Sylvain Allard brings CHC Helicopter Group back to B.C. and prepares for a quick vertical takeoff.
Shortly after Carl Agar and partners Barney Bent and Alf Stringer bought a helicopter for a planned orchard-spraying business in July 1947, Agar flew the chopper into a power line. A rocky start, indeed, but the abrupt halt to its first season in the air didn’t mark the final days of this B.C. high-flyer. Operations in Asia, India and Australia and a steady business in Europe have made CHC the world’s largest provider of helicopter services to the offshore oil and gas industry, with revenues topping $900 million. CHC makes its first appearance on the BCBusiness Top 100 list of public companies at No. 16, thanks to the move of its headquarters from executive chair Craig Dobbin’s home province of Newfoundland to Richmond in 2004. “We had offices in Newfoundland, which were purely corporate, and we had the international offices right here,” explains CHC president and CEO Sylvain Allard. “We also wanted to consolidate other management offices from around the world into one location. And Vancouver was very attractive.” During an interview in his Richmond office, Allard says the region’s natural beauty and quality of life help the company attract international talent. And it’s a lot more accessible to visitors than St. John’s ever was. The B.C. Institute of Technology aerospace program and a nexus of aviation companies also made B.C. a good place to tap talent. “There’s a lot happening in B.C. on the light aircraft side, so you get a good feed of people coming from the light helicopter business into our business,” Allard observes. CHC doesn’t operate any aircraft carrying fewer than 12 people, and with opportunities for long-term work and travel the company is a step up from the smaller regional players surrounding it on the south side of the Vancouver International Airport. But CHC is experiencing a step up of its own. Since doubling in size with the 1999 acquisition of Helicopter Services Group ASA of Norway, it has seen its growth accelerate. The company is adding 20 helicopters to its fleet this year and another 40 next year. “I’ve never seen it that way, to see so much demand for our services,” Allard says. When Dobbin, 71, discussed privatizing CHC earlier this year, he was awakened to the company’s long-term worth. He had begun stepping back from the business two years ago, having resigned as CEO and handing the reins to Allard. Dobbin still retains control of 62 per cent of CHC ’s voting shares, but he is thinking hard about the company’s future. However, after approaching a couple of American private equity firms in March this year with the idea of going private, he nixed that option. The deal – which could have been worth upwards of $1.5 billion, according to observers – never happened. “He thought that there was more value just continuing on,” Allard says. When CHC ’s long-time CFO Jo Mark Zurel resigned in May, speculation that the privatization bid was to blame ran wild. But Jacques Kavafian, an analyst with Research Capital Corp. in Toronto, considers Zurel’s departure a symptom of CHC ’s rapid growth. “Those guys work hard. They work non-stop for a long time and once in a while they call it quits,” he says. “I’m not reading anything into it except that the guy’s probably exhausted.” Certainly, CHC is showing no sign of slowing down. Work in the offshore oil and gas sector promises to remain steady and the firm is diversifying its business, snapping up lucrative search-and-rescue contracts in Europe that allow it to make better use of its equipment and expertise. “It’s just about 12 per cent of our revenue right now, but that’s going to grow, especially in ’08,” Allard says, pointing to a U.K. contract that will generate $331 million annually, on top of revenue from contracts with both the Irish and Australian coast guards. While CHC has posted a five-year return to investors in the range of 1,000 per cent, Allard says the company faces challenges in managing currency fluctuations. Since it reports its financials in Canadian dollars, some of the company’s strength is masked by exchange rates, even though it manages to do a good job of hedging. Allard figures about $80 million of CHC ’s revenues in the most recent fiscal year have been affected by the current strength of the Canadian dollar. “Our international division is growing at 20, 25 per cent year-on-year,” Allard notes. “But when you convert it back to Canadian, because of the strength of the dollar right now, you don’t see the same amount of growth.” Sputtering start A conversation over coffee in Penticton back in 1946 was the launching pad of Okanagan Helicopters Ltd., according to notes on the history of helicopters in B.C., prepared by Peter Corley-Smith for the Royal B.C. Museum. Founded by former Royal Canadian Air Force officers Carl Agar, Barney Bent and Alf Stringer, the company initially planned to provide spraying services to orchards. But the small scale of local orchards made the business uneconomical. Plans came crashing down, literally, when Agar flew the company’s first chopper into a hydro line, wrecking the rotors. The following year brought its first real commercial job: spraying for mosquitoes in the Fraser Valley. One contract led to another, and Agar saw the helicopter’s potential to replace the packhorse and canoe for prospecting, surveying and forestry work in the Interior. By 1954, Okanagan Helicopters was flying high as the largest commercial helicopter operator in the world. Related Stories: Top One Hundred Overview Biotech Breakthrough Ringing up revenues