FLUG REVUE April 2006: Fabrice Brégier outlines Eurocopter strategy

April 2006

VIP Interview

FABRICE BRÉGIER

President and CEO of Eurocopter

Eurocopter is seeking success in booming markets and is implementing a strategy of worldwide cooperation agreements, as Fabrice Brégier explained to Karl Schwarz.

FLUG REVUE: The commercial helicopter business is booming right now, but many predict 2006 will see the peak. What is your view of the market prospects in the next five to ten years, regarding both product segments as well as global regions and specific applications like EMS, offshore, etc.

FABRICE BRÉGIER: Eurocopter has a market share of 52 percent in the civil and parapublic segments. While we do not see substantial growth potential in the established civil markets there are opportunities for us in the “emerging markets” like the big Asian nations. We have entered into cooperations with China on the EC 175 and with Korea on the KHP last year. In addition to the national requirements of our partner countries, we see potential for about 800 EC 175s and about 250 KHPs in the world market. The Middle East and Latin American are also growth regions. The requirement for law enforcement helicopters continues to be brisk in a climate of extra vigilance against terrorism. There are still hundreds of older-generation helicopters both in police and EMS services, so there is a replacement market. Tourist and business flying is expanding, especially in the Middle East. These are markets for our light single- and twin-engined helicopters. In the medium twin and heavy segments, we have successfully launched the EC 155 and EC 225 into the offshore markets in Europe and the US. With worldwide demand for oil and gas rising, the supportive helicopter operators are now acquiring new-generation aircraft. We expect these trends to continue over the next years.

FLUG REVUE: With the EC 175 now on the way, will there be other gaps in the product portfolio to be filled soon? Are there plans to replace some of the long running models or will more upgrades suffice?

FABRICE BRÉGIER: Market evolution has led to there now being a requirement for the EC 175, and we are pleased to develop this aircraft in a partnership. We are constantly improving and upgrading all our products to keep up with market requirements. Don't forget we have launched 10 new helicopters into the market since our company was founded, and have now started with the EC 175 and the KHP.

FLUG REVUE: You are trying to establish Eurocopter in many countries like China. What is the strategy behind this?

FABRICE BRÉGIER: As mentioned before, the major growth markets are in Asia. China started out with license production of our Super Frelon and Dauphin, then shared the development of the EC 120, for which it has its own assembly line, and now co-develops the EC 175. The Chinese AVIC programs are aimed at building up a commercial aircraft industry in the country. The commercial market is just beginning to evolve. If you look at Eurocopter's history, both our predecessor companies in France and Germany already worked in international partnerships. Cooperation programs from which all partners benefit are the way to secure our future in the world's growth regions. We won both the Chinese and the Korean program against international competition. Apart from the quality of our products, our long-standing experience with cooperation was certainly an advantage for us.

FLUG REVUE: In the US, Eurocopter is very successful on the civil and parapublic side, but are there any opportunities for a breakthrough with the Pentagon beside the current LUH? How do you see the LUH competition?

FABRICE BRÉGIER: The LUH requirement is for an off-the-shelf utility helicopter and the EC 145 (designated UH-145 in the US) perfectly suits the requirements. We have partnered with EADS North America as prime contractor and Sikorsky and WestWind as team partners. CAE and American Eurocopter have partnered for the simulator requirement. We've been established in the US for more than 25 years and have two facilities there, employing hundreds of Americans. If selected, we offer assembly in the US, American content according and above specifications, and more employment for Americans. One of our competitors, AgustaWestland, is Italian. Bell Helicopter has its civil production line in Canada, while some doubt must be allowed whether MD Helicopters has the capability to carry through such a large programme. We believe we have an excellent offer both in terms of the product and in terms of “Buy American” requirements. Besides LUH, there may be an opportunity for cooperation on a Future Transport Helicopter in the 30-ton class required by Germany and France. A trans-Atlantic link would be a good solution in terms of reducing technological and financial risks.

FLUG REVUE: Tiger and NH90 production is now ramping up, but the programs are still dogged by problems and stark delays. How can you re-establish the confidence of the customers? When will the first NH90 be handed over at last?

FABRICE BRÉGIER: Tiger and NH90 are specific programs in a league of their own. They were developed from scratch, using totally new technologies and systems to meet 21stcentury requirements. It was a challenge for Eurocopter and also for the subcontractors and systems suppliers. We are aware of our obligations. Tiger deliveries to all four customer nations are now underway. Step 1 qualification was achieved last year, Step 2 qualification will be reached this year. Simultaneously, we have integrated Spain into the program. In close dialogue with the French and Spanish governments, we diverted HAPs from the French contingent to Spain, and launched the HAD version.
For the NH90, we will achieve type certification for the German TTH variant in the first part of 2006. In parallel, certification processes for the Italian TTH and the initial export variants are progressing. In 2006, five customer nations will receive their first NH90s. Eurocopter will deliver in the range of about 10 aircraft to Germany, Finland, Sweden and Greece. AgustaWestland is responsible for delivery to the Italian customer. In parallel, we pursue a constant dialogue with all our customers in order to share difficulties and identify common solutions.

FLUG REVUE: For many years, Eurocopter has tried in vain to improve its after-sales service reputation with civil operators, lagging behind Bell, etc. in industry surveys. What are the latest measures, and when will they show results?

FABRICE BRÉGIER: We haven't quite tried in vain. We have implemented a new concept and established logistics platforms in Paris, Hong Kong and Dallas to shorten delivery lead-times to our customers in Europe, Asia and the US. We have an inventory in Sao Paulo to cover Brazilian customers. This warehouse is also being connected to our Worldwide Distribution System. We know that our performance is still not good enough, and certainly not in line with the quality standards we have for our products. We have therefore made changes in our corporate organisation with a Customer responsibility directly in our Executive Board. Customer relations will be more personalised to improve satisfaction.

FLUG REVUE: What are the priorities on R&D spending? How important is the European work on tiltrotors, and how much will Eurocopter invest in this area?

FABRICE BRÉGIER: We invest an average of 15 percent of our turnover in R&D. Environmental compatibility, like quietness and reduction of pollutant emissions, as well as reduction of operating and maintenance costs, are ongoing programs. Another program focuses on making helicopters all-weather capable. We were the first to introduce fly-by-wire technology on a helicopter - the NH90 - and have a fly-by-light system in a test phase together with DLR. These R&D efforts serve to upgrade existing helicopters as well as the development of future helicopters. There is no immediate military requirement for a tiltrotor in Europe. The civil tiltrotor is a concept which still needs to be confirmed by the market. We are evaluating critical tiltrotor technologies in European cooperation to be prepared for potential future needs.

From FLUG REVUE 4/2006

Last updated 10 March 2006

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