CHC says restructuring to cost $15 million
Helicopter support divisions combined Plans to eliminate 180 jobs worldwide
VANCOUVER— CHC Helicopter Corp. expects restructuring costs of $ 15 million over the next three quarters as the company continues to streamline its business. CEO Sylvain Allard said yesterday a $ 1.5 million reduction in support and overhead costs in the latest quarter will be accelerated through the next nine months. The firm moved its headquarters from St. John’s, Nfld., to Vancouver earlier this year.
“ Beyond the support cost reduction, the benefit of the consolidation in Vancouver has been remarkable from a management point of view,” Allard said during a conference call with analysts.
“ It has helped us tremendously in coping with the increased demand in our operations, as well as given us the opportunity to centralize our financial functions to effectively address the requirements in a complex multinational company like CHC.” As part of its restructuring, CHC created Heli-One as it combined its helicopter support subsidiaries and divisions under one banner.
Heli- One combines Astec Helicopter Services, Multifabs Survival, AeroTurbine Support and Overhaul International and is expected to offer leasing and support services to civilian and military helicopter operators worldwide. The company also said it would cut about 180 jobs from its operations around the world as part of the restructuring. So far, 100 jobs have been eliminated, CHC said yesterday. However the company also said it has hired 80 pilots and engineers to support future growth.
“This rapid expansion and fleet renewal is expensive in the short term, but will reward our shareholders in the short, medium and long- term,” Allard said. CHC’s global operations have grown as the offshore oil and gas industry has picked up on record energy prices but its financial results have lagged as the company has increased interest costs to expand its fleet.
“ If you look at a bunch of the drillers and other companies focused primarily on exploration, they’ve been very busy over the past while and we’ve done a modest amount of work to support their drilling programs,” chief financial officer Jo Mark Zurel said.
“ But the big work for us is once the development and production starts there are large numbers of people being transported back and forth every day and that’s when CHC gets really busy. That’s why when we look forward to the next two three years and beyond we see a huge demand.” The company also hinted that it had plans to increase its training capabilities.
“ All I can say is stay tuned,” Allard said when asked by an analyst about possible plans. CHC is the world’s largest provider of helicopter services to the offshore oil and gas industry.
Last week, CHC closed its sale of its remaining 45 per cent stake in Canadian Helicopters Ltd. to the Canadian Helicopters Income Fund for net proceeds of $ 48.4 million. On the Toronto stock market yesterday CHC shares fell 62 cents, or 2.5 per cent, to $ 24.35.