EC225 grounding hits revenue and profit at Eurocopter

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Eurocopter's ongoing problems with its EC225, which have seen large parts of the fleet effectively grounded due to a gearbox fault, contributed to a slump in first quarter revenue and profit at the manufacturer.

However, a temporary fix to the issue could be delivered to operators within the next three to four weeks, according to a disclosure by one EC225 customer.

Parent company EADS revealed in its results for the first three months of the year that Eurocopter's revenues for the period dropped by 13% to €1 billion ($1.3 billion) from €1.2 billion a year earlier in part due to the still-unresolved technical fault that caused two North Sea ditchings last year. The company's EBIT fared even worse, plunging by 69% to €20 million compared with €64 million in the first quarter of 2012.

Total deliveries, including military models, slid from 72 in the first three months of 2012 to 58 this year.

"Eurocopter has faced some revenue and EBIT pressure arising from the technical problems with the Super Puma fleet," says EADS.

"Flight restrictions have impacted both the delivery schedule and the service revenues generated by helicopter operations."

Harald Wilhelm, EADS chief financial officer, discussing the first-quarter earnings on 14 May, said that as the temporary fix to the issue is rolled out across the global fleet, revenue will begin to recover later this year.

"I still believe we will see a year-on-year improvement at Eurocopter," said Wilhelm. "But the key thing is the recovery of the deliveries on the Super Puma."

Although declining to discuss the precise nature of the fix, citing confidential discussions with regulator EASA, Wilhelm said he was aware of the pressure on Eurocopter to deliver a solution. "We are fully conscious there's a pressing need for customers to have their helicopters flying again," he said.

The problems caused to operators are illustrated by the first quarter results of Texas-based ERA Group which were also released on 14 May. It has three EC225s leased to its Brazilian joint venture Aeróleo which fly under contract to state-owned oil firm Petrobras.

It says that Petrobras recently announced it would "unilaterally suspend" all EC225 contracts from 31 March due to the gearbox issue "alleging that the helicopter cannot meet the terms of the contract".

If this goes ahead, it warns Aeróleo may need a capital infusion in order to allow continued operation.

ERA believes a permanent fix to the cracking issue afflicting the type's bevel gear vertical shaft may be nine to 12 months away, but highlights the proposed interim solution which involved cockpit warning lights linked to the helicopter's health-monitoring system.

It anticipates receipt of these retrofit kits in the next "three to four weeks", it says. However, it notes: "It is unclear whether such a case will meet the requirements of certain companies and/or unions."