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Russian Helicopters sees significant rise in orders

Staff Report
Filed on November 13, 2015 | Last updated on November 13, 2015 at 07.12 am
Russian Helicopters sees significant rise in orders

The portfolio of firm orders as of beginning of 2015 was more than 500.


Russian Helicopters expects about 30-40 per cent increase in share of civil helicopters in its total volume of deliveries by 2030, its CEO Alexander Mikheev said.

He said Russian Helicopters ranked second biggest helicopters suppliers after Airbus Helicopters in 2014 with an operating profit of $4.4 billion.

Following are the excerpts from the interview:

What's the current position of Russian Helicopters in the international market?

Over the last six years, the overall production of helicopters increased in 1.5 times. In 2014, our holding ranked second among global suppliers of helicopters with turbine engines, next only to such companies as Airbus Helicopters (previously known as Eurocopter).

In prestigious international rankings, the holding is among the biggest defence companies in the world. In particular, according to the annual analysis of the global arms market IHS Balance of Trade 2014, Russian Helicopters are in the top 10 of the biggest arms exporting companies in the world, up from the 16th place.

The holding's operating profit increased to $4.4 billion. New financing mechanisms and leasing programmes aimed to support those operators who purchase or plan to purchase new helicopters are rapidly developing.

Have the declining oil and gas prices impacted your company's business? If yes, then in what way?

Energy prices certainly have influence, first of all, on offshore helicopters and all helicopters used in oil and gas industries in general.

Worsening of the situation in the oil and gas market, as a rule, results in delays in development of offshore fields or cancellation of the most cash-consuming projects, consequently decreasing demand in helicopter services.

Despite the fact that today helicopters are virtually the only way to transport personnel to offshore platforms, ensure emergency medical aid and provide search and rescue support, the demand in helicopters pretty much follows (with the lag of one to two years) the changes in oil prices.

Future prices forecasts for the year 2040 range about 300 per cent: from $75 to $237 per barrel of Brent, per US Energy Information Administration, International Energy Outlook 2014. And accordingly, changes in demand for offshore helicopters are highly likely to reflect the actual oil price. And note that there is no significant decrease or cancellations of existing contracts for deliveries in this market sector yet; we expect only moderate decline in demand for the most expensive heavy helicopters with the takeoff weight of more than 10 tonnes.

As for the offshore helicopters, the situation is as follows: in 2013 the total supply of helicopters of all classes totalled 148 units and in 2014 it was 141 units. The only difference is in the structure of supplies. The supply of offshore helicopters with the takeoff weight of five to seven tonnes decreased from 69 to 51 pcs. W139s reduced from 44 to 39pcs, S-76s reduced from 11 to 8 pcs and ell 412s from 14 to four.

At the same time, the following supplies were made in the class of seven to 10 tonnes: AW189s - 9 pcs and 175-3 pcs. Apart from that, everything is steady.

What new products are being prepared by your company, what is expected in near future?

The portfolio of firm orders as of beginning of 2015 was more than 500 helicopters. A considerable number of helicopters contracted was because of new joint projects with traditional and new partners of our holding.

Amongst the new programmes to be noted are the medium multirole helicopters Mi-38, Ansat and Ka-226T designed with the use of newest technologies and innovative materials, as well as Mi-171A2 that combines the classical advantages of the legendary Mi-8/17 series with the benefits of innovative solutions.

Marketing research shows that the sector of military and civil helicopters with the weight of 10 to 16 tonnes will be the most attractive segment in the next 10-15 years; in money terms, it is about 20 per cent of the global market. The second and third best in terms of expected profit are attack helicopters (18.5 per cent of the global market) and multi-purpose military and civil helicopters with the weight of seven to 10 tonnes (17 per cent of the global market) respectively. Heavy military transport helicopters over 20 tonnes from the profitability standpoint are 4th - around 14 per cent of the world market.

What growth opportunities for Russian Helicopters do you see? From production standpoint? Exports? Revenues?

The world helicopter industry grows in long cycles that may reach 20 and more years. Today the global helicopter market shows certain saturation. In 2020-2025, we expect a significant increase in share of civil helicopters in our total volume of deliveries. By 2030, it will be about 30-40 per cent of the total volume of deliveries, both domestically and internationally.

As for the plans of foreign manufacturers to increase their share in the Russian market, they are obviously interested in it, and they are actively promoting their products as shown by HeliRussia 2015 expo, which was held in June.

What are the ambitions of Russian Helicopters in relation to exports of military equipment? What are the reasons behind targeting Indian, Chinese, Middle Eastern and North African markets and what is the dynamics there: are there any differences in the product lines depending on the delivery market?

Russia, the CIS countries, India, China as well as prospective markets of Latin America and the Middle East remain our key markets. There are over 5,500 Russian (Soviet) military helicopters currently operated around the world. From 2001 to 2014 more than 1,100 helicopters were supplied to 51 countries as part of MTC. An efficient system of after-sales servicing with regard to these helicopters is one of our priorities.

Russian Helicopters and the Aviation Industry Corporation of China (AVIC) signed a framework agreement on cooperation in the field of long-term heavy helicopter development. The document was signed May 8, 2015.

The US Department of Defence positively reviews the quality of the Mi-17V-5, the delivery of which was completed last year. General John Campbell, commander of American and Nato troops in Afghanistan as part of an international force, described the capabilities of the Mi-17 as "incredible" and noted that this helicopter is better suited for the heavy terrain and Afghan climate than its American counterparts.

From the start of deliveries in 2011, the US side did not have any concerns about the quality of the aircraft. All helicopters arrived in Kabul on time; they were assembled, tested and after signing all delivery documentation they were used for their required purposes.

Russian Helicopters delivered fleet's serviceability status exceeds mandatory level by 80-90 per cent, a figure that satisfied all the requirements. On average, the Mi-17V-5 in Afghanistan flies more than 200 hours per year.

- haseeb@khaleejtimes.com





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