CHC Faces Bankruptcy Challenges, Despite Plan
CHC Group faces additional challenges to reorganizing its operations beyond gaining a judge’s approval of its plan with key creditors emerging from bankruptcy.
The U.S. judge overseeing the operator’s federal Chapter 11 case, Barbara Houser, will hear arguments Nov. 2 in Dallas on the “plan support agreement” with creditors and lessor Milestone Aviation. Those parties can back out of the plan if it is not court-approved and executed by Nov. 11.
Under the pact, CHC would get $300 million in new capital from creditors and terms for restructured leases and additional asset-based financing commitments of $150 million from Milestone and its affiliates. CHC said it anticipates emerging from bankruptcy proceedings “as quickly as possible,” with forecasted liquidity of $400 million.
The support agreement reflects CHC’s efforts to build consensus among parties to the bankruptcy, which contain many (but not all) of its subsidiaries and affiliates. U.S. bankruptcy proceedings can open a company’s reorganization to various bidders, however, with surprising results.
With Eastern Air Lines’ bankruptcy 27 years ago, for instance, creditors’ efforts with the judge and unions on options for saving that company were stalled when a diamond dealer walked into the Manhattan courtroom with a bag of cash and an offer to buy the air carrier.
CHC told the judge Oct. 11 that it and its advisors had worked to nail down alternatives for recapitalizing its helicopter, MRO and other operations. One advisor, the investment bank PJT Partners, began working after CHC’s May 5 bankruptcy filing to identify sources of new financing. It contacted 20 potential investors and received inquiries from roughly 25, CHC said in a filing.
PJT executed nondisclosure agreements with 15 potential investors, CHC said, and a handful went through initial due diligence with PJT. “Ultimately,” the operator added, “none of these third parties were interested in submitting a formal proposal.”
As PJT pursued that option, CHC negotiated with existing creditors on potential investments. This led to a proposal from a group of six secured creditors that the company found more favorable to a separate bid by a seventh, individual creditor. The group became the plan’s key sponsors.
CHC also won backing from Milestone Aviation for its committee of unsecured creditors. That can be a key player in a bankruptcy case, since money its members lent to the debtor is not secured by aircraft or other seizable assets. The members’ main means of recovery are through ensuring the debtor survives as a viable entity capable of repaying the debts or making sure its unencumbered assets are sold at the highest prices. R&WI
Boeing, Korean Air Partner on Combat Helo Drones
Korean Air’s aerospace division and Boeing have renewed a project to convert some South Korean military helicopters into unmanned aerial systems (UAS).
The companies signed a memorandum of agreement at Korean Air’s Seoul headquarters. The agreement calls for the development of unmanned aircraft by converting MH 500MD Defense helicopters.
Per the agreement, Boeing will provide technical support for flight control and other data, as well as for test evaluations. Both companies are also set to implement an overseas joint marketing program.
This agreement comes after Korean Air successfully completed a remodel of the ROK Air Force’s retired 500MDs to unmanned rotorcraft from 2014 to May of this year. Now, Korean Air has launched a new project to remodel the 500MDs into unmanned, armed aircraft. The project will run until 2017.
The combat aircraft will be able to perform day and night reconnaissance and surveillance missions, as well as conduct short-distance precision strikes. R&WI
Air Medical Conference Postponed Due to Charlotte Riots
The Assn. of Air Medical Services (AAMS) postponed its Air Medical Transport Conference due to the instability surrounding riots at its host city of Charlotte, North Carolina.
The conference was to be held Sept. 26 to 28 at the Charlotte Convention Center, just blocks away from rioting activity that has spurred in response to a recent fatal shooting of a man by a police officer. Rioters began throwing various items such as rocks and water bottles at police in riot gear. North Carolina Gov. Pat McCrory declared a state of emergency at the city’s request.
The conference will now be held Dec. 13 to 15 at the same venue.
In a letter signed by the association’s president and CEO, Rick Sherlock, and Board Chairman Dave Evans, the association explains the conference will “be a bit shorter than a typical AMTC.” Pre-conferences typically held the weekend before the conference will be held on that Sunday or Monday.
