Charting Bristow’s Course

Bristow Helicopters celebrated its 60th anniversary this year. The company was the first civilian helicopter transport company to work in the oil-and-gas industry, and has since grown to become one of the largest helicopter operators in the world. Heath Moffatt Photo
It’s been quite a ride for Jonathan Baliff since he took his place at the helm of the Bristow Group just over 12 months ago. That’s not to say he’s been a passive presence at head of the company as it approached its 60th anniversary this year — in fact, he’s been quite the opposite. 
At Helitech 2014 in Amsterdam, just a few months into his tenure, Baliff made a very public call for the original equipment manufacturers (OEMs) to take their share of the “availability risk” for operators following the purchase of an aircraft — and promised that Bristow would make no purchases from OEMs that failed to do so. He also stated that the operator would be drastically reducing the number of helicopter types in its fleet — from 24 down to six, with would also mean that any future orders would be for significant numbers of aircraft. Less than five months later, Bristow’s commitment to both statements was demonstrated as it signed a contract with Airbus Helicopters at Heli-Expo 2015, in Orlando, Fla., for 17 H175s, along with a “comprehensive support services” agreement from the manufacturer.
At the same event, Bristow signed a platform development agreement with AgustaWestland for the AW609 TiltRotor program. The wide-ranging agreement will see the two companies working closely together on a number of activities in support of the program’s development, addressing concepts around operations, regulations, maintenance, and optimizing the aircraft’s configuration. The aircraft appeared at the show in a custom split livery — one side featured Bristow’s name and logo, while the other featured those of Eastern Airways, a regional fixed-wing airline in which Bristow acquired a 60 percent stake in 2014. The company’s presence in the fixed-wing world was further expanded in February this year, when it acquired an 85 percent interest in Airnorth, the largest regional airline in Northern Australia.
Bristow CEO Jonathan Baliff (left) receives a model of an Airbus Helicopters H175 from the manufacturer’s CEO Guillaume Faury at Heli- Expo 2015. Baliff praised Faury’s response to his call for life-of-service support from OEMs. Jean Levasseur Photo
Finally, the last few months have seen the progressive launch of Bristow’s U.K. search-and-rescue (SAR) operations — a program that will see the company provide SAR services on behalf of the U.K.’s Maritime and Coastguard Agency with a fleet of 11 AgustaWestland AW189s and 11 Sikorsky S-92s.  
However, while the company has many exciting developments in the works, it is also having to negotiate some particularly choppy waters in its core offshore transportation work due to the ongoing downturn in the price of oil. The situation appears particularly challenging in the U.K., where, despite taking measures to cut costs, the company has admitted it may have to look at redundancies.
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So, there was plenty to talk about as Vertical caught up with Baliff to reflect on how the company has changed over the last 60 years, the challenges it faces today, and the opportunities he sees for growth in the future. (Editor’s Note: This interview was conducted before the fatal crash of a Bristow-operated Sikorsky S-76C+ in Lagos, Nigeria, on Aug. 12)
Bristow began its 10-year contract to provide search-and-rescue (SAR) services on behalf the U.K.’s Maritime and Coastguard Agency on April 1, 2015. The company will eventually use 11 Sikorsky S-92s and 11 AgustaWestland AW189s to service the contract. Bristow Photo
V: What are the company’s key areas of focus at the moment?
Jonathan Baliff: I have to give a nod, given it is the 60th, to the previous CEOs of the company, especially Alan Bristow, and then Bill Chiles, who is the one who really had a tremendous impact in both joining the company up and then also putting it under a culture and a banner of safety under Target Zero. It’s my mandate to, if you think of Bristow as a tree, tend that root structure of safety, efficiency, and client service, and grow this tree, because the roots are big enough to serve markets other than just our very strong trunk of oil-and-gas services. And that actually helps our oil-and-gas clients, because we then we get more capabilities and a larger fleet that allows for a lower cost product for them.
The great thing about Bristow is we have a really stable management and employee force. We have very low turnover, except for obviously trying to deal with our cost structure during the downturn, we have tried to hold on to as many people as we possibly can because what goes down comes up, and so we want to prepare for what will be an eventual upturn in this oil-and-gas market, and then also branch out. As you know, we’ve put a new branch in place by going live with our United Kingdom search-and-rescue contract. 
