After exiting bankruptcy a year ago and having delivered just five rotorcraft for all of 2022, MD Helicopters is well into a turnaround that will see the company deliver 19 airframes this year and more than 20 in 2024. “[Next year] is a conservative plan,” MD president and CEO Brad Pedersen told AIN. He added that the company’s board of directors gave him the objective of “how to get to 50 a year.
“A year ago we came out of bankruptcy…after years of turmoil,” he added. “Our biggest goal was to stabilize and profitably grow [the company].” One of MD’s biggest problems was customer support for the 1,700 helicopters in the field. “We didn’t pay a lot of attention to keeping those guys flying,” he admitted.
Bond insurer MBIA owns the majority of MD Helicopters, and the former owners, Patriarch Partners, and Lynn Tilton, relinquished all shares they held before the bankruptcy. The new board is led by chairman Ed Dolanski, former head of the government services business for Boeing Global Services.
In its efforts to “attract and retain most capable and qualified employees,” Pedersen said, MD has focused on retention and hiring a stable skilled workforce. During 2022, retention was as bad as it can get, with 150 people hired and 150 departing, but that turned around in 2023, with 163 hired and a retention rate of 98 percent. “Prior to the bankruptcy, there was a lot of uncertainty and instability,” he said, as well as a shortage of skilled workers as the Covid pandemic eased. Near MD’s Mesa, Arizona headquarters, competition for aerospace workers is fierce.
Under the new management team, which includes COO Harvey Ticlo and Ryan Weeks, v-p of aftermarket sales and service, MD has moved on from the old authoritarian model where management didn’t listen to employees, according to Pedersen. “We want their advice and to be more inclusive and for them to be more involved. Now we have a backlog of 20 aircraft and some stability, they’re not worried about mass layoffs.” MD’s customers depend on the company, especially utility operators who help maintain the electrical grid and law enforcement operators. “We want to give first responders the best aircraft, and this gives us a sense of purpose.”
During the past year, the management team and employees have been reviewing processes and learning how to improve efficiency while ramping up service for MD operators. “We can’t keep going with the status quo and expect different results,” Pedersen said. He has visited many customers and in some cases intervened to help keep them flying. The Louisville (Kentucky) Metro Police Department Air Unit’s MD520N needed a new tailboom because its Notar (no tail rotor) unit had reached end-of-life, and the supplier was unable to build a new one quickly enough. Pedersen asked his team to pull the Notar tailboom off one of MD’s helicopters for the Air Unit’s MD520N and said they could use it as long as they need it. “If you want to improve the relationship, you have to understand what the customer is going through,” he explained.
Another effort underway is to modernize the parts ordering and tracking system which had been done on Excel spreadsheets and via phone calls and emails. MD is implementing a new e-commerce system that will allow customers to track their orders.
A new service center council, comprised of six of the 40 MD service centers worldwide, meets once a quarter to air out the most pressing issues. “They serve as a sounding board across the network to make us better collectively,” said aftermarket v-p Weeks.
Meanwhile, COO Ticlo, who joined MD in June, is in charge of process reviews and the supply chain. “I’m looking forward to bringing my experience and knowledge to help optimize the manufacturing process and develop the support infrastructure needed for the growth of the company,” he said. “We’re doing a lot of reviews of internal processes and procedures, and we’ve identified many opportunities and are focusing heavily on the supply chain.”
Unlike the situation under the previous owners, MD is now giving suppliers a longer forecast of what items are needed to keep the fleet flying and build to meet the backlog. “We’re trying to forecast our needs and critical demand,” he said, “and make sure we’re able to plan better. We have to make sure our supply is smooth because we’re ramping up production.”
As Weeks explained, “A year ago everybody said the big problem is we [MD] don’t have spares and repairs.” He conducted an exercise to determine the part numbers that were in the highest demand, and of the 30,000 parts that MD has created over the years, 90 percent of the demand is for about 1,000 parts. “We laid out a five-year demand and loaded it into our system so the operations procurement team could set that up. The goal is to always have those 1,000 parts on the shelf and ship them right away.”
A year ago, MD could ship only 45 percent of those 1,000 parts, and now that has climbed to 77 percent and should reach 80 percent by the end of the year. “Our goal is to get to 100 percent, and we expect that in Q3 or Q4 next year,” he said.
On the repair side, MD has had to build a new exchange pool, which it didn’t have before. “We were living hand to mouth in terms of satisfying demand,” Weeks said. “We should have reconditioned assets on the shelf.”
As MD continues to grow away from the decline that led to the bankruptcy, it is adding new resources and once again offering upgrades to the field. Service centers, for example, will be able to do 500E to 530F conversions, and MD has partnered with a provider on Rolls-Royce 250-C30 engine conversions, work that used to be done solely at MD’s facility in Mesa. A maximum gross weight increase that customers used to have to pay for is now free. And new crash-resistant fuel tanks are nearing certification and will soon be available.
As it looks to the future, MD is also clearing up some historical products that didn’t prove worthwhile. While it will always support the Notar 500 and 600 series and the twin-engine 900/902, there are no plans to return the single-engine Notars back to production, Pedersen said. “We are keeping the supply base going and we’re committed to keeping those folks flying. For the 902, we’re still looking at options. I’d like to see it back in production, but it’s a very large investment to do that. We’ll have an announcement in the next 30 days on the 902 line.”