Bristow acquires Columbia Helicopters in $560M blockbuster deal

Offshore giant Bristow Helicopters is to acquire heavy-lift specialist Columbia Helicopters in a blockbuster $560-million deal labelled “the largest transaction in the company’s history” by Bristow CEO Jonathan Baliff.

The move, announced as the offshore oil-and-gas specialist reported a $140-million net loss in its second quarter financial results, was accompanied by the news that Baliff will retire from Bristow once the Columbia acquisition is complete.

Columbia, based in Aurora, Oregon, was founded in 1957 by industry pioneer Wes Lematta, and has seen global success by specializing in providing heavy lift services, primarily to U.S. military and government customers, with its fleet of 21 Vertol 107s and CH-234/CH-47D Chinooks. It has 860 employees.

Bristow, founded just a few years earlier in 1953, specializes in offshore transport for the oil-and-gas industry, and has a fleet of 233 helicopters around the globe (including 119 large helicopters). However, the Houston, Texas-based operator has endured a difficult few years during what Baliff has called a “historic” downturn for the wider oil-and-gas industry.

The joining of the two companies will provide both with “immediate operational and financial benefits” Baliff said in a conference call with investors, calling the transaction “transformative.”

“With this 560 million dollar transaction, we’re creating the leading global diversified industrial aviation service company,” he said. “[We’re] virtually defining what that means. These are two highly complementary businesses with a shared focus on world-class safety, reliability, client service and solutions.”

In a press release announcing the acquisition, Steve Bandy, president and CEO of Columbia, said the two companies shared a commitment to operational excellence that fosters long-term relationships with customers and employees. “Together with Bristow, we will have an incredible platform to serve our global customer base,” he said. “On behalf of everyone at Columbia, we are looking forward to partnering with Bristow to redefine the industrial aviation industry.”

Columbia will continue to operate as a separate subsidiary with its own board and operational and management structure, will retain the Columbia name, and its aircraft will keep the distinctive Columbia livery.

“This is a company that’s successful, and it’s successful operating as Columbia,” said Baliff.

However, Bristow hopes to be able to leverage Columbia’s expertise, contacts, and its U.S. Department of Defense (DoD) Commercial Airlift Review Board (CARB) certificate — which allows it to perform outsourced military transport operations — to find new work for Bristow’s “underutilized” offshore fleet. In particular, it hopes to find an application for many of its 22 remaining Airbus H225s, which have struggled to find work following a lack of demand for the type in the offshore sector. The company also has 44 S-76C/C++ aircraft in its fleet.

“We have idle 225s that can go to work within this CARB certificate, and they’re already being requested today. We believe meaningful revenue opportunities abound,” said Baliff. He cautioned that it could take “a year or so” to get the 225s — and potentially Sikorsky S-76s — within Columbia’s CARB certificate, but insisted the “demand is there” for them.

“There are two [Sikorsky] S-61s working currently in Afghanistan under a TRANSCOM contract. We believe that had we been in this partnership [with Columbia before that contract was awarded], we could have supplied some of those type of aircraft [H225s] into Afghanistan.”

Bristow also expects to be able to find new work for Colombia’s tandem-rotor fleet by providing them with access to new markets through Bristow’s air operator certificates (AOCs) and facilities in more than 10 countries.

“[We can] pre-position them actively to working in firefighting or other government work, or in onshore oil and gas,” he said. “We’ve got the facilities and the AOCs to be able to do that.”

He said Bristow’s global footprint would also allow it to pursue new third-party MRO opportunities in the Southern U.S., Europe and Australia.

A difficult offshore environment

News of the acquisition coincided with the release of Bristow’s quarterly financial results, in which it posted a $140 million net loss. The company pointed to foreign exchange volatility, the “timing of certain operating costs,” and “continued challenges” in its fixed-wing operations.

Due to the stiff headwind, Baliff said the company is remaining focused on reductions “across the organization” and is continuing to make structural changes to its maintenance services. It’s also attempting to cancel existing orders it has with OEMs — it currently has 23 large helicopters on order, with options for a further four.

“We are in the midst of ongoing negotiations with our OEM partners to not just defer cap ex [capital expenditure], but to eliminate additional capital expenditures — especially aircraft . . . that are really not needed in the oil-and-gas market today,” he said. “We look at those negotiations very similar to what we did last year in our negotiations for cost recoveries from the OEMs concerning certain aircraft.”

Despite this, Baliff said Bristow could look positively into the future. “[Bristow is] well positioned to take advantage of the beginning of an offshore investment cycle, as more rigs are going to work in places like the US Gulf of Mexico, the North Sea, West Africa… and we’re even beginning to see more rigs go to work in Brazil,” he said.

Finally, Baliff revealed he would be stepping down as Bristow’s CEO after over four years in the position, and eight at the company. He is to leave the company when the Columbia acquisition is completed, which is scheduled for Dec. 31, 2018, and will join Columbia’s board of directors.

“I’m honored to have led Bristow, and I’m proud of what our teams have accomplished since 2010,” he said. “We have diversified our aviation services . . . amidst a challenging period for the industry and the team. Bristow is such a special company with talented and dedicated employees.”

Tom Amonett, vice chairman of the board of directors of Bristow, will serve as the company’s interim CEO until it appoints a permanent successor to Baliff.

“On behalf of the entire company, I want to thank Jonathan for his contributions over the past eight years, including his advancement of our long-term strategy to diversify and expand our capabilities for existing and new customers,” said Thomas Knudson, Bristow’s chairman.

“During Jonathan’s tenure, we positioned Bristow to become the world’s premier, diversified industrial aviation services company, and I am confident Tom’s substantial operational and leadership expertise will allow him to skillfully guide the team as we embark on this next phase of growth.”