There have been two other areas that I’ve been very passionate about. The first is really getting into industry safety with HeliOffshore, working with our peer companies, extending and learning from each other, and creating more of a modern contemporary industry safety program. It’s really making a big difference to our safety; we were Target Zero last year in aviation for the second year in a row. We also had really world-class ground safety, with very few incidents. We’d like to be ground safety Target Zero, too — that is the goal, and we think it’s very achievable. What’s particularly important to me is that we’re expanding it to the industry.
Finally, since I joined Bristow in 2010 as CFO, I’ve talked a lot about our assets and U.K. SAR, and oil-and-gas, but we continue to have the strongest balance sheet. The type of work we do on physical safety is also applied to fiscal safety on our balance sheet, and making sure that we don’t over-extend ourselves and are prudent in how much leasing we do, for example.
Bristow and its fellow major offshore operators have agreed to no longer compete on safety, as well as share information and best practices. Bristow Photo
V: At Helitech last year, you said you were looking to increase the percentage of leased aircraft in Bristow’s fleet from 25 to 30 or 35 percent. What’s the drive behind that? What does that allow you to do?
J.B.: In oil-and-gas we only use the helicopter for anywhere between 15 and 20 years, but the life of the helicopter can go out 30 to 35 years, so we don’t want use all of our financial capital to spend on owning a whole bunch of fleet, some of which we’re then going to sell. Leases allow you to be very capital efficient, which then gets back to my idea that we allow ourselves to get a very cost-efficient product to our clients. 
However, if you do too much leasing, if you lease more aircraft than you own, you will not have a very flexible fleet, or you will also have a fleet that can’t tolerate a downturn. We’ve been very prudent about not doing too much leasing, especially when there are so many new leasing companies created. All these guys are great partners, but you can’t do too much leasing — you’ll end up with a very inflexible fleet, operationally or even during a downturn. It can be a real weight around your neck.
V: When you announced that Bristow would no longer compete on safety, was that a hard buy-in from within the company? What was that conversation like with other operators?
J.B.: I would say that, today, we have buy-in from all the stakeholders. We had our annual general meeting of HeliOffshore in Portugal in May, and a lot of our safety and operational employees, our peer companies, our OEMs, and our lessors were there for the first time. So there was real buy-in. 
But when it first started, I felt there was a little bit more resistance within our own company than there was with my peer companies, ironically. You’d think that because the companies are so used to competing, that it’d be harder to work with the peers. I’m not talking about years here — it was weeks or months — but I found that that there was a lot more skepticism within our company, just because we’ve been successful competing on safety, and we have a lot of intellectual property — Bristow was one of the originators of HUMS, was part of the beginnings of TCAS II, and we’ve been very involved with Survitec in creating the life jackets for our passengers. So to actually go out there and go, “All that intellectual property and whatever else we have in the hopper, from an intellectual property standpoint, we’re going to in essence give away….” That, for some of our team members was a little like, “Are we really going to do that?” But once it was explained, all the employees in Bristow and our partner companies got on board very quickly. It’s been great to see.
Baliff said its oil-and-gas customers would benefit from the operator’s diversification into other markets. Harald Pettersen Photo
V: Was the grounding of the EC225 fleet perhaps the driving force behind this effort — illustrating how the whole industry can be affected if there are safety concerns about rotary-wing transportation? 
J.B.: I can’t say if there was any one event, but I will say that it took a lot of courage for those CEOs — Bill Chiles, Bill Amelio [CHC] and James Drummond [Avincis/Babcok] — to say “OK, we’re done. We’re not going to compete on safety.” But that’s how new things happen, right? Somebody has got to be courageous and ask why. And now what I really love is that people are going, “Of course we shouldn’t compete on safety.” Whereas it was a little more of a radical idea back in 2013.
V: Speaking of radical ideas, you made an attention-grabbing call at Helitech for the OEMs to step up to provide life-of-service support. How was that received?
J.B.: Every single OEM called me and said, “It sounds innovative, it sounds radical, and we want to be a part of this for sure.” Every OEM was there for a first or second call, but the only one that really stepped up with significant resources, and kind of pushed me a little bit, was Guillaume Faury at Airbus Helicopters. I’ve been giving him credit not to denigrate his peer CEOs, but to give credit where credit is due. He was the one who came to us a third time, and really then we started getting teams together and everything that would need to be in place to put in a life-of-support agreement for a purchase of 17 H175 helicopters. I’ve been pretty vocal saying this is the way Bristow is going to buy helicopters from everybody. 
