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Eurocopter S.A.

Eurocopter S.A.

Aéroport International de Marseille 13725
Marignane, France
Telephone: (33) 4 42 85 85 85
Fax: (33) 4 42 85 85 00
Web site: http://www.eurocopter.com

Wholly Owned Subsidiary of European Aeronautic Defence and Space Company EADS N.V.
Incorporated:
1992 as Eurocopter S.A.
Employees: 11,000
Sales: EUR 3.21 billion ($3.8 billion) (2005)
NAIC: 336411 Aircraft Manufacturing; 488190 Other Support Activities for Air Transportation; 541710 Research and Development in the Physical, Engineering, and Life Sciences

Eurocopter S.A. is Europe's leading manufacturer of helicopters. Part of the EADS (European Aeronautic Defence and Space Company) family of companies, its heritage extends back to the histories of Aérospatiale and MBB, the French and German companies whose helicopter businesses were merged in 1992 to form Eurocopter. Eurocopter manufacturers both military and civilian helicopters. The company, which boasts the most extensive product line in the business, typically dominates the civil/parapublic sector with a 50 percent market share. A Spanish "pillar" was added in 2005. Eurocopter has forged development, production, and maintenance partnerships in a few countries outside Europe, including the United States, China, and Japan.

THE BIRTH OF THE TIGER

Eurocopter S.A., the holding company for the Eurocopter group, was formed in 1992 through the union of the helicopter operations of Aérospatiale of France and Germany's MBB (Messerschmitt-Boelkow-Blohm). Aérospatiale held 70 percent of the equity in the new holding company while MBB had 30 percent. MBB was part of Deutsche Aerospace (DASA), a unit of Daimler Benz (later DaimlerChrysler), which later merged with Aérospatiale to form the EADS group.

France and Germany had been working on a military helicopter since the 1970s. However the project did not get official clearance until 1987. It was dubbed the PAH-2, or Tiger. Eurocopter GmbH, a consortium of Aérospatiale and MBB, had been set up in 1984 as prime contractor for the Tiger.

Another consortium, Eurocopter International G.I.E., was created in May 1991 to manage the commercial helicopter operations of MBB and Aérospatiale. Eurocopter International was based at the Aerospatiale Helicopter Division headquarters in La Courneuve, near Paris. It later became a subsidiary of the Eurocopter S.A. holding company. The combined helicopter businesses of MBB and Aérospatiale had revenues of $1.6 billion in 1990. Aérospatiale's share of the world helicopter market outside the Soviet Union and U.S. military had been about 33 percent, about four times that of MBB.

From the beginning, Eurocopter was able to offer several helicopter types that had been developed by Aérospatiale and MBB. The new company's intent was to sell these aircraft in most of the world's markets, with the exception of North America, where prior sales arrangements were in place, particularly in the case of Aérospatiale, which had a successful line of light planes.

Aérospatiale had sold about 8,700 helicopters before the formation of Eurocopter. Its offerings ranged from the single-engine Ecureuil to the powerful twin-engine Super Puma. MBB's products included the BO105, introduced in the late 1960s by the Bölkow Company as the world's first light twin helicopter. In the 1980s, which MBB had developed the BK117 rescue helicopter, which was based on the BO105, with Japan's Kawasaki Heavy Industries. Both MBB and Aérospatiale were involved in the multi-nation NH90 transport helicopter project, along with Agusta of Italy and Fokker of the Netherlands.

Eurocopter S.A. was originally headquartered near Paris. It had co-chairmen: Heinz Plueckthun from MBB and Jean FranÇois Bigay of Aérospatiale's Helicopter Division. Plueckthun soon retired and was replaced by Siegfried Sobotta, former head of Daimler-Benz's busses business.

Eurocopter was soon working with numerous partners all over the world. It tried developing a heavy-lift helicopter with Russia's Mil design bureau, but this project ultimately collapsed. The company had more success with the five-seat, single-engine EC120 Colibri (Eurocopter's smallest helicopter), developed with Singapore Aerospace and China's CATIC. A manufacturing plant was established in Harbin, China. This was designed to replace the Bell 206 and Hughes/McDonnell Douglas MD500 aircraft that had dominated the skies since the 1960s and 1970s. China had begun importing Aérospatiale helicopters in the 1960s, and began manufacturing the Dauphin under license in the 1970s.

