CHC Helicopter Corporation
As of 2007, 70% of CHC's total revenue was generated by helicopter transportation and services to the oil and gas industry. Higher oil prices have encouraged greater investments in offshore wells, and have raised the utilization rate of existing rigs. These drilling and exploring rigs require helicopter transportation to move crews, food, mail, and supplies to and from offshore locations. Most new wells however, are up to 200 miles off land in deeper water reserves. To travel that distance, medium and large helicopters, like that of CHC's fleet are required.
CHC is in a strong position compared to its competitors since it already has a wide base in the international arena. It also has a much larger developed fleet of medium to large aircraft while most of its competitors are specialized in smaller aircraft. It also has its own internal Repair and Overhaul sector, while other companies must go to third parties to have there helicopters repaired.
CHC Helicopter makes money by renting, selling and repairing various types of helicopters. Its 2007 revenue was $1,149.1M and has consistently risen over the past 3 years. The continual rise is attributed to growth in the use of offshore oil rigs. There is a 43% forecasted growth in number of offshore oil rigs over the past 5 years and during the coming 5 years.
CHC Helicopters' can be roughly divided into 2 groups
CHC rents out its aircraft for periods of time to its customers. Deepwater oil exploration contracts generally are 12 months long or less, while contracts to oil and gas production sites are often between 2 to 10 years. 67% of the revenue generated in 2007 was a result of long-term contracts. After contracts expire, there is frequently another round of bidding to reassign the new contract. However, the incumbent generally get the contract again if the relationship is still positive. Because of this process, CHC has been able to maintain some of its customers for over 30 years. Its frequent customers include: BP (BP), Exxon Mobil (XOM), ConocoPhillips (COP), Royal Dutch Shell (RDS'A), STATOIL ASA (STO), TotalFinaElf, S.A. (TOT), ChevronTexaco (CVX), Maersk, Nexen (NXY) and Unocal.
CHC Helicopter is a foreign based company with the vast majority of sales outside of North America. This provides CHC with a significant advantage since it has a strong stance in geographic regions such as Africa, Nothern Europe, Asia, and Brazil. Because of the nature of the long-term contracts which tend to favor incumbent companies, CHC's strong global position allows it to have stability and probable future growth.
CHC also has a strong advantage over its competitors in that it has its own Overhaul and Repairs sector within the company. This allows them to do in house repairs, while competitors must go to a third party. CHC is also the only company licensed to repair the engine and major components of the Eurocopter Super Puma and EC225 helicopters.
|Revenue by Geographic Area||(in millions)||%|
|Other Asian Countries||$68.1||5.9%|
|Other European Countries||$120.9||10.5%|
As of Fiscal year 2007, 70% of CHC's total revenue was generated by helicopter transportation and services to the oil and gas industry. The rise in sales of offshore drillers such as Transocean (RIG), Diamond Offshore Drilling (DO) and Noble (NE) have caused an increase in demand for helicopters. Approximately 3 billion to 15 billion barrels of "sweet crude oil", possibly the largest American oil reserve, has been discovered in the Gulf of Mexico. Many other sites such as off the coast of Brazil have led to speculation that future oil will be derived through off-shore drilling deepwater oil exploration. Because each rig requires at least 1 helicopter to service it with food, water, mail and other necessary supplies, the growth of offshore drilling will continue to expand the demand for helicopters. CHC is particularly well placed since it has the largest fleet of Medium and Large Helicopters in the world and it has the largest base in Africa, Asia, and Brazil. 
The Oil Industry has felt pressure to find a way to lower the rising oil prices. There has been much research put into lowering man power on offshore oil rigs or totally automating the process altogether. The rise in automation and remote controls has lowered the amount of staff necessary on both old and new rigs. In addition, many of the oil customers of CHC have the capacity to run their own in-house helicopter production. If these companies were to begin their own internal production, the loss of this sector will have a large negative effect on the company.
The labor force in Europe and Australia is unionized, and the Global Operation pilots have submitted an application to unionize. In 2007, CHC experience a work-to-rule job action in Denmark which had a negative impact on production. A work-to-rule job action is when workers do only the minimum work required by rules. The result is a slowdown in production which puts pressure on the management. The companies operations in Netherlands are also bound by law to ask to advice of the Netherlands Work Council before taking actions on a variety of decisions.
In order to operate, CHC must receive a license to do so by the nation. In 2007, 45% of the total revenue was generated in Europe. The European Union requires a majority of the company to be owned by national of member states of the European Union. This requirement is fulfilled on the basis that the Estate of Craig L. Dobbin is a citizen of both Ireland and Canada. In 1994, two European competitors challenged CHC's right to operate in Europe. As a result, the company lost the license to operate, but has since then, regained the right. Similar legislation stands for other countries such as South Africa, where the law requires 75% of the voting rights of must be residents of the Republic of South Africa. CHC indirectly acquired Court Air, a South African registered company. A letter from the Ministry of Transportation approved the registration of Court Air, but reversal of this decision will force CHC to lose its ability to operate in the nation.
CHC competes with a few other, mainly American, companies. It is the only company with with a large international base. BRISTOW GROUP (BRS) and PHI (PHII) both have a larger fleet of small aircraft, but CHC has the largest fleet of medium and large sized aircraft. Because of this, CHC Helicopter has the strongest position in the growing Oil & Gas Drilling & Exploration. The Offshore rigs require helicopters that can fly long distance at night and in bad weather, only medium and large aircraft can do this.
|'||Small Helicopters||Medium Helicopters||Large Helicopters||Other and Fixed Wing||Revenue|
|CHC Helicopter (FLI)||2||146||89||20||$1.26B|
|Seacor Aviation Services||80||44||3||0||$215M|
|BRISTOW GROUP (BRS)||141||118||68||11||$919M|
|Rotorcraft Leasing Company LLC||89||5||0||0||$15M|