Offshore Logistics to Purchase 15 New Helicopters
Offshore Logistics has signed a contract with Sikorsky Helicopters to purchase 15 new S-76C+ helicopters over the next five years. The contract also has provisions for the optional purchase of up to 15 additional aircraft (three per year) during the same time period.
This contract represents the initial phase of a $150 million, five-year fleet renewal program that was recently approved by the Company's Board of Directors. It is expected that the fleet upgrade program will be funded with internally generated cash flow. The Company is currently reviewing various options for new aircraft and upgraded aircraft for the balance of its fleet renewal program and will provide additional data on the other components as arrangements are finalized.
The 15 new Sikorsky S-76C+ aircraft will significantly upgrade the Company's current fleet of Sikorsky S-76A/A+ helicopters, which represent the core of Offshore Logistics' mid-size fleet. The contract calls for 3 helicopters to be delivered each year between 2002 and 2006. The new aircraft will be used initially in the Gulf of Mexico, although they may be easily redeployed to other regions as demand dictates. The contract also provides the Company with the option to trade in up to 3 older aircraft per year for the next three years, which will reduce the cost of the new equipment.
Commenting on the aircraft purchase, George M. Small, OLOG's President and Chief Executive Officer said, "We are very pleased to initiate this first phase of our fleet renewal program. While our current fleet is among the best serving the energy industry, this renewal program will enable us to offer our customers upgraded aircraft that will increase efficiency and improve flexibility. In addition to newer technology, the S-76C+ provides 30 to 40% more productivity over the original S-76A model which we currently operate in our fleet. At the same time, it should reduce our repair and maintenance costs and increase our cash flow and margins. We currently plan to make use of the trade in option, which should result in the industry's fleet size remaining essentially the same."