Oil-and-gas-producer (OGP) operator Bristow Group released its financial results for the quarter ending Dec. 31, 2015, on February 9. Not surprisingly, Bristow reported an OGP revenue decline of $81.2 million, or 21.2 percent from the same quarter a year ago, and net income of $3.2 million from operating revenue of $395 million, a $35 million decline from the same period a year ago. Bristow lost $47.9 million during the last nine months of 2015. Significantly, Bristow reported that it had deferred $109 million of capital expenditures, in the form of new aircraft deliveries, through January 2016, borrowed $200 million and slashed its stock dividend to improve its liquidity.
Bristow also indicated that it is working with lessors to roll off select aircraft more quickly, a move that could save $80 million by 2020, and would continue to “rationalize” its helicopter fleet, mainly through the graduated disposal of its 48 Bell 412 and 212 medium helicopters. Bristow announced that it was temporarily standing down its fleet of 16 Sikorsky S-76s based in Nigeria following an emergency water landing of an S-76C++ there on February 3 in which all passengers and crew survived. This follows the fatal crash of another Bristow S-76 there in August that killed six.
Currently, Bristow’s owned and operated fleet of 360 aircraft is valued at $3.8 billion, with approximately $1.7 billion of that represented by 115 leased aircraft including 73 commercial rotorcraft, 25 training aircraft, and 17 fixed-wing aircraft. The entire fleet is distributed across Europe (48 percent), the Americas (18 percent), Asia-Pacific (17 percent) and Africa (16 percent). Affiliates and joint ventures operate another 124 aircraft. Bristow has orders for 29 helicopters from 2016 to 2020 and options for 16 more in 2017 and 2018. Most of these are large helicopters, with orders for 19 and options for nine.
Despite the financial carnage in the oil patch, Bristow CEO Jonathan Baliff said, “We really like” that part of Bristow’s business, which accounts for 79 percent of revenues. “Even with this downturn, and it might sound like heresy today, we like, we really like, our oil-and-gas rotary wing transportation business: it’s global, it’s focused on safety, it’s got secular growth and it is technologically dynamic.” However, he added that it is “best grown with other business lines like search-and-rescue, fixed-wing for our clients, and others that are commercially complementary to the transportation business.”
One new business Bristow is branching out to is unmanned aerial vehicles, announcing a $4.2 million investment in Sky-Futures, a provider of drone inspection data services for the oil-and-gas industry. The investment gives Bristow access to Sky-Futures UAV or drone inspection operational expertise, data capturing and analysis, and training capabilities. “Through our partnership, we will collaborate with Sky-Futures and its leading safety culture, operational integration, and analysis technology to capitalize beyond the growing need for global UAV inspection services in oil-and-gas to other industries, including search-and-rescue,” Baliff said.
Bristow’s aggressive cost cutting, begun last year, will continue, and Baliff expected further productivity increases from both the company’s unionized and non-unionized workforces. “Our global business development team continues to find innovative ways to modify our service offerings to maximize efficiency and cost savings for our clients. This helps to mitigate our top line declines while we continue to pursue company-wide cost reduction measures. Despite market challenges, operationally this was a successful quarter largely because of our progress in previously announced reductions, which are largely complete. We are largely on track to receive these cost savings for the remainder of the fiscal year,” he said, pointing out that earnings before interest, taxes, depreciation, amortization and rent margins increased 7.5 percent for the quarter in the face of declining operating revenues.
Baliff pointed to Bristow’s new Global Service Center (GSC), which launched in January, as an example of an effective cost-cutting measure. The GSC works to minimize AOG events and downtime. Baliff said the GSC “already proved itself” in the first few weeks of operation.
In the wake of the Nigerian crashes, Baliff said Bristow planned to refresh its “Target Zero” global safety programs. “We pride ourselves on safety, and these recent accidents have been humbling, but only strengthened our resolve.”
Baliff said the short-term view for the company remained challenging while the long-term one was positive. Through 2017, he said, “excess helicopter supply will continue as will the pressure on our clients to decrease costs and increase efficiencies.”