Gama Aviation announces Landmark US merger
Gama Aviation, the business aviation operator, has started 2017 by merging its US operations with Landmark Aviation, BBA Aviation’s 90 aircraft US management business. BBA Aviation, the owner of the Signature FBO chain, acquired Landmark Aviation in 2016.
The transaction means that Gama Aviation is now one of the largest business aircraft managers in the US with a combined fleet of more than 200 aircraft.
As a London Stock Exchange listed company, BBA Aviation needed to sell 51% of its shareholding in Landmark Aviation to US investors in order to comply with US airline ownership rules. It had several bidders but has chosen to joint venture with Gama Aviation and keep a stake.
“This deal is one where we have both thought outside the box,” says Marwan Khalek, CEO and co-founder of Gama Aviation. “This is a win for BBA Aviation’s shareholders, a win for our shareholders and a win for customers of both businesses because scale is important.”
Gama Aviation’s US aircraft management business is 49% owned by Gama Aviation PLC (also listed in London) through a holding company called Gama Aviation LLC. The other 51% is held by the US management team. BBA Aviation is contributing all of the Landmark Aviation business (which has an aircraft operating subsidiary called Sterling Aviation) into a new company called GB Aviation LLC along with Gama Aviation LLC.
Both businesses were a similar size so each company will have half. Gama Aviation’s US aircraft management business delivered $4.3 million in profits in 2016. Landmark generated $5.5 million in profit before tax. The business will trade under the name Gama Aviation Signature Aircraft Management.
The merger gives Gama Aviation a much stronger presence across the US and also adds larger aircraft. This balances out the smaller light jets and King Air turboprops that it operates for Wheels Up, the fast-growing business aviation membership club.
“Until now we were not truly a national operator in the US because we were lacking on the west coast,” says Khalek. “This really transforms Gama Aviation in the US.”
Gama Aviation hopes to sell line maintenance and other services to Landmark customers (Gama Aviation’s US aircraft maintenance business is 100% owned by Gama Aviation PLC). Gama Aviation already has a global contract with Signature for FBOs and this will be strengthened.
“Whilst cross-selling opportunities are there, we will always act in the best interests of customers and any business has to be won on merit. There is no obligation for Gama Aviation Signature Aircraft Management to use either Gama Aviation or Signature,” says Khalek. “One of the rules of aircraft management is that customer interests always come first.”
The deal is a significant one for Gama Aviation which acquired UK operator Hangar8 in 2015 in a reverse takeover. It already had a joint venture with Hutchinson in Asia and BBA Aviation is a strong partner in the US.
The merger has also removed a final regulatory problem for BBA Aviation which paid $2.067 billion to acquire Landmark Aviation in February 2016. In March 2016 it sold six FBOs for $190 million as part of an agreement with the US Department of Justice before the merger. BBA is also selling aircraft refuelling company ASIG to John Menzies for $202 million.
“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,” said Simon Pryce, chief executive of BBA Aviation.