By the way, very interestingly we don’t have to have this discussion when we buy fixed-wing. We’re going to become a very big buyer of regional jets, because we’ll be replacing the fleets of Eastern [Airways] and Airnorth over time naturally as those fleets need to be replaced. Those manufacturers are already there, they already know that you get life-of-service support, similar to what we’ve done with Airbus, with real guarantees on availability. Airbus was the one who was kind of able to break the mold of putting that as the key plank in a purchase agreement and combining those two. This is not just words on a page and a contract, Guillaume has to back it up with significant augmentation and also re-engineering of his support and design, and production of the 175s, and he’s really committed to that. 
We’re good at taking operational risk that we can manage. If it be weather, safety, pilot training, [or] mobilization in areas where there was no real infrastructure — we’re good at that, we can do that, we can manage that risk. What we can’t manage is a global infrastructure supply chain for helicopter parts that are really only provided by the manufacturers. If you don’t have the support right at the beginning of the asset’s life, we’re taking too much risk. That’s really where my call came from. 
Bristow has increased the percentage of its fleet that is leased, but wants to restrict that number to up to 35 percent to enable it to remain flexible. Heath Moffatt Photo
V: Why do you think it has taken so long for the helicopter industry to adapt best practices from the fixed-wing world?
J.B.: I’ll answer, but it’s only my opinion. Our fleets used to be much smaller than they are right now; the industry was much smaller, and much less global. Over our 60 years as Bristow, yes, we had outposts all over the world, but they were really small — maybe one or two helicopters. Now we have fleets of billions of dollars, and it’s only been in the last 10 to 15 years that we’ve achieved that level of scale. When you’re bigger, you have a bigger partnership with the OEMs; we’re a big part of their profitability. We’re becoming much more important to them, even during this downturn. And the supply of parts provides them a much higher level of revenue than in the past.
V: At Helitech, you said you were looking to reduce the number of types in Bristow’s fleet down to six. Is this still the plan? 
J.B.: Yes, squared! We’ve just started to eliminate a few types this year — we’ve said publicly that the [Airbus Helicopters] AS332 will be coming out of our inventory within the next 12 months; we’ve eliminated an older version of the [Sikorsky] S-76 in the last year; and our [Bell] 412s are coming out. We are very much on a journey — maybe we’re even a little bit ahead of where I thought we would be on reducing the fleet types — and the benefits are the same that you see with the airlines. I believe that we operate very safely, but simpler is safer, standardization is safer, [and] when you have fewer types I think you get an ability for a given level of resource to be more efficient. Pilot training is less complicated, and everything is just a bit easier. And then you get scale benefits like the airlines. When you fly 10 [AgustaWestland] AW139s for example, it’s very different than when you fly 60 AW139s — you just get tremendous global benefits in the aircrew and maintenance standpoints for our clients. All this is for the clients, we’re not doing this just for profitability, but we think we can become more competitive with six fleet types as opposed to the 27 or 28 fleet types we started this journey with.
Bristow expanded its order of Airbus Helicopters H175 to 17 aircraft with the signing of a “comprehensive support services” agreement at Heli-Expo 2015 in Orlando, Fla., in March. Anthony Pecchi Photo
V: The first bases in the U.K. SAR contract began operation earlier this year. How have the first few months been? 
J.B.: We’ve been very pleased. With the launch of the base at Caernarfon in July, we now have five bases operational. This is a real testament to Sam Willenbacher [director of U.K. search-and-rescue] and Alan Corbett [director of Bristow’s Europe Caspian Region]. We had real challenges here — less so with the pilot training and engineers — but the big issue has been the delay of the AW189s. We’re working with AgustaWestland, and we’re very confident in their ability to get these aircraft to us. This is a long contract, a decade-long contract, so they’ve been very good getting us some backup aircraft with some AW139s. Our capital strength, our ability to withstand and put more capital into this contract outside of what the U.K. government initially asked for, has been very key to being on time and on budget. It’s a good contract for our shareholders, but we’ve had to withstand and have the ability to use our balance sheet to back up these delayed AW189s, and I don’t think anybody else out there has the balance sheet at this point in the game to be able to do that.
