Erickson receives contract to build two Aircranes for South Korea

aircrane helicopter

Above: An Erickson Aircrane reloads with retardant while fighting the Beaver Fire in northern California, August 12, 2014. Photo by Bill Gabbert.

(Originally published at 11:58 a.m. MST January 10, 2018)

Erickson Incorporated has received a contract to build two new Aircrane firefighting helicopters for the Korea Forest Service (KFS). These aircraft are in addition to a previously ordered S64E Aircrane currently under construction at Erickson and due to be delivered in the third quarter of 2018.  These two additional aircraft will be equipped with firefighting tanks, sea snorkels, foam cannons, glass cockpit, composite main rotor blades and night vision goggle capability.

In 2001 KFS became the first foreign government to purchase S-64s from Erickson. To date it has operated five Aircranes in South Korea while maintaining a contract for parts and service support.  This new contract brings the total number of orders for the KFS Aircrane fleet to eight, with the expectation of delivering the seventh and eighth aircraft by the end of 2019.

Erickson owns 20 S-64 Aircrane helicopters as part of their total fleet of 50 aircraft. The S-64 Helitanker is equipped with a 10,000 liter (2,650 gallons) tank capable of rapid snorkeling either fresh or saltwater.

Erickson emerges from bankruptcy

erickson air-crane

Above: An Erickson Air-Crane reloads with retardant while fighting the Beaver Fire in northern California, August 12, 2014. Photo by Bill Gabbert.

Erickson Incorporated, known to wildland firefighters for their Air-Crane helicopters that can carry up to 2,500 gallons of water, has emerged from bankruptcy after declaring for Chapter 11 on November 8, 2016. Soon after the company purchased Evergreen Helicopters and Air Amazonia and their 78 aircraft in 2012 and 2013 the bottom fell out of the oil exploration industry and they lost military and firefighting contracts. Suddenly finding themselves no longer a small business Erickson lost their eligibility to compete for U.S. Forest Service firefighting contracts.

President and CEO Jeff Roberts said on April 28, 2017, “We are very pleased to have completed our financial restructuring in such an efficient and timely manner. Chapter 11 allowed us to achieve rationalization of our aircraft fleet and deliver our balance sheet by over $400 million in debt. We are exiting the restructuring process with significant available liquidity to fund the company’s present and future business opportunities.” Mr. Roberts continued, “With a stronger financial foundation and reduced cost structure, we are well positioned under the new business model to fund our operations and to further develop and expand our business in order to better serve our customers and enhance value for all stakeholders for years to come.”

Mr. Roberts said the company will move forward as a privately-held small business, effective immediately.

Susan Bladholm, a spokesperson for Erickson, told us that they currently have 20 Air-Cranes, but could not comment on the potential to bid on or obtain firefighting contracts since the company is under new ownership and some issues still need to be worked out.

Erickson files for bankruptcy

aircrane

Above: An Erickson Aircrane reloads with retardant while fighting the Beaver Fire in northern California, August 12, 2014. Photo by Bill Gabbert.

On Monday, November 8, 2016 Erickson Incorporated filed for Chapter 11 Bankruptcy. The company called it a financial restructuring, saying the company will continue to operate “in the ordinary course of business” and they are “committed to the same level of operational integrity, safety, compliance, and customer service that its partners are accustomed to.”

Between March, 2012 and April, 2016 the company had eight Type 1 Aircrane helicopters on contract with the U.S. Forest Service. When the next round of contracts was announced in February, 2016 conspicuous by its absence was Erickson, receiving none. It is likely that when they purchased Evergreen Helicopters, Inc. in March, 2013 (and their 64 aircraft) and the Brazilian company Air Amazonia (and their 14 helicopters in November, 2012), they no longer qualified as a “small business” and lost their eligibility to compete for USFS firefighting contracts.

These large helicopters can carry up to 2,500 gallons of water. Erickson bought the manufacturing license and type certificate from Sikorsky in 1992 for the military version, the CH-54 Tarhe. In addition to dropping thousands of gallons of water, it can be fitted with an optional front-mounted water cannon that can shoot water horizontally at 300 gallons per minute.

