TIDMGMAA TIDMBBA
RNS Number : 1256T
Gama Aviation PLC
03 January 2017
Gama Aviation Plc (AIM:GMAA)
Gama Aviation Plc teams with BBA Aviation Plc to create the US's
largest Aircraft Management Business
Gama Aviation Plc ("Gama Aviation" or the "Group"), the global
business aviation service provider, today announces the merger of
its US aircraft management and charter business with that of BBA
Aviation Plc ("BBA Aviation"), as of 1(st) January 2017.
With the addition of over 90 aircraft to Gama Aviation's current
US managed fleet, the combined business, with over 200 aircraft
under management, will become the US's largest aircraft management
business. Customers will benefit from the scale of the combined
business through enhanced national and global service coverage and
improved buying power resulting in lower costs. They can also
benefit from the comprehensive line maintenance support provided by
Gama Aviation's US Ground business as well as the market-leading
FBO services provided by BBA Aviation's 'Signature Flight Support'
network.
Highlights
Ø Creates a market leading platform for Gama Aviation and BBA
Aviation to expand their presence in US, the single biggest
business aviation market in the world.
Ø Provides national geographical coverage with BBA's
predominantly West Cost based fleet complementing Gama Aviation's
currently East Coast centric business, creating a national network
to enable further growth in this highly fragmented market.
Ø Extends and diversifies Gama Aviation's client base.
Ø Expected to deliver significant additional growth for Gama
Aviation's US Ground business through the ability to cross sell
maintenance services to the additional aircraft now under
management.
Ø Expected to deliver significant cost synergies of not less
than $2M over two years.
Ø Expected to be earnings neutral in 2017 and 2018 and earnings
enhancing thereafter, before the benefits of cross selling
maintenance services into the enlarged fleet.
Gama Aviation's current US aircraft management and charter
business interests are operated by its 49% owned associate Gama
Aviation LLC, whilst those of BBA Aviation are operated by its 100%
owned subsidiary Landmark Aviation through its air carrier
operating subsidiary, Sterling Aviation LLC.
Pursuant to the agreement reached, Landmark Aviation will
contribute 100% of its ownership in Sterling Aviation LLC into Gama
Aviation LLC. Gama Aviation Plc will transfer its 49% ownership in
Gama Aviation LLC into a new holding company, GB Aviation Holdings
LLC, which will be owned 50:50 by Gama Aviation and BBA Aviation
reflecting the near equal contribution of current profits by each
party. Historically, in the year ended 31(st) December 2015 through
a combination of branding fee and its 49% interest in Gama Aviation
LLC a contribution to Group profit before tax of $4.3 million was
delivered by Gama Aviation's aircraft management activities; in the
same period BBA Aviation's US aircraft management activities
delivered profit before tax of $5.5 million.
Gama Aviation LLC will continue to manage and operate the
combined businesses going forward and will trade its new service
offerings under the brand name Gama Aviation Signature Aircraft
Management. Gama Aviation's US Ground business remains a 100%
wholly owned subsidiary of the Group.
Under the terms of a new licensing and branding agreement, Gama
Aviation LLC will continue to use the Gama Aviation brand and IP,
and will also be able to use BBA Aviation's Signature Flight
Support brand name. The annual fee has also been increased and
fixed and will be shared between BBA Aviation and Gama Aviation.
This will reduce the existing branding fee contribution to the
Group whilst increasing the contribution to the Group's income from
associates.
After taking into account the build up of cost synergies, the
transaction is expected to be earnings neutral in 2017 and 2018 and
earnings enhancing thereafter. This is before any benefit from
cross selling of Gama Aviation's comprehensive maintenance services
into the immediately enlarged fleet or the future growth
opportunities expected to be derived from Gama Aviation Signature
Aircraft Management's market-leading platform.
Gama Aviation will issue a trading update for the year ended
31(st) December 2016 on Monday 9(th) January.
Commenting on the transaction, Marwan Khalek, Chief Executive of
Gama said:
"We are delighted to announce this exciting deal and to be
teaming up with BBA Aviation in the US. The enlarged business
creates a market leader and an unrivalled platform for growing our
share of this massive business aviation market. The combination
diversifies our customer base and extends our network coverage
nationally whilst simplifying the financial arrangements with our
US partners. As part of this strategically important transaction,
we are also excited by the potential to cross sell our US
maintenance services into the enlarged fleet."
Simon Pryce, Chief Executive of BBA Aviation, said:
"This agreement marks another milestone for BBA Aviation,
creating a leading charter and fleet management company, whose
scale will benefit both us and our customers. We look forward to
working with our partners at Gama Aviation to develop and grow the
new company in the years ahead."
ENDS
For further information please visit www.gamaaviation.com or
contact:
Gama Aviation Plc +44 (0) 1252 553000
Marwan Khalek, Chief Executive Officer
Kevin Godley, Chief Financial Officer
Camarco +44 (0) 20 3757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
Jefferies International +44 (0) 207 029 8000
Simon Hardy
Harry Nicholas
Gama Aviation - Notes to Editors
Gama Aviation (GMAA) is a multi-disciplinary global aviation
services company that specialises in providing support for
individuals, corporations and government agencies. Following the
reverse takeover by Hanger 8 in January 2015, Gama Aviation is now
one of the top three global players in a highly fragmented market,
with a fleet of 153 aircraft. Gama operates across Europe, the US,
the Middle East, Asia and Africa.
Gama's services can be split into two broad areas: Air and
Ground. The Air Operations include aircraft management, special
mission and charters, with Ground Services covering maintenance
services, Fixed Base Operator (FBO) operations and modification
services.
http://www.gamaaviation.com/
BBA Aviation - Notes to Editors
BBA Aviation plc is a leading global aviation support and
aftermarket services provider with market leading businesses and
attractive growth opportunities. BBA Aviation's Flight Support
businesses (Signature Flight Support and ASIG) are focused on
refueling and ground handling of business and commercial aviation
aircraft. Its Aftermarket Services businesses (Dallas Airmotive,
H+S Aviation, International Turbine Service, Barrett Turbine Engine
Company, International Governor Services and Ontic) are focused on
the repair and overhaul of jet engines and the service of aerospace
sub-systems and components. For more information, please visit
www.bbaaviation.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
JVEBLLLBDFFFBBX
(END) Dow Jones Newswires
January 03, 2017 02:00 ET (07:00 GMT)