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Change of Guard in the GOM

Story by Mark Ogden, Photos by Ned Dawson

Following a merger with previous competitor Tex-Air and purchase by SEACOR Holdings Inc., a publicly traded company (NYSE:CKH) and global provider of marine support and transportation services, primarily to the energy and chemical industries, Era Helicopters is embarking on a renewal and expansion program that will take it from Alaska and the Gulf of Mexico to the world.

Era's billion-dollar parent company, SEACOR, provides customers with a full suite of marine-related services including offshore services, U.S. coastwise shipping, inland river services, helicopter services and environmental services and harbor and offshore towing services. The company was launched in 1989 with a purchase of Nicor Marine, which operated 36 vessels. Today SEACOR's Offshore Marine unit operates more than 300 vessels.

With more than 125 helicopters, 18 bases and almost 600 employees, Era is the third largest operator in the Gulf of Mexico. In 2005 Era carried approximately 175,000 passengers while flying nearly 6 million miles and accumulating 53,000 hours of flight time. When it was owned by Rowan Companies Inc., a major offshore drilling contractor, the staples of the Era operation were oil industry support in the Gulf of Mexico (GOM) and Alaska and flight-seeing in Alaska. When Rowan decided to focus its energies elsewhere, it sold its helicopter arm to SEACOR, with whom Era is now embarking on a renewal and expansion program that includes plans to move beyond its traditional GOM and Alaskan operating areas.

SEACOR's Vision

Although he had no real background in the helicopter industry prior to SEACOR's entry into the Helicopter business, the business driving-force behind the company's acquisition and rebuilding is Era Helicopters' CEO, Ed Washecka. With support from SEACOR's Board, Washecka has implemented new business models and new direction including a helicopter-leasing subsidiary and moves to take the company outside the USA.

Safety and service excellence are paramount in all SEACOR business lines, including Era. To this end, Era's continual upgrade and improvement program has included the integration of a Sky Connect Iridium/GPS-based tracking system into its company-designed tracking "Flight Following" and "Moving Map" systems. Its S76C++ has been equipped with HEELS (Helicopter Emergency Egress Lighting System), a Health and Usage Monitoring System (HUMS) and a new combined float/life-raft system, and the company is acquiring personal beacons incorporating GPS positioning. The company has ordered 20 AB139s, five S-76C++ and four EC135 helicopters in a major fleet renewal program that will see the retirement of helicopters such as the MBB B105, AS355, and 206 (already out of the air).

Washecka explained that the company had analyzed the potential for buying into the helicopter offshore market as a compatible product line to compliment its marine support operations for several years. "We looked at assets and whether they made money," explained Washecka. "The helicopter operators were not making a sufficient return on capital in the U.S. Companies like Offshore Logistics were investing in new equipment and moving it overseas where rates were better." A couple of years later the industry dynamics had changed and SEACOR dusted off its analysis. The main change was that the industry was more profitable. With a realization that the market appeared to be improving, SEACOR turned its attention to helicopters in 2001. The company found a small operation, Tex-Air Helicopters that had a young fleet of technologically advanced equipment, principally Eurocopter EC120's and Astar B2's.

Negotiations resulted in SEACOR making a small initial investment of US$50,000 for a ten percent stake in the company with options to buy more. "I think the legal fees were higher than the price we paid," Washecka noted. Six months later SEACOR purchased another ten percent for US$175,000. With the company proving a good fit, SEACOR purchased the balance of Tex-Air on 31 December 2002. SEACOR soon turned toward expanding its newly acquired Tex-Air operation with the purchase of two "state of the art" EC155B1's and an initial order for three Agusta A119 Koala's. Some might wonder why Tex-Air didn't launch its crew change services with an older 412 or S-76A++ (Why spend eight million when you can carry the same number of passengers for two?). But Washecka emphasizes that SEACOR's focus has always been to invest in new equipment and new technology, and this applies across all of its businesses. According to Tim McKeand, VP of Investor Relations for SEACOR, the company has commitments to spend $564 million on new equipment (vessels, barges, helicopters) as of November 2005.

Asked about the Koala, Washecka said that while he initially had doubts about taking on another new helicopter after the EC155, the Koala has proved to be a particularly popular helicopter. "I am glad Ed Behne, Tex-Air's founder and former owner, pushed us as hard as he did to buy the Koala," says Washecka. "It has proved itself - our customers appreciate its speed and spaciousness."

Then, in 2004, SEACOR 'got lucky', as Washecka puts it, when Rowan decided to put Era on the market. "Era had grown significantly under Rowan, but the parent company was no longer investing in new equipment for Era," he said. Era was the ideal opportunity to grow SEACOR's helicopter investment, since it planned to grow the business. As Washecka explains, "A major concern for Rowan was its people. Rowan executives stressed the importance of their employees having a future with the new buyers of Era. Fortunately, we didn't have in-house maintenance in Tex-Air, so we weren't going to have the forced redundancies that may have occurred had another competitor purchased Era. We were

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Published on: 2006-03-18 (3476 reads)

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