Aircraft valuation service HeliValue$ is reporting that the used helicopter market might be rebounding off the bottom, based on its first-quarter 2017 analysis released late last week. “For the first time since 2009, values have increased for a few models. There has also been a notable increase of reported sales transactions in the first quarter,” the company said.
“The single turbine market seems to be fairly active right now,” with “older Airbus AS350B2 and Bell 206L-3 values improving.” However, HeliValue$ noted that resale values for newer used singles and light twins remain soft as is the market demand for heavies that primarily service the battered offshore energy sector.
“The number of Sikorsky S-92A aircraft on the market is increasing mostly due to a dearth of contract renewals. Unfortunately, some of the contracts that are renewing are now requiring alternative aircraft such as super mediums. Both asking prices and market demand for used S-92As has been declining over the past two quarters. There are some bright spots, but the oil market probably has the biggest impact on the helicopter industry as a whole,” HeliValue$ noted.
With oil stuck at around $50 per barrel, the worldwide demand for heavy helicopters is stuck with it, as more offshore operators curtail operations and shift to medium and super-medium twins. Not even the temporary grounding of much of the world's Airbus Helicopters Super Puma fleet following the April 2016 Turoy crash seemed to materially lift the fortunes of the Lockheed Martin Sikorsky S-92A, as a good portion of that fleet was already underutilized.
According to the General Aviation Manufacturers Association (GAMA), last year Sikorsky shipped seven S-92s, while Airbus shippped nine H225s and 10 H215s. This compares to Sikorsky shipping 16 S-92s in 2015, 42 in 2014, 37 in 2013, 30 in 2012 and 20 in 2011, according to the GAMA data. For the first quarter of this year, Lockheed Martin reported that both operating profit and operating margin were down sharply in its Rotary and Missions Systems (RMS) segment, slipping to $108 million from $229 million and to 3.5 percent from 7.6 percent, respectively. The company attributed a large portion of that decrease to fewer helicopter deliveries.
Helicopter valuation service HeliValue$ reported that its Q1 2017 analysis suggests portions of the used helicopter market may be rebounding off the bottom, including the turbine- single market, but such is not the case for heavies in general and the S-92 in particular. “The single-turbine market seems to be fairly active right now,” with “older Airbus AS350B2 and Bell 206L-3 values improving,” HeliValue$ reported. However, it noted that resale values for newer used singles and light twins remain soft, as is demand for heavies that primarily service the battered offshore energy sector. “The number of Sikorsky S-92As on the market is rising, mostly because of a dearth of contract renewals. Unfortunately, some of the contracts that are renewing are now requiring alternative aircraft such as super-mediums. Both asking prices and market demand for used S-92As have been declining over the past two quarters. There are some bright spots, but the oil market probably has the biggest impact on the helicopter industry as a whole.”
The softness of the S-92 market is driven not only by depressed oil prices and the “paucity of contracts in the North Sea,” HeliValue$ said, but also by the ability of operators to cost-effectively substitute super-mediums such as the Airbus H175 and the AgustaWestland AW189 into missions previously served by heavies in “an already saturated market.” In some cases still smaller aircraft such as AW139s have been substituted for heavies in these markets.
“Any way you look at it, contract activity is low and some available contracts are now requiring alternatives to the S-92A,” HeliValue$ said. Even lower values for used S-92s may be right around the corner as operators shift to more efficient aircraft. “As a consequence, we see some used S-92As being returned to banks at the end of their contracts. With virtually no secondary market for this aircraft, there has been little interest in what is coming onto the market. The trend of depressed values will likely continue until oil prices recover to a level that is profitable in the North Sea or the values of the S-92A reach a level that competes with super-mediums,” HeliValue$ said.