Air Partner Share Discussion Threads

[venek] 25/4/2019 09:56

AP have very strong competitors like Chapman Freeborn (privately owned) and ACS (a plc) and there are plenty of brokers in trade body BACA (some with external accreditations that AP haven't bothered to seek) hxxp://www.baca.org.uk/members/
Air operators are always happy to sell direct too.

The lack of well defined benchmark makes it more difficult to evaluate performance, but so does diversifying into non-core activities too. That can't help investor confidence.

This means AP should really be communicating hard to investors. Not just the fluffy pap they pedal to HNWI who want to charter a flight to a Caribbean paradise (see their twitter feed)and empty platitudes that things can only get better, but solid business performance data. They have tried to use hard data to impress training and consulting customers but all that proved is how stagnant those expensive acquisitions have been year on year (further evidenced by leaking staff).

I can't help thinking the only way investors will recoup their losses is if a white knight finds some value to unlock and buys AP out. No hope of an MBO though based on the directors miserly investment!

[cd27idw] 24/4/2019 22:39

Re fair peer group; probably not, but being a broker, rather than a de rigeur charter company which holds its own aircraft, it's probably peerless. Latterly however, its price has been tracking the cos I mentioned (they're listed on the FTSE under the same banner).

[venek] 24/4/2019 21:39

cd27idw Is that a fair peer group? AP are mainly a charter broker, predominately chartering business jets to HNWI, some cargo flights and some charter flights for big companies etc. They are not an airline selling to individuals or even to tour operators. Its a bit like comparing Uber with GWR. They move people but they are not the same. AP certainly don't have the assets and cost base of an airline has to maintain , or the regulatory approvals, and they don't have to hedge fuel or compete for landing rights.

AP have invested in their own vanity project, a consulting and training business, that sells to...those struggling airlines. No surprise that division, that they appear to have paid over the odds for, has struggled to create the growth they proclaimed it would.

trident5 Yes fractional ownership operators are different to airlines. But AP is not one either of course! They pre sell business jet 'availability' and use buying power to buy capacity cheaper than any user theoretically could. But they don't have any direct control over the quality of the service delivery, they can't control supply or demand and are only taking a relatively small cut.

Plus AP are vulnerable to the uberisation of air transport and the possible rise of on-demand urban air mobility services (electric vertical take off aircraft), predicted to be a billion dollar business in the next 5 years. They aren't investing in being a leader brokering that sort of service and risk losing HNWI business to players ho can move the rich and famous from door to airport to door in one transaction, that is as easy as order a limo through a smart phone.

[trident5] 24/4/2019 20:28

A few years ago Warren Buffett pointed out that globally and over all time the airline industry has generated a net loss. He attributed this to the involvement of "vanity" national airlines.
By that token it's just not a place to be invested in, albeit the business model of AP is different to those you have listed and WB did well out of investing in another fractional ownership model.

[cd27idw] 24/4/2019 20:06

Re poor share performance: you might want to check out AIR's performance relative to it's peers, I.e. easyjet, IAG, Wizzair, Dart Group and, dare I say Fastjet and Flybe. Obviously you can't compare with Flybe, because they're not listed anymore, and Fastjet are a basket case kept afloat by Stelios's many friends. Air's share price has only in the last four months converged with it's group, having out-performed since the error was uncovered. Granted the failure to iron out the cyclic trend is worrying, but very early days there; that said I worry about their ability to deliver on this count. Results due May 4; maybe price getting real up to ten?

[venek] 24/4/2019 19:59

Well by definition they won't if such anomalies fester for 6 or 7 years before they are found...

AP has never publicly acknowledged that the abnormalities uncovered a year ago started almost exactly when they changed accountants in FY2011 (after a previous financial snafu cost them £3.1 million).

On page 19 of that very year's Annual Report, Briffa's first as CEO, they explained that they were strengthening their financial controls. At the same time, we now know that, in AP's words, "certain inappropriate financial journals had been deliberately processed without effective review" and that these were then concealed by further inaccurate records being created over many years!