The letter also cites that a December conference eliminates budgetary challenges that an event in a new fiscal year would pose. All registered attendees will remain registered for the new dates. R&WI
Maryland University Flies First Solar-Powered Helo
A team of University of Maryland (UMD) students made history after it flew a piloted, solar-powered helicopter for the first time. The aircraft, composed of a cabin frame, four rotors and eight blades, flew for nine seconds and got more than 1 foot off the ground.
Team Gamera was formed in 2012 by UMD students inspired by the American Helicopter Society’s Sikorsky Prize. At that time, the goal was to engineer a human-powered helicopter. Once that goal was met, the team in 2014 reinvented itself into Solar Gamera, with the goal of taking the helicopter from human power to solar power.
Two years later, Solar Gamera reached its goal, with materials science major and team member Michelle Mahon in the cockpit.
Although the students recognize that the helicopter may never see long-distance flight, the program provides a unique, hands-on learning experience. More than 100 students from across the UMD A. James Clark School of Engineering have been a part of the Gamera team. R&WI
Helos ‘Critical Assets’ in Hurricane Relief
A South Carolina National Guard’s CH-47F Chinook delivers water and food supplies to Hurricane Matthew victims in the state.
In Haiti, the government expects the death toll to continue to climb and said that well more than 1 million people are in need of humanitarian assistance. The devastation left by Hurricane Matthew is requiring help from all places, as the U.N., USAID, the U.S. military and others are sending aid from abroad and putting boots on the ground.
During a mission on Oct. 10 in Port-au-Prince, members of the U.S. military loaded supplies onto a Marine Corps Sikorsky CH-53E Super Stallion. On Oct. 13, troops at Port-au-Prince loaded bags of rice onto an Army Boeing CH-47F Chinook. Though the storm may be gone, supplies like food, cholera treatment supplies and hospital equipment are needed to keep survivors alive.
U.S. helicopters have been flying anywhere from 80,000 to 100,000 pounds of food and medical supplies to Haiti every day for almost a week. The USS Iwo Jima recently arrived to relieve the USS Mesa Verde as a mobile helicopter base after the latter had been stationed there since the beginning of the month. It’s expected the relief effort will carry on for quite some time, as the U.N. recently extended its Haitian peacekeeping mission for another six months. R&WI
Sikorsky Production to Stay in Connecticut
Sikorsky workers represented by the Teamsters union overwhelmingly voted to back Connecticut’s roughly $220 million incentive package to keep the Lockheed Martin unit in the state manufacturing helicopters.
Connecticut state legislators approved the deal at the end of September. But it required concurrence from the union. More than 93% of 2,244 members of Teamsters Local 1150 union, which represents Sikorsky workers in Connecticut and Florida, voted Oct. 9 to approve contract changes called for in the deal, which would keep production of U.S. Marine Corps CH-53Ks at the company’s Stratford plant.
In return for supplying secure jobs, Sikorsky under the changes would impose a two-tier wage scale for new employees, an alternate work week and pension plan changes. Each Sikorsky employee on payroll will receive a $1,500 ratification bonus for the vote.
Most of the changes ushered in by this agreement will affect only Sikorsky employees who started after June 30, 2017. They include a 25% reduction in hourly rates, an alternate work week of three 12-hour days (with workers paid for 40 hours) and automatic company pension contributions and supplemental contributions.
Stratford is now positioned to produce nearly 200 Ch-53Ks, or “King Stallions,” for the U.S. Navy and Marine Corps. This heavy-lift helicopter is the successor to the CH-53E and will be the second-largest heavyweight in the world, next to Russian Helicopters’ Mi-26.
Stratford, Connecticut, is still where Sikorsky headquarters are located — even after becoming a subsidiary of United Aircraft Corp., which became United Technologies Corp., and after it was acquired by Lockheed Martin in 2015. R&WI
Russ Spray Retiring as Turbomeca USA Chief
Turbomeca USA President/CEO Russ Spray is retiring after a 50-plus-year career in helicopters.
“After 53 years in this wonderful world of helicopters, it is with both excitement and a bit of nostalgia that I am announcing effective Oct. 1, 2016 my retirement,” Spray said in a Sept. 20 letter to staff and associates.
