
No wonder the big bosses at Babcock Group are getting frustrated!
That comment alone goes to show you havent a clue what you are typing.
Join Date: Mar 2016
Location: N of 49th parallel
Posts: 167
Originally Posted by helicrazi
New airfield to set up???
That comment alone goes to show you havent a clue what you are typing.
That comment alone goes to show you havent a clue what you are typing.
Archie Bithell's comments regarding the O&G part of Babcock were made before the Consortium and Total wins, so they were not related to these contracts. Big Babcock have written off a substantial amount of assett value and debt that would have been hampering the ability to bid competatively. This is no different really to what Bristow and CHC have done with their CHapter 11 filings, just not as clean and tidy from a business perspective. Perhaps it was this moving of debt that has enabled Babcock to be more competative over the last few months and win some work?
Rumour has it that the CHC boss admitted yesterday in a staff briefing that they bid with no profit margin (at a loss?) and still lost the work. So who was trying to undermine the market? A simlar comment was made during the UK SAR bid that Bristow won and CHC was excluded from on price. Bristow must have bid at a loss!! Or are CHCs overhead costs still way too high?
Join Date: Nov 2008
Location: UK
Posts: 88
With Babcock having to create a new AOC along with a new base and setup and what appears to be a significantly low bid for the work then this surely will be a HUGE loss making contract for them.
Where is the logic? To see the accounts in 2-3yrs time showing significant losses?
I sense there will be disappointment in the CHC and NHV camps but also a relief from a financial perspective.
Interesting to read that Shell make sure that there is a profit margin available for the operator.
Where is the logic? To see the accounts in 2-3yrs time showing significant losses?
I sense there will be disappointment in the CHC and NHV camps but also a relief from a financial perspective.
Interesting to read that Shell make sure that there is a profit margin available for the operator.
Join Date: Oct 2019
Location: York
Posts: 15
Haven't logged in for a few days - Surprised to see so much criticism.
OK, when I said new base to set up, I mean that the IAC has run out of Scatsta for many years - It will now have to run out of Sumburgh. There's a fair bit to set up.
But it was evident that Babcock really hadn't planned ahead for this. They didn't seem to have an idea how the contract was run by Bristow. They told all their staff that 'its fine - TUPE won't apply'. They hired new pilots. There was a level of arrogance about their whole bid. This is a contract that has been bid on remarkably cheaply and now they are asking the pilots to take a cut, because they cannot afford this new work they have just won.
Big Babcock put out two Statements to say they were pulling out of the O&G market. One just before winning the IAC and the second, not long before winning Total. OK, so the managers have run around trying to convince staff that the barn isn't on fire, and perhaps they have managed to convince the clients too, but personally I suspect the clients don't care too much, so long as they are getting a cheap service.
So do I really not have a clue what I'm typing?? Does anyone here really think that Babcock can make a profit on either of these two contracts?? The various incumbent companies had held the work for several years, so we can assume that the profit margins had gradually been eroded and they weren't major money makers by the end - So the idea that someone has undercut the existing contracts and despite significant start up costs, can supposedly deliver a profit making service?? I just don't see how that is plausible
OK, when I said new base to set up, I mean that the IAC has run out of Scatsta for many years - It will now have to run out of Sumburgh. There's a fair bit to set up.
But it was evident that Babcock really hadn't planned ahead for this. They didn't seem to have an idea how the contract was run by Bristow. They told all their staff that 'its fine - TUPE won't apply'. They hired new pilots. There was a level of arrogance about their whole bid. This is a contract that has been bid on remarkably cheaply and now they are asking the pilots to take a cut, because they cannot afford this new work they have just won.
Big Babcock put out two Statements to say they were pulling out of the O&G market. One just before winning the IAC and the second, not long before winning Total. OK, so the managers have run around trying to convince staff that the barn isn't on fire, and perhaps they have managed to convince the clients too, but personally I suspect the clients don't care too much, so long as they are getting a cheap service.
So do I really not have a clue what I'm typing?? Does anyone here really think that Babcock can make a profit on either of these two contracts?? The various incumbent companies had held the work for several years, so we can assume that the profit margins had gradually been eroded and they weren't major money makers by the end - So the idea that someone has undercut the existing contracts and despite significant start up costs, can supposedly deliver a profit making service?? I just don't see how that is plausible
Join Date: Dec 2009
Location: Moo moo land
Posts: 299
Im pretty sure this was only a NHV contract due to the take over of Dancopter,
Correct me if im wrong but I dont think NHV won this contract ever, So its a bit of a pointless opinion from NHV. They will have bid it on old dancopter expensive rates.
