TXT Textron Inc

By Robert Wall

LONDON--Airbus SE (AIR.FR) helicopter deliveries rose more than 5% in 2016 in a difficult year marred by a sustained slump in commercial customer demand and the widespread grounding of one of the European rotorcraft maker's most lucrative models.

Airbus, principally known for its large jetliner business that competes with Boeing Co. (BA), Friday said it delivered 418 helicopters last year, up from 395 the year prior.

The prolonged slump in oil and gas prices that began mid-2014 caused exploration companies to curtail spending. That forced helicopter makers that ferry oil workers to offshore rigs to cut back and reduce purchases of new models.

"For the rotorcraft industry as a whole, 2016 was probably the most difficult year of the last decade," Airbus Helicopter Chief Executive Guillaume Faury said.

The industry's woes were compounded at Airbus after one of its Super Pumas crashed in Norway in April killing all 13 people on board. The tragedy grounded much of the Super Puma fleet used heavily in servicing North Sea rigs. British and Norwegian authorities still haven't allowed the type to resume flying in commercial operations, though some regulators lifted restrictions imposed immediately after the incident.

Marillyn Hewson, CEO of Lockheed Martin Corp. (LMT), which acquired helicopter maker Sikorsky in 2015, this week said: "We do expect at some point, the commercial business will come back." She called the area an "opportunity for growth."

Signs of recovery may be emerging. Scott C. Donnelly, CEO of Textron Inc. (TXT), which owns helicopter maker Bell, this week told investors that "after a difficult period in the market with several quarters of very low order flow, we saw a significant increase in order activity in the back half of 2016, and we're looking to carry that momentum into 2017." Demand for foreign military helicopters also should gain pace, he said, with the Trump administration now in place. Momentum for some of those deals slowed during the transition period in Washington.

Airbus also saw signs the market for rotorcraft is no longer worsening. Fewer customers last year cancelled orders. Airbus suffered 35 helicopter cancellations last year for a net order intake of 353 units. Last year its net order intake of 333 helicopters reflected 50 cancellations.

To help damp the effect of a slump in commercial business, Airbus has been ramping up efforts to secure more military work. The company said it last year won deals in Singapore and Kuwait for a military version of the embattled Super Puma. It also secured a deal for U.K. military training helicopters.

Airbus exited 2016 with a backlog of 766 helicopters, it said.

-Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

January 27, 2017 03:44 ET (08:44 GMT)

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