Customer Support Terminated, Factory Closed, with Liquidation to Come

The Enstrom Helicopter Corporation has sent a letter to dealers and representatives, announcing the end of continuous operations. The company has apparently seen lean times lately, and its owners have directed the company to declare Chapter 7 bankruptcy. Enstrom will leave behind nearly 1,500 unsupported aircraft around the world, now orphaned unless the company is resurrected in some form. 

The banruptcy is somewhat unsurprising to some, as the often troubled company has changed hands several times over its lifetime. The helicopter industry is not a particularly high-volume one, and economic doldrums are felt much more keenly in a manufacturer the size of the ~110-strong Enstrom. Technical support for customers is terminated and its factory will be closed on the 21st. The letter sent to dealers and brand representatives from (soon-to-be-former) sales and marketing director Dennis Martin, reads thusly: 

"I regret to inform you that after 64 years of near continuous operations, Enstrom will be closing its doors on January 21, 2022. Due to several financial difficulties, Enstrom's owners have directed the company to declare Chapter 7 bankruptcy. Parts, technical support, overhauls, and new aircraft will no longer be available from the factory. In addition, all existing contracts and agreements will become null and void. Finally, all employees, including the senior management team, will be terminated.

Enstrom understands that you all have customers you are supporting, and that this will put both you and your customers in a difficult position. We apologize. Enstrom's management team is aware of multiple groups who have expressed strong interest in buying Enstrom's assets and reopening the company post-bankruptcy. While we have no control over how and when this may happen, we feel that it is highly likely that a new Enstrom will be in a position to support you and your customers relatively quickly." 

Aviation has never been a stranger to bankruptcies, especially for small GA and LSA operations. While theoretically the company's demise will result in the end of factory support entirely, the sale of Enstrom's assets - the designs, the certificates, the branding, and the production tooling - should prove enticing to buyers looking for an affordable, boutique helicopter brand. A new deal mirroring the previous sale to Chongqing Helicopter Investment Corporation could be replicated once again, if someone believes they could add something the previous owners missed. Enstrom's sales have never been too impressive, however, as the last sale of note occurred in 2020 with the sale of 3 480B turbine helicopters for Botswana Police. Other banner deals included the sale of a few dozen helicopters to the Royal Thai Army, Indonesian National Police, Peruvian Air Force, and Japanese Self Defense Forces as an advanced light trainer aircraft. 

GAMA data from 2006 to 2019 shows that Enstrom's total sales volume for the company was a paltry 206 aircraft worldwide. The high-water mark for the period topped out at 27 aircraft in 2013, right around the time of its purchase by Chongqing. On average, only 15 helicopters a year were shipped worldwide, a number that pales in comparison to any would-be competitors. Enstrom's portfolio was hard to define like its contemporaries, boasting the turbine-powered 480B as well as the light piston-engined 280. A one-off training helicopter model is a hard sell for cash-strapped militaries. Customers want as much parts compatibility as possible, but without economies of scale, pricing will always remain higher than mass-produced competition. At the lower, cheaper end of their product offerings, the piston-engined 280 saw stiff competition from Robinson, who handily outsold year after year. Bringing the company back to health, while not entirely impossible, will mean taking on Hughes, Robinson, and Bell at what they do best. Will someone try? Could we see another pie-in-the-sky purchase, maybe a deal that pivots into sustainable eVTOL for the nameplate and certifications? Only time will tell. 

FMI: www.enstromhelicopter.com