Story ID: 337
Erickson Has New Focus out of Bankruptcy
By: Garrett Reim
Caption: The Portland, Oregon-based company sees long-term opportunities with military customers.
Word Count: 597
Some nine months out of bankruptcy, Erickson (Booth C1338) has new private ownership, a new board of directors, and a new executive team. It also has a new strategy.

Before the bankruptcy, the company was known as the manufacturer, as well as an operator, of the S-64 Aircrane helicopter, which is used for its heavy-lift abilities on construction and logging sites, and as a water tanker for aerial firefighting. It also operated a fleet of several dozen smaller helicopters and fixed-wing aircraft. But, Erickson of Portland, Oregon, is turning its focus away from civil aviation services and toward serving the U.S. military, said Doug Kitani, the firm’s chief executive, who was appointed in September.

“We are now organized around two principal verticals: commercial and defense-national security,” he said. “Most of us on the team and the board view the national security segment as a tremendous growth opportunity.”

Within five to ten years, the company aims to generate the majority of its revenue from military customers through pilot services, as well as maintenance, repair, and overhaul services.

“You are seeing a shift within the DoD away from these legacy, acceptable, touch-labor contracts toward, ‘We are looking for quality,’” said Kitani. “It’s beyond the simple repair aircraft. It’s ‘How to do we extend the life of these aircraft?’”

The U.S. military’s need to overhaul aircraft to extend their operating lifetime plays to Erickson’s strength in engineering, according to Kitani.

In particular, the company sees opportunities to provide aircraft modification and support, as well as pilot services for special operational activities in remote and austere environments—conditions to which Erickson is accustomed, given its history of aerial firefighting, logging, and heavy-lift operations.

Kitani declined to disclose the company’s revenue last year or its projected revenue this year. He also declined to disclose the firm’s number of employees, though the firm’s interim chief executive, Andy Mills, told AIN that the company had 700 employees in May 2017.

Erickson generated $297.5 million in revenue in 2015, but had a net loss of $86.7 million, according to financial filings. The company filed for bankruptcy in November of 2016 with debts of $561 million.

Much of the company’s liabilities came from its $298 million acquisition of Evergreen Helicopters and $26 million purchase of Air Amazonia in 2013, according to financial filings. Erickson divested itself of Air Amazonia and the majority of the helicopters that it acquired via its purchase of Evergreen as part of its bankruptcy reorganization.

Erickson’s Aircrane is a heavy-lift helicopter based on the U.S. military’s Sikorsky CH-54 Tarhe. The company manufactures the helicopter in house via an exclusive type and production certificate from Sikorsky Aircraft. The Aircrane has a lift capacity of up to 25,000 pounds and can be equipped with a 2,650-gallon water tank and snorkel for aerial firefighting.

Kitani acknowledged that civil aviation services will remain the bulk of Erickson’s revenue stream over the next five years. In 2015, civil aerial services accounted for 54.1 percent of the firm’s revenue, defense and security accounted for 35.3 percent, and manufacturing and MRO accounted for 10.6 percent, according to a financial filing with the Securities and Exchange Commission.

The company now owns a total of 50 aircraft, 20 of which are S-64 Aircranes. The rest are a mixture of fixed-wing twin turbo aircraft and other helicopters, said Kitani. The manufacturer also has orders for four S-64 Aircrane Helitankers from the Government of South Korea Forest Service.