Helicopter deliveries to climb for second year, Honeywell says

[DALLAS] Helicopter deliveries will rise for a second year, extending a modest rebound after hitting a low in 2016 amid a decline in crude prices that dried up sales to oil companies.

Manufacturers from Textron Inc.'s Bell to Airbus SE are expected to deliver about 700 civilian choppers this year, up from 650 last year, according to Honeywell International Inc., which conducts an annual survey of more than 1,000 helicopter operators.

Though the energy industry has seen a mild rebound, the fallout from the market collapse still lingers because the industry bought a lot of large helicopters from 2011 to 2014 and there's "some overcapacity there," said Gaetan Handfield, chief of marketing analysis at Honeywell's aerospace unit. Most of the increase in deliveries will be for small helicopters, which will throttle sales to US$4.2 billion this year, a 2 per cent gain from US$4.1 billion in 2017. Last year, sales jumped 14 per cent from US$3.6 billion in 2016.

Current oil prices of about US$60 a barrel aren't yet high enough to stimulate replacement demand, Mr Handfield said. "It will take a few years for purchase intentions to go up for oil and gas." Helicopter sales peaked at US$6.1 billion in 2013 amid a frenzy of drilling. Crude, along with other commodities, began to weaken in the second half of 2014 after soaring to more than US$100 a barrel. Oil prices plummeted to below US$30 a barrel in 2016. Helicopter sales followed, hitting bottom that year, according to Honeywell.

The company forecasts helicopter shipments of between 4,000 and 4,200 over the next five years, about the same at the midpoint of the company's survey last year. Purchase plans showed increases for emergency services and in Latin America, particularly in Mexico where a law change to open offshore drilling to foreigners is attracting investment.

BLOOMBERG