Spray’s career began in 1963 after his uncle, a retired pilot for Trans World Airlines, rode in a helicopter and urged him to do the same. Spray paid $5 for a ride in a Hughes 269 operated by Pacific Airmotive at Hollywood Burbank Airport in Burbank, California.
That year, he worked for Pacific Airmotive and got his private pilot’s license, became a ground school instructor and, at 18, received his commercial pilot and certificated flight instructor licenses.
He became a contract instructor for the U.S. Army at Fort Rucker, Alabama, and Camp Wolters in Mineral Wells, Texas, for 7.5 years.
Spray worke in Iran as flight training commander for Bell Helicopter International-Textron, leading a training squadron there until Americans were evacuated from Iran’s 1979 revolution.
Returning to the U.S., he finished a bachelor’s degree in medical technology from the University of Texas at Arlington and came to run laboratory services for what is now Baylor All Saints Medical Center in Fort Worth, Texas.
Spray was with Memorial Hermann Life Flight, which was founded in part by the late world-renowned trauma surgeon Dr. James “Red” Duke. It was the second air medical service set up in the U.S.; Spray taught medical technology and helicopter operations there.
Spray spent the next 25 years contributing to the development of the air medical industry in the U.S.
In 2002, he moved on to Rocky Mountain Helicopters. Spray helped restructure and grow it from a company with $3 million in revenue and seven aircraft to one with more than $100 million in annual revenue and 90 aircraft. He helped convert it to a privately held company and later sold much of it to Air Methods.
With his share of that sale’s proceeds, Spray retired as chairman and CEO of Rocky Mountain Holdings.
“Forty-five days into that retirement, I took a call from [Turbomeca CEO] Emeric d’Arcimoles, who asked if I’d be interested in running Turbomeca USA for a year or two and building it into a platform for engine sales and support in the U.S.,” Spray told R&WI. “Fourteen years later, I’m getting on an airplane for France for Turbomeca’s 2017 budget planning meetings.”
Spray oversaw Turbomeca USA’s re-engining of the U.S. Coast Guard’s of Aerospatiale HH-65 Dolphins, its ramp-up of production of Arriel 1E2 engines for the U.S. Army’s hundreds of UH-72A Lakotas and the selection by Bell Helicopter of its Arrius 2R to power the new 505 Jet Ranger X. Today, in its 35th year, Turbomeca USA (soon to be Safran Helicopter Engines USA) supports more than 2,300 engines operated by about 400 customers across a wide range of missions. R&WI
Reports: KAI Surion Fails Cold-Weather Tests
The supply of KUH-1 Surion utility helicopters to the South Korean Army has been halted after the aircraft reportedly failed cold-weather tests performed earlier, according to Korean media reports.
Korean Aerospace Industries (KAI) and Airbus Helicopters co-developed the aircraft to replace the country’s fleet of UH-1Hs and 500MDs. As part of the contract with the Defense Acquisition Program Admin. (DAPA), the manufacturer was to make about 200 more by 2023.
The aircraft was reportedly performing cold-weather safety tests in Michigan last winter. Media reports cite a DAPA spokesperson as saying that more ice had built up than was allowable on the aircraft engine’s air inlet, and the 53 aircraft that have already been delivered and assigned around the peninsula since 2013 will likely not be operable until the problem is a addressed.
A KAI official spoke to Korean media to say the manufacturer plans to redesign the necessary parts to undergo further testing. R&WI
Former Kaman CEO Heads West
Succeeding the CEO and founder of a company is a daunting task for anyone — there are high expectations, to say the least. But when Charles Kaman, founder of Kaman Aircraft Co., retired at the turn of the century, Paul Kuhn stepped up to the challenge. Kuhn died on Sept. 17 at age 74, but the impact he had on Kaman remains.
“He had the unenviable task of succeeding Mr. Kaman after his 55 years as CEO,” said Kaman’s current chairman, president and CEO, Neal Keating. “Paul led a fundamental transformation of our company and retired with the company positioned to benefit from strong positive momentum.”
Kuhn retired from Kaman in 2008, but not before he recapitalized the company from a dual-class stock structure, sold the music segment, developed a strong leadership team and acquired the Joint Programmable Fuze program — the
largest single program Kaman has — among other accomplishments. The fuze allows the settings of a weapon to be programmed while in flight.
