Erickson files for bankruptcy

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

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.

Aircranes continue to stay busy in Australia

Stymied by contracting regulations in the United States, Erickson’s Aircrane helicopters are still loved down under.

Above: An Aircrane reloads with retardant while fighting the Beaver Fire northwest of Yreka, California, August 12, 2014. Photo by Bill Gabbert.

Erickson’s Australian partner Kestrel Aviation signed up for a third S64E Aircrane helicopter to support firefighting efforts in Victoria state. Erickson has six Aircranes currently working in Australia.

“We are proud to help protect the lives and homes of Victoria’s residents during the peak of their fire season,” said Andy Mills, Erickson v-p of commercial aviation services. “Our crews have already been busy fighting fires in Western Australia and New South Wales.”

The third Aircrane, previously stationed in Sydney, New South Wales to fight fires, has been reassigned to Mangalore, Victoria where it remains available as required for the remainder of the fire season.

Erickson has also been contracted in support of the initial phases of NASA’s 3rd Generation Mid-Air Retrieval Project focused on mid-air retrieval of NASA spacecraft re-entering the atmosphere. Erickson is contracted to study the concept of operations for proposed NASA missions that employ mid-air retrieval using a single S-64F Aircrane helicopter.

Contracts awarded for 34 Type 1 firefighting helicopters

Unlike the last time a Type 1 helicopter contract was awarded, the information was released without a Freedom of Information Act request.

Above: A Siller Helicopters CH-54A (H-781); a Type 1 helicopter. Photo by Siller.

Contracts have been awarded to 13 companies for a total of 34 Type 1 firefighting helicopters. The exclusive use U.S. Forest Service contracts issued on February 26 are effective through April 30, 2017, with the possibility of three one-year renewal option periods.

Below are the companies receiving contracts along with the number of helicopters each will be providing:

Central Copters: 2
Columbia Helicopters: 5
Billings Flying Service: 2
Firehawk Helicopters: 4
Helicopter Transport Services: 5
Helimax Aviation: 2
Mountain West Helicopters: 1
Heliquest International: 2
Swanson Group Aviation: 2
Siller Helicopters: 4
Timberline Helicopters: 2
Rainier Helicopter International: 1
Croman Corporation: 2

A company conspicuous by its absence is Erickson. The company had eight Air Cranes on the last Type 1 contract that was issued in 2013.  We have reached out to Erickson to determine why they are not on the list, but did not immediately receive a response. There is a theory on a helicopter forum that when Erickson purchased 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 contract.

Even though Erickson is not involved this year there are still nine Sikorsky helicopters similar to the Air Crane that will be flying over fires for the next one to four years. Helicopter Transport Services has five and Siller has four. The models are CH-54A, CH-54B, SK-64A and SK-64E.

Federal Business Opportunities (FBO) posted the information about this latest award on their web site. When the 2013 contracts were issued the U.S. Forest Service refused to divulge which companies received them. We first asked for the information on April 16, 2013, hoping to receive it well before the western wildfire season got underway. We were told that the list was only available if we filed a Freedom of Information Act (FOIA) request, which we did. After many delays, countless emails, excuses, and being sent incorrect information, we finally received it September 26, 2013 as the western wildfire season was beginning to wind down and more than five months after asking for it. At the time we wrote:

It is absurd that this information about how taxpayers’ money is being spent is not easily available to citizens.

The total four-year estimated cost of this latest contract is $594 million. The citizens have a right to know this information.

We are pleased that the FBO is being more transparent this year.

Erickson’s warehouse

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.