The VTOL industry rebounds from the pandemic with new sales, product launches, and lessons learned.
HAI HELI-EXPO 2022 welcomed the vertical flight industry to Dallas, Texas, this year to “Find the Future.” The theme of the event, which ran from Mar. 7 to Mar. 10 at the Kay Bailey Hutchison Convention Center Dallas, proved prophetic as more than 13,000 attendees from 72 countries walked the show floor, attended classes, participated in meetings, and met face-to-face again.
Attendance exceeded expectations, even with the worldwide travel restrictions that kept many veteran Expo attendees away.
This year’s 590 exhibitors were 90% of the number on the show floor at HAI HELI-EXPO 2020 in Anaheim, California, and the number of attendees was 91% of 2020’s total. The energy on the show floor was high as industry veterans and newcomers alike reconnected.
“It really felt like people took this year’s theme to heart,” says HAI President and CEO James Viola. “Everybody I talked to was extremely happy with how the show was going. A lot of people turned out ready to do business.
“It is clear many companies scheduled their strategy around HAI HELI-EXPO this year. Our show definitely drives completions of projects, and that is evident by all the news announced this year,” Viola continues.
Indeed, hundreds of helicopter, engine, product, and service agreements, sales, and commitments were announced alongside updates and product launches. Most every announcement touted increased sales and business in 2021 over 2020.
OEM Numbers Tell a Good Story
Some industry sectors are already above their 2019 numbers, with heavyweights Sikorsky, MD Helicopters, and Leonardo reporting their highest single-year sales in many years. Airbus Helicopters cited a more than 40% recovery of the overall helicopter market since 2020, while the company’s North American branch reported booking totals for 2021 that exceeded those for each of the previous five years.
In general, medium- and light-duty helicopters are selling more briskly than heavy aircraft, according to Airbus. But with many manufacturers eyeing a recovering oil-and-gas market as fuel prices climb, several OEMs hinted that business for large aircraft is expected to grow in this sector if gas prices remain at or above current levels.
Some other sectors of the industry are still catching up, such as large helicopter tour companies that rely on international customers. Not until international tourism returns to pre-pandemic levels is helicopter tourism on the whole expected to fully recover, according to a representative of Papillon Grand Canyon Helicopters, the world’s largest helicopter tour company.
Scrappy manufacturer Schweizer is progressing on its FAA validation process to manufacture its aircraft, says Schweizer President David Horton. With an FAA Part 145 certification expected in the second quarter of 2022, the company will soon be able to add full component repair and overhaul to its capabilities. FAA sign-off for full manufacturing is expected at the same time, allowing Schweizer’s new-aircraft production to pick up.
MD Helicopters Chairman Alan Carr says his company has experienced stronger aftermarket support and growing sales in the two years since its former CEO stepped down. Since the show, MD Helicopters had announced a buyer, a creditor consortium led by Bardin Hill and MBIA Insurance. The sale was still pending court approval as of press time.
Another beloved industry veteran, Enstrom Helicopter Corp., had apparently received new ownership during the show. On Mar. 8, MidTex Aviation signed a purchase agreement to acquire all of Enstrom’s assets, breathing new life into the brand after Chapter 7 bankruptcy shut the company’s doors earlier this year. But the deal later fell through when MidTex encountered problems obtaining funding.
Enstrom instead was purchased by Chuck Surack, founder of musical instrument retailer Sweetwater Sound and Surack Enterprises, in May. Surack’s aim is to rebuild the Enstrom brand into one of the leading American-made helicopter manufacturers.
Pandemic Lessons for Better Business
At the heart of the industry’s recovery, however, is the work that took place during the pandemic. Our industry is one forged from exceptional, outside-the-box engineering and business solutions. As the world changed suddenly, rotorcraft businesses went back to these basics, and many came out stronger and better prepared to support their customers as a result.