Never seen a contract price go up.
Correct me if im wrong but I dont think NHV won this contract ever, So its a bit of a pointless opinion from NHV. They will have bid it on old dancopter expensive rates.
Never seen a contract price go up.
Join Date: Dec 2007
Location: UK
Posts: 389
Originally Posted by SpindleBob
Haven't logged in for a few days - Surprised to see so much criticism.
OK, when I said new base to set up, I mean that the IAC has run out of Scatsta for many years - It will now have to run out of Sumburgh. There's a fair bit to set up.
But it was evident that Babcock really hadn't planned ahead for this. They didn't seem to have an idea how the contract was run by Bristow. They told all their staff that 'its fine - TUPE won't apply'. They hired new pilots. There was a level of arrogance about their whole bid. This is a contract that has been bid on remarkably cheaply and now they are asking the pilots to take a cut, because they cannot afford this new work they have just won.
Big Babcock put out two Statements to say they were pulling out of the O&G market. One just before winning the IAC and the second, not long before winning Total. OK, so the managers have run around trying to convince staff that the barn isn't on fire, and perhaps they have managed to convince the clients too, but personally I suspect the clients don't care too much, so long as they are getting a cheap service.
So do I really not have a clue what I'm typing?? Does anyone here really think that Babcock can make a profit on either of these two contracts?? The various incumbent companies had held the work for several years, so we can assume that the profit margins had gradually been eroded and they weren't major money makers by the end - So the idea that someone has undercut the existing contracts and despite significant start up costs, can supposedly deliver a profit making service?? I just don't see how that is plausible
OK, when I said new base to set up, I mean that the IAC has run out of Scatsta for many years - It will now have to run out of Sumburgh. There's a fair bit to set up.
But it was evident that Babcock really hadn't planned ahead for this. They didn't seem to have an idea how the contract was run by Bristow. They told all their staff that 'its fine - TUPE won't apply'. They hired new pilots. There was a level of arrogance about their whole bid. This is a contract that has been bid on remarkably cheaply and now they are asking the pilots to take a cut, because they cannot afford this new work they have just won.
Big Babcock put out two Statements to say they were pulling out of the O&G market. One just before winning the IAC and the second, not long before winning Total. OK, so the managers have run around trying to convince staff that the barn isn't on fire, and perhaps they have managed to convince the clients too, but personally I suspect the clients don't care too much, so long as they are getting a cheap service.
So do I really not have a clue what I'm typing?? Does anyone here really think that Babcock can make a profit on either of these two contracts?? The various incumbent companies had held the work for several years, so we can assume that the profit margins had gradually been eroded and they weren't major money makers by the end - So the idea that someone has undercut the existing contracts and despite significant start up costs, can supposedly deliver a profit making service?? I just don't see how that is plausible
Very little set up in sumburgh, babcock has always (give or take) operated out of there in 1 form or another, but operated CAT flights from there as a base for about 5 years
Join Date: Nov 2008
Location: UK
Posts: 88
Originally Posted by helicrazi
Who says babcock was cheapest? I wasnt aware you were privy to the tenders
Very little set up in sumburgh, babcock has always (give or take) operated out of there in 1 form or another, but operated CAT flights from there as a base for about 5 years
Very little set up in sumburgh, babcock has always (give or take) operated out of there in 1 form or another, but operated CAT flights from there as a base for about 5 years
The other part of the work was in Denmark, do they have a Danish AOC? Do they have facilities, staff and infrastructure in place in Denmark? Startup costs for all that?
Appears TOTAL have been negligent to me, greed getting the better of them and if that results in serious safety concerns then the blame lies with them. Demotivated staff (pay cuts and morale) ultimately increases risk. Pressure on aircraft serviceability to meet time slots and so on.
Some sort of ‘profitability’ legislation needs to come into play from CAA/EASA etc to make sure these types of contracts are profitable for the operator in order to protect safety. If you can’t prove that you are making X % on each contract then there’s a risk of the AOC being removed. Would certainly stop this race to the bottom.
By all accounts Shell are doing it the right way if they are making sure that there must be profits for the operator.
Last edited by Mitchaa; 14th Aug 2020 at 07:59.