CIVIL MARKET CRASHES IN 1993

Eurocopter won orders for its Cougar military transport helicopter from Turkey and the Netherlands in 1993. While it was the best of times for Eurocopter's military business, it was the worst of times for the world's civil turbine engine helicopter market, which, according to Flight International, in 1993 saw its lowest sales since 1967. Eurocopter dominated the flat market, however, with a 56 percent market share in terms of value, according to Bigay. Its main rival in the civil sphere was Bell of the United States.

Eurocopter's history in the United States dated back to the 1974 acquisition of Texas-based Vought Helicopter by Aérospatiale. In 1979, MBB also formed a U.S. unit, headquartered in Pennsylvania.

In 1993, Eurocopter posted it first annual loss, amounting to FRF 462 million ($85 million). As a result, the company cut 1,000 jobs in 1993, reducing the work force to about 10,500, followed by a couple more rounds of layoffs in the following years.

Though it remained a worldwide leader, the company could not afford to rest on its laurels. In the mid-1990s, rivals old and new succeeded in whittling away some of the company's market share based on price competition. Eurocopter fought this encroachment through a number of initiatives, reported Interavia Business & Technology.

Eurocopter was developing new versions of existing models, such as the Squirrel and the Dauphin, with more fuel efficient engines. At the same time, the company was also offering stripped-down, low-priced versions of military choppers such as the Cougar for sale to developing nations. The product line included more than two dozen aircraft types in all. At the end of 1996, its worldwide fleet numbered 8,000 aircraft in 130 countries. Eurocopter was also paying more attention to after-sales service, making product support a separate business unit. According to Interavia, after-sales service typically accounted for a third of revenues.

COMPANY PERSPECTIVES

As early as 1907, the first experiments with rotary wings were conducted in France. Though Paul Cornu and Etienne Ochmichen were the pioneers, the history of helicopters was also marked by names as illustrious as Louis Breguet, René Dorand and Heinrich Focke, who expressed an interest in rotary wings well before World War II. However it was not until the end of this world war that an authentic helicopter industry was born. And today the rich past of the two parent companies, Aerospatiale and Deutsche Aerospace, is preserved by the experience, knowhow and excellence of the Eurocopter Group.

One important new technology was originally developed in conjunction with client Bristow Helicopters, a specialist in flights to North Sea oil rigs. The Health and Usage Monitoring System (HUMS) used a variety of sensors to monitor tell-tale symptoms of mechanical trouble before they developed into full-blown problems. This lowered maintenance costs while adding a new level of safety.

Both the civilian and military markets in Europe had a dramatic upswing in the late 1990s. France and Germany placed a major order for 160 Tiger attack helicopters in 1999.

2000 RESTRUCTURING

A restructuring in 2000 did away with the co-executive structure and put Pierre Bigay in charge of the whole group, which was classified a "société par actions simplifiée" (SAS), or simplified limited liability company. Eurocopter continued to be the largest helicopter manufacturer in the world, controlling a bit less than half of the civil helicopter market and 38 percent of the military market (by unit volume).

Sales exceeded EUR 2 billion in 2000. The company got a big boost when France, Germany, Italy, and the Netherlands ordered 243 NC-90 military transports. Eurocopter logged 531 orders in all, worth EUR 3.5 billion. A highlight of 2001 was the launch of the EC145. Based on the BK117, it was capable of search and rescue missions in thin mountain air.

Eurocopter managed to increase sales to EUR 2.5 billion in 2002 despite the lingering recession and aviation industry turmoil following the September 11, 2001, terrorist attacks on the United States. In fact, the company's market share in civil/parapublic helicopters was up to 60 percent.

Bigay was succeeded as Eurocopter's leader in 2003 by Fabrice Bregier, formerly head of missile manufacturer Matra BAe Dynamics/MBDA. Eurocopter had revenues of about $3.8 billion by 2004. Though exports were up, including those to the United States, the company was laboring under unfavorable exchange rates in relation to the dollar.

BRIGHT OUTLOOK IN 2006

Revenues rose 15 percent in 2005 to EUR 3.2 billion. Eurocopter Spain was added during the year as the company's third "pillar." Highlights of the year included the delivery of the first U.S.-made AS350.

A number of booming markets buoyed Eurocopter's fortunes and prospects for 2006 and beyond. The overall U.S. helicopter market was having a record sales year as high oil prices prompted new investment in offshore oil exploration. There was also a need to replace the aging fleet; an official told Interavia that 60 percent of its aircraft in service offshore were more than 20 years old. There were also a great number of 1980s-era rescue choppers coming due for replacement.

