NAFA member, Rob Smith, President of Jet Aviation, talks about business success with Anthony Harrington, Editorial Director at BizAv Media Ltd.
AH: With trade war tariffs being bandied about, and with emerging economies currently wobbling, 2018 has not been without its problems. How has it been for Jet Aviation?
RS: We have had a great year so far. The outstanding event for us was obviously closing the Hawker Pacific deal and we announced the completion of that acquisition on May 2nd. The transaction itself is valued at $250 million and it adds 19 locations across Asia Pacific and the Middle East to our global network. 2018 brought us seven FBOs, 14 MRO facilities and over 400,000 square feet of hangar space, plus in excess of 800 additional employees. We are now several months into the integration process and that has been a very absorbing challenge. The deal was our largest acquisition ever. Their total revenues were about a third of the size of ours, so it was a huge deal for us. We also received authorization from GACA in Saudi Arabia to provide handling services at Prince Abdul Mohsin Bin Abdulaziz Regional Airport in Yanbu, the Kingdom of Saudi Arabia. Lastly, we are hoping to add an additional two FBO locations in Europe in the near future.
AH: How much overlap is there between your various facilities now you have added Hawker Pacific?
RS: One of the very few overlaps that we have is in Singapore, where we have six hangars on the campus between us, and the two sites are right next door to each other. By the end of the year we will have everything in Singapore badged as Jet Aviation. We are also rebranding our Australian FBOs to Jet Aviation in the first quarter of 2019 and will continue to review the other locations.
AH: The acquisition is obviously a huge leap forward for Jet Aviation. How much organic growth are you seeing on top of that?
RS: We are certainly seeing signs of growth. We’re building a new wide-body hangar at our Basel location. On top of this we have two expansion projects in the US, at our Van Nuys and Teterboro locations. These are two busy FBO locations for us so we are working to stay abreast of, or ahead of, the growth that we see coming in the industry.
AH: Everyone in the MRO field talks about how the shortage of top rate technicians and engineers is impacting the industry. Jet Aviation has an arm that specializes in providing skilled staff. What is demand like?
RS: There is certainly a very clear shortage of skilled folk in the sector, right across the board, including pilots and flight crews. However, our staffing business helps to support the industry by providing engineers or pilots and flight crew. And we are always recruiting heavily in that business to help support the industry.
AH: How is the completions side doing?
RS: One of the major highlights for us was that we were able to announce in the 2nd quarter of this year that we had secured our second Boeing 787 project for an undisclosed private individual. We have three wide body projects just finished or finishing up. We just re-delivered a Boeing 777 in mid-August and we have a second 777 nearing the final stages, plus an Airbus 330. We have orders in the pipeline for Airbus Neos and BBJ MAXs. We’re starting to see some of the narrow body aircraft that were gone from the market for a couple of years, and we are seeing those aircraft being adopted in the VVIP space as well, which is always interesting for completions houses. On another note, we have just been authorized by Airbus as a VIP completions center for the ACJ 350. We don’t have orders for this yet but we are poised and ready, just as with the Boeing 787.
AH: The completions space is fascinating but hugely demanding, as well as risky. How do you rate it?
RS. It is always an interesting space. We are having some great conversations with potential clients. The great thing about running a completions business is lining up the right level of work. You want to get the backlog as close to a perfect fit for your facilities as you can. You don’t want to bring in too much work, or too little, so it is a real balancing act. Completions can so easily swing between feast and famine, so you have to plan your work out carefully.
AH: What are you seeing on the 2020 mandates? Is that driving work for you?
RS: We have not had a whole lot of the ADS-B type work here, though we are qualified to do them. However, until we get our new hangar facility finished in Basel, we are pretty much jam packed as far as workload goes.
AH: That adds credence to the point that a lot of senior MRO people are making, namely that the industry is unlikely to have sufficient capacity to help all those folks who are delaying getting to grips with 2020 mandate work, when they all dash to get their aircraft completed in time…
RS: It is going to be a crunch, no doubt about it. Both ourselves and our competitors are urging operators and owners to book their aircraft in as early as they can. It will be a real rush from now to 2020 to get the work completed.
AH: What are you seeing by way of demand for connectivity upgrades?
RS: This is now a very interesting area. We have several solutions on connectivity that we offer clients. We recently had a 747 in our Basel facility for a Ka band installation and we are committed to developing the STCs for a variety of aircraft type installations. There is a very high demand for high throughput broadband connectivity in the market and we are working with suppliers to have full, seamless solutions available in all our locations. On all the services we offer, one of our key messages to industry is our independence. We don’t play favourites among the OEMs. We have our sister company, Gulfstream, but we also support all other OEMs in the industry.
This article was originally published in Business Aviation Magazine, August 2018.