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V: Why was the U.K. SAR contract such an important win for Bristow?
J.B.: I think there are four reasons, and one of them deals with the historic legacy of Alan Bristow. If you read his autobiography, Bristow wasn’t just an oil-and-gas company for most of his lifetime. It trained military pilots in Pakistan and India, for example. It did air rescue in Stornoway and Sumburgh in the ‘70s. We’re staying close to our roots — it’s a different branch of the tree, but it’s a branch that we’ve been on historically, so to me, it’s important to our culture.
The second issue is it provides a much higher level of service for the United Kingdom. We really appreciate what the RAF and the Royal Navy did — we appreciate it so much that we’re using most of their pilots to fly! But we’ve got new kit, the new S-92s, the AW189s, and that gives a much better capability than a 40-year-old aircraft. If you start talking to these pilots who are coming out of the military flying this new kit, it’s not just about the technology, it’s about the speed of the aircraft, it’s about being able to be on station longer, it’s about how the aircraft are easier to fly and can work with weather much easier. 
This contract also provides a level of financial stability and operational stability in the company, because it’s not correlated to oil-and-gas prices. This year, it’ll probably provide 10 to 15 percent of our revenue. In the future, it could be as high as 20 to 25 percent. That ability to provide an even more stable financial structure and balance sheet for our oil-and-gas clients, especially in the middle of a very intense downturn, will benefit them. 
Lastly, it gives us the confidence to go after other non oil-and-gas SAR. We have received a lot of reverse inquiries — there are a lot of countries watching us. We’re doing this for a significantly lower cost for the British government than they had before, and there are other countries that are really looking at this as a way to go. So for us, there’s future growth. 
Going forward, Bristow is looking to reduce the number of types in its fleet — to as few as six. Heath Moffatt Photo
V: Are there any other operational areas you’re looking at — such as air medical?
J.B.: I get back to this tree analogy. We’ve got this root structure in place, the trunk and the base of it is in oil-and-gas services, but now we’ve got this very strong branch that’s developing in civilian government outsourcing and SAR. But again, because the capability is so significant, we can actually put even more branches on this tree safely, to benefit the whole tree. We’re beginning our journey by absolutely looking at air medical. Remember we do fixed-wing, too, so we can provide fixed-wing air medical services, which is something else we can get into.
V: What does the AW609 development partnership provide Bristow?
J.B.: It’s really in response to our clients’ desire for joined-up service. A lot of our clients fly from Clapham Common [in London] up to Aberdeen, and then Aberdeen off the to the rig or platform, and that helicopter piece is only 100 to 200 nautical miles. The other part is much longer, and providing a more seamless service gets a much better level of efficiency for our clients. The TiltRotor is just an outgrowth of our getting into fixed-wing, through Eastern Airways and Airnorth. Because the best way to combine these services is in one machine, right? The 609 will have the legs to maybe get somebody from Clapham Common directly to the rig, and that’s just more efficient, it’s more secure, [and] we believe in the technology. It’s become much more proven technology through the [Bell-Boeing V-22] Osprey’s development, and the 609 today is very different to the 609 12 years ago. It’s lighter, it has more range, [and] it has more speed. We think AgustaWestland is really a great partner. We’re already in the middle of this partnership; we’re really working quite closely with them to commercialize the 609.
An AgustaWestland AW609 appeared in a Bristow/Eastern Airways livery at Heli-Expo 2015. Jay Miller Photo
V: How close are you?
J.B.: They’ve publicly said they’re trying to get certification by the end of 2017; our goal is to put an order in within the next 12 months. We haven’t put an order in yet because we’re looking to make changes to the aircraft that will help ease its commercialization. I think AgustaWestland has been very smart in signing an exclusive agreement with us, because it’s a lot easier to work with one large leader that has the financial capability to purchase these aircraft even in a downturn, and so for us, we want that certification to not delay the commercialization. Just because it gets certified, doesn’t mean it’s commercially ready. We want to work in parallel with the regulatory agencies that are certifying it, but also there will be changes that are made to the 609 that will help accelerate both the commercialization and make it more efficient for things like air evacuation off the rigs, crew change as necessary — for example, in the Arctic — or even pilot training in the future for military Osprey pilots. So we have the missions that we think this thing can do, but AgustaWestland’s been very clever in bringing us in to be able to commercialize it.

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