Bristow president and CEO Chris Bradshaw said the offshore energy sector is in “the early stages of a multi-year growth cycle,” as he gave shareholders an update on the company’s performance during a quarterly earnings call May 8.
The optimistic projection provides relief for the company and others like it following the prolonged downturn of the oil-and-gas sector.
“What we’ve seen now is that a new upcycle has clearly begun,” Bradshaw said. “Global demand has returned and years of underinvestment have resulted in limited available supply.”
This limited aircraft supply and long lead times for new builds have become a silver lining for Bristow, which sees opportunity with 70 percent of its offshore legacy contracts set to expire. Bristow expects to renew those contracts at improved rates, which Bradshaw estimated could rise by as much as 25 percent.
He said the fundamentals of the company’s offshore energy services business “are very strong.” In fact, Bradshaw said the environment is “more positive than any time that I can recall since entering the helicopter industry. After several difficult years, we’re now seeing some positive tailwinds.”
Bristow has a global fleet of 218 aircraft, including 67 Sikorsky S-92s, 21 Leonardo AW189s and 53 AW139s. At HAI Heli-Expo earlier this year, it signed a contract for another 10 AW189s, with options for 10 more.
With deliveries starting in 2025, Bradshaw said the AW189s “serve most of the missions that the traditional heavy helicopters like the S-92 have serviced, at a meaningfully lower operating cost and lower CO2 emissions.”
When asked about improvements to parts availability for the S-92, Bradshaw said the sector continues to see delays in lead times for parts and repairs.
“However, in working with Sikorsky, they are optimistic,” Bradshaw said. “We’re working with them to help get us to a position by the end of this year that is more normal — where hopefully, the parts are shipping when the parts are needed … but real-time conditions on the ground today remain challenging.”
While the offshore side of the business has experienced volatility over the years, Bristow’s government services contracts for search-and-rescue and personnel transportation has provided welcomed stability for the company.
Bristow has seen several wins on its government services side of the business, having been awarded 10-year contracts for the UKSAR2G, Irish Coast Guard, Netherlands Coast Guard, Dutch Antilles Coast Guard, and Falklands/U.K. military in the last 24 months.
“These are long-term, stable contracts, generating cash flows from high credit quality government customers that provide attractive margins and capital returns for the company,” Bradshaw said.
In preparation for its two largest government contracts — the £1.6-billion UKSAR2G and the €670-million Irish Coast Guard contracts — Bristow is investing $300 million to purchase six new AW139s and five new AW189s, as well as modify existing aircraft.
“Over the last couple of years, we’ve been successful in capturing opportunities, and we’ve been able to make investments to grow and diversify this leading government services business,” Bradshaw said.
Bristow’s shareholder update comes on the heels of a three-day strike that started May 7 among Bristow’s U.K. pilots and tech crews.
According to the British Airline Pilots Association (BALPA), Bristow pilots and tech crews are demanding “a fair and reasonable” pay deal, after accepting below-inflation pay settlements and enduring pay freezes for the past few years while the company experienced financial hardships.
With the offshore market rebounding, the union said it was time to “repay the flight crews’ loyalty” by “restoring pay levels” to make them comparable to other helicopter operators.
