‘Demand for helicopters follows changes in oil prices’

Russian Helicopters, part of state-run Rostec Cooperation, is one of the global leaders in helicopter production and the only helicopter design and production powerhouse in Russia. Russian Helicopters was founded in 2007 and is headquartered in Moscow. The company comprises five helicopter production facilities, two design bureaus, a spare parts production and repair facility, as well as an after-sales service branch responsible for maintenance and repair in Russia and all over the world. Its new programmes  include the medium multirole helicopters Mi-38, Ansat and Ka-226T as well as Mi-171A2 that combines the classical advantages of the legendary Mi-8/17 series with the benefits of innovative solutions. Huma Siddiqui finds out more in an e-mail interview with Alexander Mikheev, chief executive officer, Russian Helicopters. Excerpts:

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 2nd 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 defense 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.

What is the company’s interest in looking at Indian market?

Russia, India, the CIS countries, 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.

Have the declining oil and gas prices impacted 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 1 to 2 years) the changes in oil prices. Future prices forecasts for the year 2040 range about 300%: 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.

Russian Helicopters is not likely to be impacted much as only a very limited number of our helicopters are engaged in offshore activities – small numbers are in Vietnam (Vietsovpetro), Cuba, the Caspian Sea, the Black Sea and Sakhalin. That’s about 20-25 helicopters in total.

What are the future plans of the company?

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.