It’s been an eventful year for MD Helicopters. Since the rotorcraft industry gathered for the last Heli-Expo, the Mesa, Arizona-based rotorcraft manufacturer was sold, emerged from bankruptcy, and had new leadership installed.
A year ago, the company announced that it had entered into an asset-purchase agreement with a creditor consortium led by Bardin Hill and MBIA Insurance. The consortium acquired nearly all of MD’s assets and provided tens of millions of dollars in capital to strengthen its financial position and support its ability to manufacture and service its products.
As MD prepared to return to Heli-Expo for this year’s show, recently installed president and CEO Brad Pedersen expressed optimism about its future. “I’d like to think this is a brand-new company,” he told AIN. “We’re looking at it as an opportunity to bring MD back to where it was in the past—to make it a trusted, respected business in this industry.”
Pedersen’s experience dates back to 1983 when he worked for its predecessor, Hughes Helicopters, as a flight test engineer, primarily on the single-engine 500 series, for nearly a decade before departing for Sikorsky Aircraft. “I know the product and I understand how much operators depend on the factory for spare parts or for technical guidance. That has been one of the things MD Helicopters had been lacking, so I told the new owners that’s the number-one thing we have to work on,” he said.
Toward that end, the company has brought in aftermarket specialist Ryan Weeks, formerly with Honeywell, as v-p of aftermarket sales and service to build up the company’s spare parts and rotables inventory. “Sometimes companies like this lose focus on those things,” said Pedersen. “Now we’ve got somebody who’s a professional in that spot.”
With a global fleet of approximately 1,700 helicopters, the airframer has identified more than 700 commonly requested parts. “The number-one thing is to keep the customer’s aircraft flying and to have enough parts on hand that if somebody calls by noon, their part is on a truck by four in the afternoon,” said Pedersen. While stocking an extensive inventory is capital intensive, “if I have them on the shelf, then I can turn them immediately, so it’s not really an investment—they fund themselves fairly quickly,” he said. In addition, MD is working to build up its pool of rotables for repairable dynamic components such as transmissions and rotor heads, so if a customer sends in a damaged unit, a serviceable one can be swapped out. “Dynamic components such as transmissions have a fairly long lead time so we can invest in those things over time,” Pedersen added.
Boosting Production
During the corporate disruptions last year, the company built only seven helicopters. MD expects to more than double that number with 19 deliveries in 2023, and Pederson hopes to increase the total to 30 in 2024. “The second priority now is to ramp up production on the single-engine [conventional tail rotor] line and reduce our costs so we can pass that along to the customer,” he told AIN. “We haven’t had a chance yet to rationalize the 600, 520, and/or the 902 but we’ll work on those next to determine where we go with those.”
But as Pedersen explained, the company is facing some market-based headwinds as it looks to increase its output. “It’s not just us to spool up; everybody in the supply chain has to increase as well,” he said, adding that long-term supply agreements are being signed with suppliers. “We’re sharing our production schedules and our aftermarket. It is better for us if our supply base has a smooth, steady production schedule, just like it would be for us.”
The second hurdle is finding enough labor as the company ramps up production. “That is the biggest problem that we have right now,” said Pedersen, noting that his company has more than 100 job openings. “We’re in a great location. There’s a lot of aerospace around us, which is good because the talent is here, but it’s also bad because we steal talented people from each other as well.”
Since the change in ownership, company executives have been traveling extensively to meet face-to-face with all members of the value chain, from clients to service centers to parts manufacturers and distributors. “We’re trying to listen to what the customers would like, and listen to our suppliers, and trying to stabilize the company and earn back the trust that the customers once had in us—a trust that they can buy the helicopters and we’ll support them in the field,” Petersen commented. “I tell people we don’t deserve any respect or trust. We have to earn that back, and we’re trying to do that by focusing on the aftermarket and getting our production line back up to speed.”
This year in Atlanta, MD brought a pair of helicopters to display at its Heli-Expo booth (C2729), including a law enforcement-outfitted 530F for the Huntington Beach (California) Police Department, the second delivery of a three-ship order placed in 2021, and another 530F in a VIP configuration.
As for what message the company wants to convey to attendees at this year’s show, Pedersen said, “I believe that we’re a different company now than we were even 12 months ago. We realize we have to demonstrate that we’re at a point where we are different and we are better. A little dose of humility is probably good for MD Helicopters at this Heli-Expo.”