Offshore helicopter services company Babcock Mission Critical Services Offshore reported a pre-tax loss of $30.285 million in 2020 on revenues of $141.7 million, compared with a $3.989 million loss on revenues of $185.7 million in 2019.
The two consecutive years of losses follow a $6 million profit in 2018 on revenues of $176 million. For 2020, Babcock cut its workforce from 432 to 363 and saw a 25 percent drop in flight hours, from 45,729 to 34,358. Babcock operates in the North Sea from bases at Aberdeen, Blackpool, and Sumburgh. In a strategic report issued by the company, Babcock blamed the losses on “continued commercial pressures with reduced activity.”
“There has still been a continuing need for companies operating in the UK oil and gas market to lower operating costs while maintaining service delivery and ensuring safety,” the company noted. Babcock has set aside $7.285 million in the form of “an exceptional provision” for “loss-making contracts where unavoidable costs of meeting obligations under these contracts exceed the associated expected future net benefits.” Babcock’s admission was seen as giving credence to competitor charges that it had won new North Sea contracts by bidding below cost. Babcock valued those contracts at $278 million over five years.
Despite its losses, Babcock said membership in the larger Babcock International Group shielded it from going concern issues and provided it with the ability to “enhance fleet capacity” and leverage fleet financing. For the first half of 2020, Babcock International reported profits of $105.8 million on revenues of $2.109 billion; however, only $10.28 million of that profit was attributable to aviation activities and the amount represented a sharp drop from the $57.9 million profit generated by aviation in the year-ago period. Babcock International said it is in the process of right-sizing its fleet that numbered 492 leased and owned aircraft at the beginning of the fourth quarter.