Company went out of business due to financial issues
CBC News · Posted: May 27, 2020
After nearly six decades in Newfoundland and Labrador, Universal Helicopters has closed due to financial reasons.
At the end of Tuesday’s business day, all of its operations — including those of its subsidiaries — ended.
“Universal Helicopters reached this decision after working unsuccessfully with its banks to find solutions to stay in business,” the company said in a press release Wednesday morning.
It said it was “vulnerable after a poor financial performance in 2019” that carried into 2020, as management and the board of directors worked on ways to keep it going since September, when its future was “a going concern.”
Universal Helicopters said it engaged legal and financial advisors, negotiated with key stakeholders like its creditors, and retained a broker to help with marketing and sales of its assets.
Those poor financial results were “exacerbated by high levels of bank debt,” which the company said came from its acquiring Lakelse Air in 2018, the COVID-19 pandemic, and the global economic downturn from the latter as well as other recent events.
“These occurrences have had a drastic negative impact on the operations of all businesses of Universal Helicopters,” the statement read.
With no acceptable plan reached to address Universal Helicopters’ immediate need for liquidity to keep going and pay its obligations to its creditors, the company closed, despite what it called “substantial efforts” to avoid it.
In an emailed statement to CBC News Wednesday afternoon, the Department of Transportation and Works said the cost of helicopter services with Universal was $2.5 million in 2019-20.
“As the current contract with Universal was set to expire on March 31, 2020, the department issued a request for proposals in late 2019 for the supply and delivery of helicopter services,” the statement reads.
“The department’s contract with Universal was extended beyond March 31, 2020, and government has been preparing to make a decision on the next contract.”
The department said officials have been speaking with other businesses that provide helicopter service, noting Canadian Helicopters and Newfoundland Helicopters have agreed to provide assistance to ensure that the services previously provided by Universal will continue.
Nunatsiavut Group of Companies have 40 per cent share
The Nunatsiavut Group of Companies owned 40 per cent of Universal Helicopters, according to NGC president and CEO Chris Webb.
CBC News asked him for an interview, but he declined, citing legal reasons.
A few hours later, Webb issued a statement about the shutdown.
He said the minority stake was obtained in the fall of 2013.
“Unfortunately, the investment did not work out … as intended,” according to the news release.
Webb noted the company performed poorly in 2019, and since then, various options were looked at in order to stay in business.
“The financial impact of the decision upon NGC and its affiliates will remain uncertain until the proceeds of the partnership assets are determined,” Webb said in the statement.
‘End of a legacy’
Geoff Goodyear, a former helicopter pilot and CEO of Universal who joined the company in 1979, said he was surprised to hear the news.
“Not just a normal type of surprise, it was like, ‘Oh my,'” Goodyear said. “What a sad event for not only here, but for the industry.”
“It’s sort of the end of a legacy,” he added. “There’s more than one provincial citizen that’s been born in the back of a Universal helicopter, and people that owe their lives to the services … so it’s going to affect the province, and Labrador specifically, in numerous ways.”
Goodyear said Universal was unique in the aviation industry, serving as a trendsetter over the years.
“Even though we were an older company, we were the test bed for real-time satellite flight following,” he said. “A lot of the stuff the industry takes for granted today, Universal played a role in.”
Goodyear said the helicopter industry is heavily impacted by capital, which has taken a hit across the board as the COVID-19 pandemic progresses.
“You’ve got an industry that’s very capital intensive, on top of depressed markets. And all of a sudden the markets disappear,” he said. “Everybody in the equation is pressing the reset button except the bankers. The bank still needs people to pay.”
With files from Janice Goudie and Alex Kennedy