The onset of the pandemic and the subsequent business slowdown created an opportunity for vertical flight organizations to devise leaner processes and procedures as well as invest in more-efficient technology. Robinson Helicopter Co., facing increased labor and supplier shortages, invested in technology that both streamlined company processes and required less labor.
“By switching to more CNC [computer numerical control] machines, we were able to automate more processes,” says Robinson President Kurt Robinson. “The CNC water jets, for example, have made a substantial difference.”
When the pandemic hit, Rolls-Royce was already experiencing a massive turbine-wheel backlog brought on by a perfect storm of issues involving tooling, the supply chain, management issues, and outdated equipment. After the business team began working from home in March 2020, the entire company went through a major reorganization that streamlined the reporting process and increased project accountability, which led to significant efficiency increases.
“There is no perfect organizational strategy; each has different strengths and weaknesses,” says Scott Cunningham, helicopter program director for Rolls-Royce Corp. “However, in our former organization, no one specifically owned an issue. Now, it’s an integrated program where there is project ownership.”
The new organizational structure removed roadblocks, allowing the company to invest significantly in the latest manufacturing technology to produce turbine wheels and manage the supply chain. Rolls-Royce built up and now maintains a buffer of supply in case the supply chain breaks down again. By the beginning of 2022, the company had resolved all engine holds waiting on wheels, was reporting 97% uptime, and now enjoys the lowest number of back orders in the past five to six years, Cunningham says.
Safran Helicopter Engines CEO Franck Saudo saw the pandemic as a chance to “adapt at the speed of flight” to head off supply chain issues. He says the company switched gears during the downturn by streamlining and reorganizing within the company.
“Supply chain is more an art than a science,” Saudo says. “I was convinced it was important to adapt fast. One way was to cut costs. We chose to organize ourselves differently to address a changing market. Rather than ask our people to do more with less, we looked at how to reorganize. This led to more than 30 internal adaptations.
“Second was operational planning,” Saudo continues. “We were paranoid about keeping our supply chain an accurate compass of what we expect in demand. The earlier we could give that compass to our suppliers, the better we would be serviced. Third, we erased and redid our ERP [enterprise resource planning] management.”
In some ways, Saudo reflects, the pandemic was an opportunity. “We learned a hell of a lot. Working as a team, with the people who are next to the market, you can do a tremendous amount of work for your customers.”
Pratt & Whitney Canada shared in a statement that it focused on sustainability and advanced its development of hybrid-electric propulsion technology with funding from the governments of Quebec and Canada.
Finding the Digital Connection
As VP of business development for commercial and international military at Sikorsky, a Lockheed Martin company, Eric Schreiber felt pretty confident sales and operations in 2020 and 2021 would remain fairly steady. His real concern was the lack of customer connection during the pandemic and how that would affect business in 2022 and beyond.
What developed surprised him. “As quickly as we adapted to Zoom and other mediums of communications, our customers did too,” Schreiber says. “Our employees developed connections in new ways. Zoom calls can happen in the middle of the night when it works for the customers. We’re finding our customer relationships are stronger than they were before.”
Sikorsky also reevaluated its investments during the pandemic to maximize returns, Schreiber adds. When sales slowed, the company reallocated funds to support higher demand for aircraft such as the Firehawk to meet the world’s growing need for wildfire suppression tools. Sikorsky was able to expand the Firehawk’s customer base to Eastern Europe and the Asia-Pacific while also making advancements such as ADS-B Out qualification.
Airbus Helicopters took a similar tack. As sales slowed in 2020, the company turned its attention to research, development, and innovation, particularly in sustainability and digital services. The company launched its HDataPower digital connectivity suite in 2021, one of the results of this focus.
For Leonardo, the ability to pivot quickly helped maintain the company’s momentum, says Roberto Garavaglia, SVP of strategy and innovation at Leonardo. Located in Italy, a country that suffered severe impacts in the first wave of the pandemic, Leonardo quickly set up a remote work structure for employees.