Add to that list acquiring the aerospace bearing manufacturing company RWG business in Germany, and it’s clear that Kuhn paid attention to both the Aerospace Group and the Distribution Group. With a bachelor’s degree in mechanical engineering and a master’s in business administration, Kuhn was an aerospace professional with the know-how to run a business.
Prior to Kaman, he was the SVP of operations in Aerospace Engine Business for Coltec Industries. Before that, he held senior positions at Chandler Evans and General Electric.
A celebration of life was held in his honor on Sept. 25 in Connecticut. R&WI
EASA Lifts Civilian Super Puma Ban
EASA has lifted the temporary flight suspension of the Airbus Helicopters Super Puma EC225 LP and AS332 L2.
The Civil Aviation Authority said its restrictions on the aircraft will remain pending investigations into the accident.
This suspension was put in place on June 2 following the crash of CHC Helikopter-operated EC225 that killed 11 passengers and both pilots in April.
An investigation, led by the Accident Investigation Bureau of Norway, found the cause of the accident to be the main gearbox. More than 27,000 people signed a petition following the accident to revoke the airworthiness certificates for the Super Puma and to remove it from service. However, Airbus stood by its aircraft, believing in its future operation.
Several measures concerning the gearbox were, and shall be, taken to enable the end to the suspension. These include replacing the type of stage main gearbox planet gear, which was involved in the accident, with another type that has demonstrated reliability. It also calls for decreasing the time before replacement of this other gear type by more than 50%, requiring daily inspection or after 10 flight hours (whichever comes first) of the chip detectors and requiring inspection of the oil filters against stringent criteria (every 10 flight hours).
All main gearboxes that have experienced external events that could have lead to stress, visible or not, will be taken out of service.
The Swiss Air Force had already resumed its flights prior to EASA’s announcement. R&WI
Bell, Airbus Reach Milestones at Japan Expo
Bell Helicopter and Airbus Helicopters Japan made the most of their time at Japan International Aerospace Exhibition 2016. From Oct. 12 to Oct. 15, both companies said they were busy giving and receiving signatures in Tokyo.
Bell now has plans to deliver a Bell 505 Jet Ranger X to Japan’s Yuhi Airlines for corporate travel and tourism operations after both parties signed a letter of intent. Japan’s first Bell 407GXP is set to make its way to EuroTec Japan, Inc. The company, which has experience operating Bell rotorcraft, will use the rotorcraft for corporate and VIP transport. Another letter of intent was signed, this time between Bell and SECO International, for another first in Japan — The first Japanese customer of Bell’s Customer Advantage Plan (CAP). SECO International will be using the fixed-cost-per-flight-hour service option for its two Bell 505s, which are planned for future delivery.
Established in 2009, Airbus Helicopters Japan sold four helicopters, made one delivery and signed a contract for Performance-based Logistics (PBL) during the exhibition.
Japanese real estate company, Mikikanko Co., Ltd, purchased and Airbus H125 — its first helicopter. As a sales agent for Kawasaki Heavy Industries (KHI), Airbus signed a deal with Hiratagakuen for two Airbus H145/BD117D-2s — the first Japanese order of that aircraft. Japan’s Fukuoka City Fire Department signed on to replace its Airbus Helicopters AS365N2 with an AS365N3 in 2018.
At the end of the week, Japan Maritime Self-Defence Force (JMSDF) signed a contract for Performance-based Logistics (PBL) through Airbus Helicopters’ HCare program. This contract, effective this month, enables long-term cost reduction for JMSDF and improves efficient parts supply. The PBL will be applied to JMSDF’s TH-135s for training. The delivery of one Airbus H125 to Toho Air Service Co., Ltd was also announced on Friday. This is the 10th H125 to be delivered to Japan. Toho Air Service was the first Airbus Helicopters customer in Japan, and now operates a total of 27 of its rotorcraft.
Bell has a Tokyo office, and three authorized Customer Service Facilities in the country. Airbus Helicopters Japan has offices in Tokyo and Kobe and has a 55% market share overall in Japan’s civil and parapublic sectors. R&WI