Its still not clear if the expensive investigation actually identified why this "deliberate" long term deception occurred. Was it to build a time bomb to sabotage the company or a deviant attempt to boost the apparent profit?

There has been no mention of seeking damages from Deloitte, suggesting AP are unable to show they were negligent, yet it doesn't appear that there were grounds for prosecution of any employees for making false entries either.

[pvb] 24/4/2019 17:52

...Hopefully, discovering a longstanding accounting problem, losing the CFO and changing the auditor will not be an annual event. ;-)

[venek] 24/4/2019 13:54

We'll have to differ on "as expected". In contrast the law expects accounts to be filed by the statutory deadlines without excuse.

"We had a 6 year latent problem with our parent company accounts" is not an excuse that plays well with investors either as evidenced by the continued poor share price.

It would be ironic if the envisaged but yet to be realised back office synergies of acquisitions have simply meant that swamped AP group staff are now unable to meet statutory deadlines. Not something that boosts confidence in future accounting robustness.

[pvb] 24/4/2019 11:02

After PWC took over various AP subsidiaries still filed months late incurring fines and a compulsory wind-up being initiated on at least one.

We've already had an explanation for that, above. Not surprisingly due to the main company accounts problem plus the change of auditor. As expected really.

[venek] 24/4/2019 10:54

Very true, but appointing a Chairman from your accountants would be an outrageous conflict of interest that even AP wouldn't make the mistake of doing. They have simply selected the chairman of an accountants they didn't choose last year.

But please also remember that:

Mazar and Deloitte were both previously dumped after accounting problems at AP.

After PWC took over various AP subsidiaries still filed months late incurring fines and a compulsory wind-up being initiated on at least one.

The appointment of a chairman to provide independent governance has resulted in the selection of one who is also a chairman of accountants under close regulatory scrutiny.

Long suffering shareholders might wonder if a different choice might have triggered a bigger market confidence boost and recovered some of their losses for AP management's accounting incompetence.

[valhamos] 24/4/2019 10:36

To be fair to welshdaff it was his first post and he may not have realised that. The whole audit industry has a bad reputation at the moment and it was Deloitte not Grant Thornton who messed up at AIR. They have now gone along with the CFO at the time.

[pvb] 24/4/2019 10:11

...But let's remember DeLoitte are the AIR auditors, not GT.

CORRECTION: PWC are the AIR auditors since Nov 2018

[venek] 24/4/2019 09:52

pvb I prefer to analyse and interpret the facts. Facts others seem happy to remain willfully blind to. It’s that sort of willful blindness that stokes poor corporate governance.

welshdaff makes a good observation on the fact AP directors have been reticent to invest.

The fact that AP has appointed a chairman who is also chairman of an accounting firm with a current track record of being subject to regulatory enforcement actions is noteworthy too.

I'm now aware, thanks to welshdaff's tip off, that it’s a fact that of the 10 current FRC cases, 3 involve GT vs 7 for the 'big 4' accountants combined (its 3 vs 10 for their past cases).

[trident5] 24/4/2019 08:52

Looking after GT right now should be a full time operation - no matter how smart these people think they are part-time oversight is just ticking the boxes and taking the money - hence: Pat Val.

[pvb] 23/4/2019 22:54

I am curious why you first reaction is to make insinuations.

Well, Venek, when it comes to making "insinuations"... :-)

[venek] 23/4/2019 22:41

No 3800 I am not schizophrenic.

I am curious why you first reaction is to make insinuations. Perhaps you don't like not being able to find fault in welshdaff's logic?

I had realised Ed Warner's role at GT:
hxxps://www.accountancyage.com/aa/news/2442727/ed-warner-tasked-with-overseeing-grant-thornton-governance

But I hadn't realised GT were PV's auditor.


