Story ID: 
Honeywell hedges market bottom 
By: AIN Staff
Caption:  Honeywell’s annual market forecast for civil turbine-powered helicopters released Saturday is still predicting flat to slightly higher deliveries bet
Word Count: 501
 Honeywell’s annual market forecast for civil turbine-powered helicopters released Saturday is still predicting flat to slightly higher deliveries between 2009 and 2013 compared to the previous five-year period, but there are caveats aplenty. Honeywell (Booth No. 1310) expects overall 2009 delivery levels to be at or near 2008 levels before declining in 2010, but the steepness of the drop and how long it will last is largely unknown “due to the uncertainty of the global economy,” the company said. The trough could last until 2012 and perhaps longer. Honeywell’s forecast also illuminates a present and clear disconnect between OEM production plans and customer purchase expectations and the growth of negative market indicators including a surge in used inventories, weak new order intake and a lack of financing available to buyers. The precipitous drop in new order intake, combined with an increase in delivery cancellations and deferrals, may significantly erode assumed OEM backlogs. Honeywell notes that Bell, for example, took orders for 40 new helicopters in January 2008 but only three in January 2009. Measured customer expectations of new purchases over the next five years are down 21 percent worldwide and drops range from 21 (North America) to 45 percent (Latin America) almost everywhere except Europe. Medium and intermediate twins posted the biggest drop, down 43 and 49 percent, respectively. Only expectations for short-cabin singles and light twins rose, 29 and 23 percent respectively, and a good portion of this demand appears to be triggered either by attrition or by operators who are “trading down.” Attrition appears to be the biggest market driver, according to the survey data, accounting for 80 percent of all new helicopter purchases. Less than 11 percent of operators planned to “trade up” to more expensive or sophisticated equipment while 54 percent of heavy multi-engine helicopter operators’ purchases were forecast to be trade-downs to smaller aircraft.   North America will continue to dominate the overall turbine market, accounting for 37 percent of worldwide demand, and most of that, 62 percent, will be for light singles. Measured by category, expected customer demand for light singles fell the least, posting a 20-percent decline overall, driven by a drastic drop for long-cabin singles such as the Bell 407 and Eurocopter AS 350. However, the five-year demand forecast for light twins is actually growing, up 23 percent, fueled by continued strong demand in Europe, where regulation mandates twin-engine operations for many applications. Purchase expectations for intermediate and medium twins have basically fallen off a cliff, down 50 percent compared to 2008. Most of the market for these helicopters is in North America and Europe where they are used primarily to service the offshore oil and gas industry, still reeling from the global collapse of energy prices. While demand for new helicopters is unquestionably perched to decline, utilization hours appear to be holding steady according to the survey data, with most respondents saying that they will either fly the same or more hours in 2009. However, Honeywell notes that this data may actually be more optimistic than what is happening in the field as all levels of government deal with acute budget shortfalls and are forced to curtail flight hours.