“We learned that smart work was not so bad,” Garavaglia says of employees working remotely. “We found that people could manage more work when given flexibility, which worked out really well for them and the company. Some members of our team are still smart working. We learned to be more flexible in how we manage ourselves without a loss in productivity.”
At Bell, a key lesson that stands out to Lane Evans, Bell’s managing director of North America sales, was embracing the value of digital media. Bell launched a completely digital experience for customers to see the Bell 505, a first for the company. The three-hour online event allowed customers to learn about the aircraft, ask questions, and get answers in real time.
“This really showed us how powerful and successful digital media is at reaching our customers,” Evans says. “Not being able to connect face-to-face with customers pushed us into learning new ways to connect, through videos, virtual meetings, and social media. What we also found was customers were craving that interaction too. Before the pandemic, they may have been too busy with other things. Now, they had the time to have that interaction.”
Bell focused on developing relationships with customers, influencers, media, and photographers that now help boost business today and into the future, Evans says. “It’s a whole new way of interacting, and I think it’s changed business for the better.”
United for Ukraine
In addition to the industry recovery and business building, the other undeniable big issue affecting HAI HELI-EXPO 2022 was Russia’s invasion of Ukraine. Only 12 days old on the day the show floor opened, the war’s effects were felt throughout the event.
HAI member Ukrainian Helicopters had planned to exhibit in Dallas but ultimately couldn’t attend. The company’s booth remained in place, however, decorated with a banner of the Ukrainian flag and a display of sunflowers, the national flower. Attendees stopped by and wrote messages of support to the Ukrainian people, posting them to the banner.
The industry displayed a united show of support for sanctions against Russia for the unprovoked invasion of Ukraine. All major rotorcraft manufacturers confirmed at the show they had stopped selling parts, engines, components, and aircraft to Russia. Those companies with employees or businesses in Russia confirmed they had closed up shop in the country and evacuated non-Russian employees.
Overall, OEMs with aircraft in Russia reported that the helicopters, all civilian, represent a very small percentage of their collective fleets. The exception: Robinson.
“The killer for us is the Russian civilian commercial- and private-owner market has been slowly growing over the years,” says Kurt Robinson. “It’s under 10% of our business, but it’s still a big hit.
“We have aircraft on the line for Russian buyers; we’re setting those aside,” Robinson adds. “We’re also working out how to arrange the line around ships on deposit that haven’t started being built. With bank accounts frozen, money isn’t coming in either. We won’t build them now until we have a clearer picture of how things will play out.”
Leonardo is involved in HeliVert, a joint venture with Russian Helicopters that serves as a final assembly plant for the AW139 and a maintenance facility for AW109, AW139, and AW189 helicopters in Russia. The company safely evacuated all non-Russian employees in the early stages of the Russian troop buildup in Ukraine and has since ceased all interactions with Russian Helicopters, according to Leonardo. Leonardo has also stopped sending parts, aircraft, and support to Russian customers.
For Sikorsky, the situation hit home with the company’s wholly owned subsidiary PZL Mielec in Poland, which manufactures the S-70i and several airplane models. Employees there have been actively involved in providing humanitarian assistance to refugees. Sikorsky is also providing funds to support these humanitarian efforts, including stipends to Polish employees who take in Ukrainian refugees.
Bruno Even, CEO of Airbus Helicopters, reported that about 260 Airbus aircraft operate in Russia and that the company had ceased all shipments and support. “We expect the impact of the war should be limited in the short term. However, midterm, it’s too soon to comment on how that will affect the company.”
Bell was more straightforward about the economic impact of the Russian invasion. At the beginning of its Expo press conference, Bell shared parent company Textron’s statement expressing solidarity and compliance with sanctions as well as the closure of its operation in Russia. On how that could affect the company and the industry as a whole, Bell shared what other manufacturers kept close to the chest.
“There are Bell helicopters in Russia, all civilian,” says Lane Evans. “In the short term, these actions will affect us mainly in Europe. However, there potentially could be opportunities to increase military sales down the road in neighboring countries. It’s all still fluid right now. Time will tell.”