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Ascend by Cirium, Financial investments

Inside Track on Values – Helicopters

February 15, 2021

The Ascend by Cirium team of expert aviation asset appraisers provide a Q1 market update on base values for the helicopter sector.

Following some significant changes in the helicopter space over the past few years, particularly in the offshore sector, we have observed some persistent and fundamental changes to some helicopter types heavily exposed to the sector. Consequently, moving into 2021, we have shifted Base Values for these types to reflect the Current Market Value/Base Value dynamics more accurately.

Base Value changes

Airbus Helicopters EC130 B4 has a large fleet with over 400 helicopters and only 3% storage, indicating a strong market. It is one of the more liquid types today and value movements have been minimal over the past few years. As such, we would expect the Market Value/Base Value ratio to be reasonably close to equilibrium despite the type having a newer sibling – the H130 T2 – and Base Values have been reduced by between 10% and 15% to reflect market balance more accurately.

Airbus Helicopters H130 T2 has, like its older sibling, a large fleet with low availability at around 1.5%, indicating high liquidity. To reflect market balance more accurately, Base Values have been reduced by around 5% to 10%.

Light Twin

Leonardo AW109E Base Values have been adjusted downwards by close to -19% with the newer vintages seeing the biggest changes. The variant had its delivery peak in 2006, and no new deliveries of the variant have been observed since 2014, amid an ageing fleet. There are now three newer variants taking a strong hold in the market – the S Grand, the SP Grand New and the Trekker.

Medium Twins

Airbus Helicopters AS365 N3+ never reached critical mass with a total fleet of just some 30 aircraft with no new orders. As such, the type failed to deliver as expected and Base Values have been changed by -40% to more accurately reflect the Current Market Value/Base Value relationship.

Airbus Helicopters EC155/H155 was developed as a successor to the popular AS365N to serve the offshore sector, however, it failed to deliver in significant numbers to the sector. Today, only 25% of the fleet is in offshore configuration with the majority, and just over 40% is in corporate/VIP configuration. This indicates a fundamental change in fleet make-up based on original expectations, and while popular in Corporate configuration, the sector is notoriously price sensitive, thus it is highly unlikely that Current Market Values will increase significantly. As such, Base Values for the type have been reduced by between 27% and 51% depending on vintage, to reflect the Current Market Value/Base Value relationship more accurately.

Sikorsky S-76 C++’s popularity continues to diminish and while the corporate market has managed to provide some respite for available aircraft in good condition and with low time, the pool of suitable candidates for such transition is rapidly reducing. The IOGP 690 Report issued in July 2020 did little to persuade operators and lessors it was worthwhile keeping stored stock, and we subsequently observed continued high availability as those machines were brought to market. As a consequence of the shift in market dynamics, Base Values have been reduced by around 60% to more accurately reflect the Current Market Value/Base Value relationship.

Heavy Twins

Sikorsky S-92A continues to have a weak outlook as the fundamental market for the Heavy category has shifted as oil production has slowed down and increased automation of platforms means less personnel is required. In addition, there is currently a limited secondary market for the type, thus idle helicopters are finding it challenging to get back to service. The type is ageing with an average fleet age of 10 years and no new deliveries have been observed since 2019. Part-outs are occurring, which may mean the market could stabilise, should oil production, and in particular exploration, recommence. However, due to what we consider to be a permanent shift in the fundamentals of the market for this type, Base Values have been reduced by up to 30%.

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