Asia and Eastern Europe were a growing source of sales. According to Interavia, although China purchased fewer than ten helicopters a year, Eurocopter was expecting the country to become as large a consumer as the United States, which bought ten times as many, by 2015.

Eurocopter was developing an intermediate (six-ton) aircraft, the EC175, to accommodate increasing use of highly automated oilfields popping up further and further from shore. The company was joined in this project by China's Avic II. Deliveries were expected to begin in 2011.

Eurocopter continued its domination of the civil helicopter market, claiming a 52 percent market share by unit sales. It was the leader in several important countries, including the United States and Japan. In 2006 it was preparing to launch a subsidiary in China, where it had been working with local firms for decades. The company also had a long history with in another emerging market, India.

PRINCIPAL SUBSIDIARIES

Eurocopter Deutschland GmbH (Germany); Eurocopter España S.A.(Spain).

KEY DATES

1984:
Eurocopter GmbH set up to manage Franco-German Tiger helicopter project.
1991:
Eurocopter G.I.E. established to market Aérospatiale, MBB helicopters.
1992:
Eurocopter S.A. formed through union of Aérospatiale and MBB helicopter businesses.
1996:
There are 8,000 Eurocopter helicopters in service throughout the world.
1998:
Popular EC120 Colibri light utility helicopter introduced.
1999:
France and Germany order 160 Tiger attack helicopters.
2000:
Sales exceed EUR 2 billion as European militaries order 243 NC-90 transports.
2005:
Eurocopter continues to dominate the civil/parapublic market with a roughly 50 percent market share.

PRINCIPAL COMPETITORS

AgustaWestland Helicopter Company; Bell Helicopter Textron, Inc.

FURTHER READING

"Eurocopter Ambitions, New Structure," Les Echos, September 19, 2000, p. 14.

"France, West Germany Clear New Tiger Helicopter," Reuters News, November 30, 1989.

Gamauf, Mike, and Paul Brou, "Operators Give the EC120B Solid Grades," Business & Commercial Aviation, February 2005, pp. 30-35.

"Group Formed with MBB to Jointly Sell Helicopters," Wall Street Journal, May 7, 1991, p. A15 (W), A18 (E).

Lenorovitz, Jeffrey M., "Aerospatiale, MBB Merge Helicopter Commercial Sectors," Aviation Week & Space Technology, May 20, 1991, p. 50.

Macrae, Duncan, "Eurocopter Sitting Pretty," Interavia Business & Technology, February 2001, p. 19.

Michaels, Daniel, "Europe Gets Liftoff in Helicopter Sector," Wall Street Journal (Europe), January 2, 2004, pp. A1+.

Mordoff, Keith F., "Development Contract Signed for French/German Helicopter," Aviation Week & Space Technology, October 10, 1988, p. 31.

Moxon, Julian, "Down, But Not Out: The Market for Civil Helicopters Is Virtually Flat, But Eurocopter President and Chief Executive Jean-FranÇois Bigay Is Proud of the Group's Performance," Flight International, January 26, 1994, p. 25.

, "Eurocopter Forced to Cut Back," Flight International, June 29, 1994, p. 17.

Musquére, Anne, "High Times for Helo Makers," Interavia (683), Spring 2006, pp. 14-18.

Sedbon, Gilbert, "Helicopter Merger Moves Closer," Flight International, May 15, 1991, p. 14.

Sparaco, Pierre, "Eurocopter Navigates in Crowded Field," Aviation Week & Space Technology, July 4, 1994, pp. 61+.

, Eurocopter Seeks Recovery in a Weak Market," Aviation Week & Space Technology, September 23, 1996, p. 31.

Sutton, Oliver, "Up-Cyclic in the Crisis: Shrugging Off the General Downturn in the Aerospace Sector, Eurocopter Turned in Another Impressive Set of Figures in 2002," Interavia Business & Technology, January/February 2003, pp. 14+.

Taverna, Michael A., and C. Tardif, "Eurocopter Declares War on Costs," Interavia Business & Technology, January/February 1997, pp. 28+.

Taverna, Michael A., "East-West Whirlybird," Aviation Week & Space Technology, December 12, 2005, pp. 32-34.

;, "The Cutting Edge," Aviation Week & Space Technology, June 13, 2005, pp. 167+.

Vechere, Ian, "MBB Consolidates in Eurocopter," Interavia,

June 1992, p. 22.

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