Eurocopter under pressure to replace Super Puma after crash
September 5, 2013 By The Financial Time
Sept. 5, 2013, Oxford, U.K. - Flights of Eurocopter’s Super Puma helicopters in the North Sea have been allowed to resume after last month’s fatal crash, but the trouble for the world’s largest commercial helicopter manufacturer is far from over.
The recent crash, in which four people died, was Super Puma’s fifth incident in the U.K. since 2009 and is likely to have a serious effect on Eurocopter’s sales and profits, analysts say.
Two forced landings last year involving a different variant of the Super Puma helicopter prompted U.K. regulators to impose a ban on sea flights while a gearbox problem was being investigated. That ban, which was lifted in early July, contributed to falling sales and earnings at Eurocopter and led to a build-up in inventory that helped halve the net cash position of the parent company, EADS, between December 2012 and June this year.
The ban this time has been far shorter, but oil workers’ confidence in the brand has been badly dented, and some are calling for Super Pumas to be grounded.
Meanwhile, oil companies say they are shifting away from operators that use Super Pumas to ferry their workers to and from offshore platforms.
“After the 2009 incident, our technical aviation and logistics people in-house have been doing work making sure we’re not overexposed to Super Pumas,” said one executive from a large oil company.
Helicopter operators are getting the message and are shying away from offering services with Super Pumas when bidding for important new work, people close to the industry said.
When Bristow, the Texas-based helicopter operator, clinched the U.K. government’s £1.6 billion, 11-year search and rescue contract, it chose to replace the U.K.’s ageing fleet of Sea King helicopters with 11 AgustaWestland AW-189s and 11 Sikorsky S-92s, but no helicopters from Eurocopter.
Sash Tusa, a long-time defence analyst, says the series of crashes is a “massive issue” for Eurocopter.
“Puma has shown itself unquestionably to be at, or beyond, its genetic limits,” he said, noting that by comparison Sikorsky’s and AgustaWestland’s helicopters were “shiny and new with lots of growth in them”.
But Guillaume Faury, Eurocopter’s chief executive, disputed that the Super Puma was falling behind its competitors, saying that the EC-225 variant was the most modern helicopter of its kind and competing well with Sikorsky.
“This will change when the (AgustaWestland) AW-189 comes, but the EC-225 will stay ahead in some technology, especially in flight control systems,” he said, adding that the EC-175 was also in the pipeline.
Others analysts say that having so many Super Pumas flying increases the chance of an accident in any case. They also point out that Sikorsky’s S-92 is not brand new either and has a record blemished by a fatal crash in Canada in 2009.
But for Eurocopter the biggest underlying problem – made more acute by the recent crashes – is that the company’s pipeline lacks a new alternative to its 30-year old Super Puma and its subsequent variants, analysts said.
That has left Sikorsky, part of United Technologies of the U.S., and AgustaWestland, part of Italy’s Finmeccanica, to share the spoils with the S-92 and the even newer AW-189 helicopters. Meanwhile, Bell Helicopter, part of Textronof the US, is not far behind in developing its own variant.
To get back in the game, Eurocopter will have to plough as much as €500m into developing a helicopter for civilian transport and search and rescue, according to analyst estimates.
Mr Faury, who was head of Eurocopter’s research and development and chief engineer for the EC-225 before becoming chief executive in May, has given himself three to five years to refresh the group’s product portfolio.
But that will require a serious commitment by EADS, which has watched Eurocopter struggle with delays and cost overruns in the production of its NH90 and Tiger military helicopters, which might otherwise have formed the basis for new commercial variants.
Nick Cunningham, an analyst at Agency Partners, says the big question weighing on Eurocopter is: “Will the market have gone by the time they develop an airframe?”