The slump in oil-field services business could push one of the sector's largest helicopter operators to cancel or defer almost three-quarters of its existing order book, including deals with units of soon-to-be-sold Sikorsky Aircraft and the AgustaWestland arm of Italy's Finmeccanica SpA.

Era Group Inc. said Wednesday that it had amended existing contracts with manufacturers last month allowing it to defer deliveries of helicopters used to transfer workers and cargo to and from offshore platforms, delay deposits or even cancel deals altogether.

The warning from Houston-based Era as it reported an 85% side in third- quarter profit highlights the spread of the energy industry's downturn beyond traditional oil-field services companies such as Schlumberger Ltd. and General Electric Co. to include suppliers more closely tied with production rather than exploration.

Era is more exposed to work in the Gulf of Mexico, where production and rig counts have held up better than in regions such as the North Sea where relatively higher costs have stunted exploration and started to limit output.

Helicopter operators such as Era, Bristow Group Inc.—which reports quarterly earnings on Friday—and CHC Group Ltd. have previously said they'd been in talks with rotorcraft makers about cancellations or deferrals, but didn't provide any details. Though executives don't expect any industry recovery before 2017, most had previously insisted they were relatively protected by sustained oil and gas production rates, which kept revenues stable because of fixed-price contracts.

Era has outstanding orders for 17 helicopters, including 14 from Finmeccanica and three from Sikorsky, a unit of United Technologies Corp. that plans to close the $9 billion sale of the business to defense company Lockheed Martin Corp. on Friday.

Era said it may terminate deals worth around $127 million of its existing $175 million in capital commitments. Most of the helicopters are due to be delivered between the end of this year and 2018, and Era has options on another 13 rotorcraft.

"We remain in dialogue with our long-term partners at the helicopter manufacturers and expect that those commercial conversations will result in additional contract modifications that will further reduce our near-term capital commitments by deferring additional helicopter delivery dates," Era said in a statement.

The slide in energy business comes as big helicopter makers, which also include units of Airbus Group SE and Textron Inc., roll out new faster and larger models designed to serve fields in deeper waters farther from shore. GE also paid $1.8 billion in January for Milestone Aviation, the largest helicopter leasing company by sales.

Lockheed has said it plans to retain the commercial arm of Sikorsky, the world's largest military helicopter maker by revenue, aiming to develop its services business.

Era shares have fallen about 22% since the turn of the year, less than the 44% decline at Bristow and CHC's precipitous fall of more than 90% that has left the stock clinging on to its New York Stock Exchange listing by a thread after a prolonged period below $1 a share.

Write to Doug Cameron at doug.cameron@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

November 04, 2015 23:55 ET (04:55 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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