Bristow Sees Drop in Energy-Related Work, May Cancel Helicopter Orders
May 26 2016 - 2:10PM
Dow Jones News
The world's largest operator of helicopters on Thursday said it
expected energy-related work to decline further and may cancel some
orders for new aircraft.
Bristow Group Inc.'s Chief Executive Jonathan Baliff said
continuing uncertainty had forced it to shelve plans to provide
full-year profit guidance, as oil and gas companies cut back on
exploration and production, reducing demand for helicopter
flights.
Even with benchmark oil prices moving above $50 for the first
time this year, Bristow shares recently have fallen 27% in price on
Thursday and have declined almost 80% over the past year.
Helicopter operators' business is a leading indicator of
activity in the energy industry, and Houston-based Bristow is one
of two companies serving the global market ferrying workers to and
from offshore energy platforms. The other, CHC Group Ltd, filed for
bankruptcy protection earlier this month.
Bristow derives three quarters of its revenue from the energy
industry, and its revenue from that sector fell 29% in the fiscal
fourth quarter to Mar. 31. The company swung to a loss of $33.4
million in the fourth quarter from a profit of $15.8 million a year
earlier.
Mr. Baliff said Bristow was "kind of seeing the bottom" in the
latest quarter, with a pickup in activity in the North Sea and
Asia, though it also saw additional softness in the Gulf of Mexico.
The pace of decline in the company's revenue from the energy
industry in fiscal 2016 was expected to slow in the current
financial year.
Bristow and rivals have been cutting costs, shedding staff and
parking helicopters in response to the energy market's downturn, as
well as diversifying into areas such as search and rescue
services.
The company operates a fleet of 296 helicopters made by units of
Airbus Group SE, Leonardo SpA, Lockheed Martin Corp. and Textron
Inc.; It has another 28 of the aircraft on order, as well as
options to acquire 14 more.
Bristow plans to return some helicopters to lessors when leases
expire and has been in talks with manufacturers to defer some
deliveries, but Mr. Baliff said during a post-earnings' call with
analysts that cancellations were a possibility.
With overcapacity in the helicopter services industry running by
some estimates at around 20%, some pressure has been released by
the grounding of the Airbus EC225 model helicopter in some
countries, following the fatal crash of a CHC-operated aircraft in
Norway last month.
Bristow said it had grounded 20 EC225s in the U.K., Norway and
Australia and said Brazilian energy company Petró leo Brasileiro SA
had also parked seven flown by another operator.
Mr. Baliff said Bristow was flying other helicopter models for
longer and taken some out of storage to make up the shortfall.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
May 26, 2016 14:55 ET (18:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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