News & Views

MOVING IN THE RIGHT DIRECTION

LCI specialises in leasing helicopter and commercial aircraft with a broad spread of types leased to operators around the globe. Its Vice-President of Marketing, Christopher Grainger, tells EUROPEAN ROTORS that while times have been tough for everybody, the helicopter market has bounced back strongly from early 2020 and is entering a period of growth, particularly in the top-performing sectors like EMS, SAR and wind farms.

“I think the industry has recovered, particularly in Europe, which is a very important market, although not all segments are necessarily doing as well,” he says. “All in all, we are seeing a significant level of activity, and more importantly, we’re seeing growth opportunities across the place.”

To make sure it is a part of that growth, LCI has raised more than US$1 billion in capital since 2109, which is clearly significant in a time when Grainger says banks and financiers have been turning their backs on aviation. “It’s no secret that we’re talking to several operators who tell us that they have difficulties financing their helicopters, so let’s not dream helicopters are in a different world,” he says. “And the operators we are talking to now are going for new technology, which is very exciting. And I think it’s driving the markets in the right direction to bring more deals in the future.”

Two things that make helicopters an attractive investment are their long operating lives and the types of missions and customers that operator’s contract with to provide services. The long lifecycles come from being non-pressurised aircraft, and Grainger points to aircraft such as Pumas and S-61s that have transitioned into new roles as examples. “

When you see aircraft more than 50 years old still being used, not necessarily for their original offshore applications but in utility work or firefighting, that’s pretty amazing,” he adds. “The second reason is more linked to the end-users, and in some European countries, an EMS contract can be for terms beyond 10 years, which is unique.

Putting the sanctity of contracts to one side, lessors still need to be aware that contracts can be terminated, as seen in the oil and gas sector, and he says it’s vital they know their operator and what they are getting into.

“Of course, you have to be selective, so when we’re approached with an opportunity, we like digging a bit further into the project to understand who’s the end-user and what’s the underlying contract,” he explains. “And all that together gives us a lot of security to the contract.”

Leasing aircraft to operators with firm contracts in hand seems to be a more effective strategy than selecting a popular aircraft type and adding that to a lessor’s fleet. Light to medium twin-engine aircraft form the backbone of LCI’s fleet, including Leonardo AW139/169, Airbus H135/145 and the super-medium H175 and AW189.

“We have a very positive long-term view of the super-medium, which more and more are competing with the heavier types,” he says.“We have a few heavies, so we’re not excluding anything, but the 139 and 169 are the core of our fleet at the moment.”

The commercial helicopter market leans heavily towards owned aircraft. Industry consultant IBA estimates less than 10% of the total commercial turbine fleet of nearly 24,000 aircraft is leased, which Grainger sees as a great opportunity for LCI.

“There’s huge potential, but it needs a very thorough and strict analysis project-perproject and operator-per-operator, so we take a meticulous approach,” he adds. “We don’t exclude anything in principle, but we certainly can’t and don’t take everything.”

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