Era Aviation's Texas-based parent corporation is considering whether to sell the 50-year-old aviation company.
Rowan Companies Inc.'s board of directors asked management to evaluate the importance of Era Aviation to Rowan's core business.
"The board has asked the company to take a look at Era Aviation and check the market as to what kind of value Era has to the company," said Bob Croyle, Rowan's vice chair and chief administrative officer. "Then the board will determine if Era is a core business to us or if we want to sell it."
Simmons and Company International, a Houston-based investment bank firm that specializes in the energy industry, is conducting the evaluation. The process began in April, said Era President Chuck Johnson.
As part of the evaluation, Rowan has received proposals to buy Era from several companies, both Croyle and Johnson said. Management also has offered presentations about Era to some of the potential buyers.
Rowan, based in Houston, has three areas of operation: Rowan conducts offshore and onshore drilling of oil and gas wells; LeTourneau Inc. conducts the manufacturing and sale of heavy equipment and products; and Era provides fixed-wing and helicopter services.
Croyle said the process should be completed within the next few months.
"It's not a fun time for Era employees to have this indecision," he said. "We want to reach a decision on the matter fairly quickly."
Era's airline services are an important part of Alaska's transportation, especially in rural communities. Era has hub operations in Anchorage and Bethel, and flies to 24 destinations throughout Southcentral, the Yukon-Kuskokwim area and to Kodiak Island. It also offers charter and contract flight services.
Era's helicopter division operates flight-seeing tours in Southeast Alaska. It also operates out of Louisiana and Nevada, primarily for oil and gas companies.
As of March, Era owned 85 helicopters and 16 fixed-wing aircraft, according to financial statements. The company has 950 employees, most of whom are in Alaska.
But Era's balance sheets for the airline and the helicopter divisions over the years haven't always been favorable.
"Neither (division) have been as profitable as we'd like to have seen over the last few years," Croyle said. "Rowan at the core of its business is an offshore drilling company, so the question that arises is, 'Should we be in the aviation business?'"
In the first six months of the year, Era experienced a loss of nearly $14.4 million in operations, according to Rowan's second-quarter financial statements. That compares to a loss of $5.1 million during the same period last year.
The bulk of the loss was attributed to the normal seasonal slowdown in helicopter flying activity in Alaska during the first four months of the year.
Comparatively, the rest of Rowan's companies are doing well so far this year. All totaled, Rowan reported an operating loss of $964,000 through June 30, 2004, compared to a loss of $17.1 million for the first six months of 2003.
The drilling company, which reported a loss of $12 million in the second quarter 2003, turned a profit of $11 million this year. The manufacturing company increased its profits from $297,000 last year to nearly $2.4 million this year.
Era has had profitable years, including a nearly $14 million profit in 2002. But the company's bottom lines haven't been steady or predictable. Those ups and downs reflect heavily in Rowan's earnings, Croyle said. And operating costs for such factors as fuel, insurance and excise taxes continue to rise.
Carl F. Brady founded Era in 1948, establishing what is now the world's oldest helicopter company. In 1967, Rowan bought Era's holdings.
While he doesn't know what's going to happen to Era, Johnson said he doesn't believe that Era will ever leave Alaska.
"I'm sure we'll still be around; I'm as confident as I can be about that," he said. "We really aren't a core business to Rowan. We're the only one of their companies that's not core to offshore drilling. But we're a viable company.
"I'm confident that however it goes, it will be positive for the long-term future of the company," Johnson added. "But we want to get through it so we know what the end result is going to be."
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