Fundamental changes have taken place to the relationship between CHC Helicopter and its customers in the North Sea region as each party works to survive the effects of the plunging oil price.

That is the view of Mark Abbey, regional director for the Western North Sea at CHC, who believes the oil and gas industry in Aberdeen, UK has reacted in a “collaborative” way to deal with the ongoing crisis.

“Without exception we have approached each other with mutual understanding to work together to find our way through the [current] market conditions,” he said, speaking to reporters in Aberdeen prior to the release of the company’s second quarter results.

Both the operator and its customers are looking for cost savings to address the current market conditions, says Abbey. But a change in attitude is required if some efficiencies are to be implemented successfully, he adds.

“If you look at [helicopter flights] as an unstructured limousine service rather than a scheduled service then costs will remain the same,” he says.

However, the majority of customers in the North Sea, which has seen a 20% reduction in flight activity over the past 12 months, have been receptive to the changes to schedules, which have become “more structured and regular”.

In addition, some oil and gas clients have accepted shared-use helicopters, instead of contracting them exclusively.

Its workforce has also helped. Pilots accepted a reduction in hours to around 85% in order to minimise compulsory redundancies.

But even when the oil price recovers – and most analysts are now predicting a prolonged downturn – Abbey cautions that many of the changes made are here to stay.

“The improvements we are making today to try and combat the oil price will have to stay in place to make us efficient,” Abbey says.

CHC's latest quarterly results – released as Brent crude dropped briefly below $40 per barrel – show how deeply the oil and gas crisis is affecting the offshore transportation industry.

Revenue from its helicopter services business unit for the three-months ended 31 October dropped by 22% to $325 million, down from $417 million in the same period a year earlier. And for the half-year, revenue fell by 21% to $665 million from $841 million.

Second quarter net losses for the entire business – which includes maintenance operation Heli-One – were at $42 million, albeit an improvement on the $177 million net loss recorded for the same period a year earlier.

Order commitments at CHC are now at an “historic low” it says, with just $258 million currently allocated for new helicopters, down from an early 2014 high of $878 million.

Discussions with the airframers on order flexibility continue, says chief executive Carl Fessenden, as all sides react to “the market realities we are seeing today”.

“We believe we are having a lot of progress in those discussions,” he told analysts during a 9 December call.

Source: FlightGlobal.com