Or indeed that they were also Sport's Directs auditor.
hxxps://www.consultancy.uk/news/20384/grant-thornton-comes-under-scrutiny-for-sports-direct-role

Or that GT was fined £4mn for accounting scandals at Nichols and Salford Uni:


Or that in February they had been ordered to pay AssetCo £21mn (after also being fined £3.5mn):
hxxps://economia.icaew.com/news/february-2019/grant-thornton-ordered-to-pay-assetco-21m

Nor did I realised that within 2 weeks of his appointment by AP, the FRC had opened an investigation into GT and Interserve: hxxps://www.frc.org.uk/news/april-2019/investigation-in-connection-with-the-audit-of-the

Which surely begs questions about the soundness of AP executive decision making, yet again.

Ironic this is the same Ed Warner who recently said: "Getting caught cheating is truly transformative to your life and not in a good way."

[3800] 23/4/2019 20:16

Have you got a new posting name Venek? Seems a little odd welshdaffs first and only post is on this board wouldn't you say?

[welshdaff] 23/4/2019 19:09

Certainly more focus on the core business but the price correction partly reflects lack of success with earnings diversification leaving investors exposed to volatile risks. Acquisitions have been small with disappointing returns and nothing purchased in 18 months. Worthwhile transactions may need a higher share price for effective funding. A circular problem difficult to resolve.

Previous comments are now ringing alarm bells. I toiled in financial services regulatory compliance for years and watched investment guru Jim Slater for obvious reasons. He based decisions on when directors, particularly the CEO and CFO, bought shares. Its noted AP’s CEO has not bought but now totally illuminating that since the accounting disaster the CFO has not invested a penny after 7 months of familiarisation, especially when confidence desperately needed boosting. Linked or otherwise, no director has bought in this period. Mr Biffa even offloaded 34,000 recently. Arguing that stock will rise but still grabbing an excuse to sell would lack credibility. Are these strong indicators of bad news to come?

If so investors may accept trading issues but definitely nothing governance related because shockwaves from years of accounting failure still linger. Valhamos (posting March29) was incorrect because proper governance/compliance is categorically a board’s responsibility. Ensuring those processes work effectively, even if accounting staff can’t manage it, is what audit committees are obligated to do. The accounts should explain this somewhere as a legal commitment to third parties. Its ingrained across fin services and should be so everywhere. Ergo “the poor management responsible for the accounting issue” with one/two (?) exception have in fact continued in post and potentially as before. Interestingly, the regulator’s website shows AP is possibly the only high profile scandal not yet independently reviewed leaving 5 years of governance negligence explained so far only by what management chose to (not) tell about compliance. Shareholders stuck on big losses usually get an independent assessment after entrusting their funds. I bailed months back sensing directors would not be buying but still copped it. The current fin services Watchstone case will be instructive after their shareholders lost patience.

Could it be more ironic that the new chairman is still in charge of governance at GrantThornton, the firm regulators are showing missed everything at Pat Val? My daughter completed her audit articles there before very swiftly moving on.

[venek] 23/4/2019 17:41

At last, some focus on their core business!

Having said that Macnaughton has spent the last 15 months working at the London Doctors Clinic who say they are "a convenient and affordable private London GP practice providing GP Services exactly when and where you need it. For only £59 you can see a doctor at a time, and place, that suits you."

[trident5] 23/4/2019 12:13

Thanks pub

[pvb] 23/4/2019 10:55

Tony Whitty, founder of Cabot Aviation - taken over by AIR - was listed in 2018 R&A as Managing Director, Charter.

He is still shown as a "Managing Director" on the AIR website. "...Tony now heads up the Remarketing and ACMI business within Air Partner."

[trident5] 23/4/2019 10:35

Is he replacing someone? Or is it a new role?

[pvb] 23/4/2019 10:10

Appointment of Kevin Macnaughton as Managing Director, Charter

[venek] 16/4/2019 12:03

Yes, share price is now back to where it was in August 2016.

This week the current BS MD has been in post for a year...and another BS Principal consultant has gone. They are leaving at a rate of one every 4 months, so with just 5 left the cupboard will soon be bare.

[pvb] 11/4/2019 23:01

Bit of a bounce. Heralding good annual results? We shall see.