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4
Second Quarter 2015
Global airline traffic grew 6% in 2014 (the fourth consecutive year above 5%),
and is projected to grow another 35-40% over the next decade.
1
Increased air
traffic, evolving next generation aircraft requirements and an expanding business
jet fleet are creating opportunities for Maintenance, Repair and Overhaul (MRO),
Ground Support Equipment (GSE) and Fixed Base Operations (FBO)
businesses. Consequently, MRO and FBO companies are the largest Aerospace
M&A categories based on transaction volume, representing nearly a quarter of all
TMG tracked aerospace deals in 2013 and 2014, and already more than a third
of 2015 transactions.
As the unprecedented commercial aircraft backlog continues to drive strong
valuations for quality supply chain businesses, strategic investors often have had
an advantage. Accordingly, MRO, FBO and ground support services and
equipment may represent a more accessible entry point to an attractive market.
Furthermore, a level of fragmentation persists among companies serving these
areas and offers opportunity to build scale. Private equity groups that are building
platforms include The Carlyle Group with Landmark Aviation’s six FBO
acquisitions, Arlington Capital with MB Aerospace in MRO, and most recently
Veritas Capital with its platform acquisition of StandardAero, one of the world's
largest independent providers of aircraft MRO.
Meanwhile, strategic buyers are actively shaping portfolios to capitalize on
growing market demand for ground services and equipment. Signature Flight
Support acquired five FBO operations over the last two years. AAR is building out
its Aviation Services division with three acquisitions, while shedding Telair Cargo
and positioning to sell its Precision Systems Manufacturing operations. Wencor
expanded its international MRO position with two acquisitions that added
specialty capabilities in cargo and interior systems. Textron added to its
Specialized Vehicles division, acquiring two GSE companies that will complement
its existing brands E-Z-GO, Cushman and Bad Boy Buggies. In addition to MRO,
FBO and GSE, other growing areas of strategic M&A interest include software
and data analytics capabilities that capitalize on rapidly expanding data outputs to
maximize efficiency and drive operations and systems design.
Industry Trends
(Aerospace Ground Support Services M&A update)
Source:
1
“Aviation Week’s Top 10 Airframe MRO Providers”, S&P Capital IQ, Public filings
MRO, GSE and FBO Transaction Activity
3
8
12
9
9
12
7
10
10
8
2013
2014
2015
Q1 Q2 Q3 Q4
29
34%
66%
2015 YTD
MRO, GSE & FBO Other Aero
23
%
77
%
2013
Buyer
Target
EV Announced
ERA FBO, LLC
NA
4/8/2015
TWC Aviation, Inc.
NA
4/3/2015
Ellington & Southwest Airport Services
NA 2/19/2015
Island City Flying Service, Inc.
NA
2/4/2015
Atlantic Aero, Inc.
NA 6/30/2014
Ross Aviation, LLC
NA 4/23/2014
Wiggins Airways FBO assets
$16.2M 10/8/2014
FBO 2000 Antigua Limited
$5.6M
8/5/2014
Landmark Aviation Scottsdale AirCenter
$55.8M
8/4/2014
Maguire Aviation
$69.0M 8/27/2013
Starlink Aviation Inc., FBO Montreal
$4.0M 6/26/2013
Cool Containers, LLC
NA 8/27/2014
Sabena Technics Brussels
NA 3/20/2014
PFW Aerospace, Cargo Loading System
NA 12/2/2013
Norbert Industries
NA
4/1/2014
Delta Industries
NA
6/2/2013
Douglas Equipment Limited
NA 1/13/2015
TUG Technologies Corp
NA
5/3/2014
PHS/MWA Aviation Services
NA
4/6/2015
XTRA Aerospace
NA
4/9/2014
LLCP / Tronair
Wasp, Inc., Commercial Towbar & Tailstand
NA 1/14/2015
Veritas Capital
Standard Aero
NA 5/26/2015
35
?
Total Subsector Transactions As a % of Total Aerospace M&A
23
%
77
%
2014
Notable Acquisitions and Consolidations