This week’s Farnborough International Airshow promises to be another busy one for dealmakers like Michael Richter, managing director and head of aerospace and defense with investment bank Lazard. Even compared with the periods around the 2012 Farnborough show and the 2013 Paris Air Show, he sees rising levels of mergers and acquisitions (M&A) activity in the commercial aerospace sector. He also anticipates some degree of recovery in defense industry M&A activity, reversing a period of relative inactivity in a sector that has been impacted by uncertainty over military budgets.
Mergers and acquisitions
LAN Airlines of Chile and TAM of Brazil cleared the last regulatory hurdle to their merger December 14, obtaining approval from Brazil’s antitrust authority to create one of the world’s largest airline groups.
Aerospace firms have been doing a roaring trade here at the Paris Air Show, selling record volumes of aircraft, engines and all the associated systems and services that go with them. But, according to leading mergers and acquisitions specialists, they should be just as busy buying and selling each other since the industry recovery now presents the ideal combination of motive and opportunity.
Online charter portal Avinode is launching its new Operator Link Web service here at the NBAA Convention. The latest addition to its Avinode Link family of products helps operators to market their aircraft directly to end users from their own Web sites.
United Air Lines and Continental Airlines formally closed their so-called merger of equals today, as United Continental Holdings–the former UAL Corporation–announced that both now operate as wholly owned subsidiaries of the new entity. The common stock of United Continental Holdings began trading today on the New York Stock Exchange under the symbol UAL.
UAL Corp.'s United Airlines and Continental Airlines expect their proposed merger to close by October 1, now that companies have cleared the last major hurdle in their bid to create the world's largest airline. On Friday shareholders from both companies approved the transaction by a wide margin, as more than 98 percent of the votes cast by each group went in favor of the merger.
Avinode and CharterX are joining forces to form what will be the executive charter market’s largest online portal. Avinode is buying out the CharterX shares for an undisclosed sum. The deal should be closed by early this month, at which point the two companies’ technical teams will start integrating the rival systems.
Four years ago, Steven Hankin, an executive at a Starwood Hotels division, joined Sentient Jet, an independent jet card and charter brokerage firm that was growing rapidly into a national brand. Sentient didn’t operate aircraft itself but created demand for lift by brokering charters and selling hours in business jets in the rapidly growing jet card marketplace.
Sentient Jet and JetDirect once again are operating as separate companies after agreeing in late August to separate into their original elements. The two companies merged in April 2007 when JetDirect Aviation bought Sentient Jet, with the goal of matching the demand created by Sentient’s jet card and charter brokerage business with the available charter hours from JetDirect’s growing charter fleet.
The business aviation downturn will last at least another year or two but there is still plenty of room for good deal-making, according to financial advisors First Equity. Director of investment banking Brett Pogany told NBAA Convention News that new aircraft sales are being stifled by “negative factors” such as supply pressure from a strong pre-owned market.
- Page 1