Monday Erickson provided more information about the bankruptcy:

…Under Bankruptcy Court supervision, the Company expects to file a consensual plan of reorganization with the support of its major creditor constituencies which the Company anticipates will significantly reduce its total indebtedness. Additionally, our first lien lenders and second lien noteholders have entered into a credit support agreement which is expected to result in approximately $60 million in new financing to further fund ongoing operations over the course of the restructuring.

Erickson Inc. struggling financially

aircrane

Above: An Erickson Aircrane reloads with retardant while fighting the Beaver Fire in northern California, August 12, 2014. Photo by Bill Gabbert.

Last year Erickson had eight Type 1 firefighting helicopters, Aircranes like the one above, on exclusive use contracts with the U.S. Forest Service. There are none on the new contract that was issued February 26.

While it may be only partially related to losing those eight contracts, Erickson Inc. is struggling financially. Their stock, (EAC) that reached a 5-year high of $28.10 on May 13, 2013, has dropped like a stone since early in 2014 and Friday closed at 99 cents.

In 2012 and 2013 the company went on a buying spree, and purchased two companies that had a total of 78 aircraft. When Erickson acquired Evergreen Helicopters, Inc. (and their 64 aircraft) and the Brazilian company Air Amazonia (and their 14 helicopters), they no longer qualified as a “small business” and lost their eligibility to compete for the federal firefighting contract. Evergreen Helicopters had 400 employees. Last year Erickson laid off 150 workers.

Below is an excerpt from an article at Oregon Live:

…Erickson is not a big player in oil and gas. But it has its own problems. It recently lost a crucial wildfire fighting contract with the U.S. Forest Service. It also borrowed heavily three years ago to buy the helicopter business from Evergreen Aviation in McMinnville, only to see the U.S. defense business that was Evergreen’s forte go into a tailspin.

The toll on Erickson’s financial performance has been dramatic.

The company lost $10.2 million in 2014 and another $86.7 million in 2015. So far, 2016 has brought little relief, with Erickson losing another $26 million in its first quarter…

Erickson had six aircranes working in Australia during their 2015/2016 summer fire season.  There are still nine Sikorsky helicopters similar to the Aircrane that are on contract for the next one to four years in the United States. Helicopter Transport Services has five and Siller has four. The models are CH-54A, CH-54B, SK-64A and SK-64E.

Erickson receives contract for two helicopters in Alaska

Erickson made it more difficult to obtain contracts for their firefighting helicopters from the U.S. federal government when they bought two companies, expanding beyond the criteria for a “small business”. But they are still eligible for a contract in Alaska.

On Tuesday Erickson announced two exclusive-use contracts with the State of Alaska’s Department of Natural Resources for wildfire suppression. The company will provide two medium-lift helicopters; one based in Palmer and another in Fairbanks. The contracts are for one year, with four additional option years.

Erickson to refurbish MH-53E Sea Dragon

Erickson Incorporated has been selected as a subcontractor by Adams Communication & Engineering Technologies (ACET) for the refurbishment of two Sikorsky MH-53E Sea Dragon helicopters in support of the United States Navy Heavy Lift Helicopter Program.

This is the first contract awarded by the U.S. Navy for depot-level maintenance of a MH-53E helicopter to a commercial contractor, according to Kerry Jarandson, Erickson’s Vice President of MRO and Manufacturing.

The MH-53E Sea Dragon is one of the largest helicopters in the United States military. It is a variant of the CH-53E and is used for mine countermeasures. That family of helicopters has a troubling accident history, according to Wikipedia:

Between 1969-1990, more than 200 servicemen had been killed in accidents involving the CH-53A, CH-53D and CH-53E. The MH-53E Sea Dragon is the U.S. Navy’s helicopter most prone to accidents, with 27 deaths from 1984 to 2008. During that timeframe its rate of Class A mishaps, meaning serious damage or loss of life, was 5.96 per 100,000 flight hours, more than twice the Navy helicopter average of 2.26. A 2005 lawsuit alleges that since 1993 there were at least 16 in-flight fires or thermal incidents involving the No. 2 engine on Super Stallion helicopters. The suit claims that proper changes were not made, nor were crews instructed on emergency techniques.

Erickson has been building and operating Sikorsky S-64 Aircranes, which can carry up to 2,650 gallons of water, since 1992.

Aircrane
Aircrane. Erickson photo.