Broker Air Partner buys UK charter operator

 - November 7, 2006, 6:09 AM

Global charter broker Air Partner International has acquired UK executive charter operator Gold Air for £4.4 million ($8.1 million). From its base at London Biggin Hill Airport, Gold Air now operates six new Learjet 45s and a Hawker 800 under management contracts for their owners.

According to Air Partner managing director David Savile, the company bought Gold Air primarily to ensure a supply of charter capacity for its clients.

He said that Air Partner’s brokers simply cannot find enough charter capacity in the market during busy periods and it is largely for this reason that it wants to be able to have assured access to Gold Air aircraft at these times.

But he insisted that Air Partner, based near London Gatwick Airport, will still be making charter bookings with numerous other operators around the world and will not show any commercial preference for Gold Air.

Savile insisted that there will still be plenty of work for rival charter operators. “We expect to see 30-percent growth [in charter demand] over the next year, so this means we will need about 130-percent more capacity,” he explained. “We will be able to cover only about 5 percent of this growth with the Gold Air fleet, so that leaves 25-percent growth in business for the other operators. We are simply not moving capacity in-house at other operators’ expense.” He noted that some customers do not want to involve a broker in their charter bookings and so will be attracted to Air Partner’s new status as an end supplier.

Gold Air also has two Bombardier Global 5000s on order, both of them due for delivery in 2009. Savile said that he could not yet say precisely under what terms these aircraft will be owned but confirmed that Gold Air is not buying them directly. He added that Air Partner, which has 20 offices in Europe, the U.S., the Middle East and Asia, also wants to be able to help existing charter customers who seek to own aircraft and have them managed by a respected operator.

Gold Air’s existing management is being retained and will continue to operate under its own name. Under managing director Will Curtis and its operations director Richard Davies, the company achieved sales of £10.8 million ($20 million) in the financial year that ended on June 30, 2006.

Savile said that Air Partner and Gold Air have been working on the deal for the past 15 months. Gold Air was formerly owned by the Shed Group, which is part of the privately owned Gold Group, controlled by brothers David and Ralph Gold, whose interests also include the Ann Summers chain of lingerie and adult entertainment stores and UK professional soccer team Birmingham City. Air Partner is a publicly held company listed on the London Stock Market.

According to Savile, Gold Air’s previous owners didn’t feel they could take the company beyond its status as a successful second-tier charter operator, behind top-ranking groups such as Jet Aviation and TAG Aviation. Gold Air was not directly underwritten by the Gold Group, he maintained, so some would-be aircraft-management clients perceived it to be lacking sufficiently stable and transparent financial backing.

Air Partner believes it can take Gold Air to the next level, partly because clients will feel more comfortable dealing with an established public company. By providing an in-house source of charter bookings, Gold Air’s new parent company will allow it to make better use of its fleet and personnel, flattening dips in demand and spreading overhead in a more cost-effective way.

Under the terms of the buyout, Air Partner will pay Shed Group £1.4 million ($2.6 million) and pay off Gold Air’s £3 million ($5.5 millon) debt with NatWest Bank. An additional £940,000 ($1.758 million) is to be paid into an escrow account following the final settlement of Gold Air’s assets.

After the transaction is complete, Gold Air will enter a new management contract with Gold Group to operate three of the Learjet 45s and the Hawker 800 for between two and four years. These aircraft will be under Air Partner’s control in the charter market while three other Learjet 45s are managed for third-party owners.

Savile said that the need to ensure lift for Air Partner’s new JetCard block charter program is a consideration in the Gold Air acquisition, but not a driving factor. Air Partner will now be conducting talks with Bombardier to decide whether it is appropriate for Gold Air to continue as one of the approved operators for the Canadian airframer’s Skyjet International block charter offering. In Savile’s view, Bombardier will allow the arrangement to continue because its main motivation behind Skyjet is to attract new clients to its business aircraft, and so, in this context, it might not care whether Gold Air is flying for Skyjet or JetCard.

Air Partner’s intention is to create a one-stop shop offering business aircraft usage under several different formulas as part of its strategy of attracting more wealthy individuals to complement its strong corporate client base. “The European private jet market is complex and highly fragmented, consisting of 250 operating companies and brokers and six fractional ownership and jet card [programs],” concluded its October 11 statement to the London Stock Exchange.

Savile would not rule out the prospect of Air Partner buying other charter operators, but said that no immediate plans to do so are in place.