When you heard someone say that the flap of a butterfly’s wings in Brazil can set off a tornado in Texas, you probably wondered why no one has shot the butterfly.
The expression is actually based on serious science – deterministic nonperiodic flow is part of chaos theory. Tiny changes – such as a flatulent Belgian cow or a wobbly office fan in Hawaii – can genuinely lead to massive atmospheric events.
The same is true in business. Last Friday (June 25th) Jet Aviation bought ExecuJet’s Zurich FBO and hangars and also Luxaviation’s Swiss aircraft management division (with 17 aircraft) because of money moving around in New York.
Jet Aviation, which is owned by General Dynamics, now has two FBOs, two ramps and two hangars at one of Europe’s most important business jet airports.
“This acquisition creates significant value for our global customer base by further expanding our network and delivering innovative, world class standards in service and quality,” said Jet Aviation president, David Paddock. “It is an exciting step in our journey to be the leading partner in global flight.”
The last sentence is especially important. Until recently, becoming a dominant global player was something that few companies saw as a priority. Business aviation has very few truly global operators, maintenance companies or FBO chains. But the sudden influx of cash into the sector is raising the ambitions of many. In fact, identifying the individual butterfly from the kaleidoscope of deals fluttering around is impossible.
It could be Wheels Up – which is set to merge onto the New York Stock Exchange on July 13th. Wheels Up plans to use the $800m of cash it is getting from its listing to go international.
The sale of Signature Aviation for $4.7bn to Blackstone, Global Infrastructure Partners and Cascade Investments is also creating gusts. This is most obvious in the sale of Atlantic Aviation, the second largest FBO chain, to KKR. Not only have these highlighted FBO valuations – Atlantic Aviation is going for $4.475bn or 16.2 times 2019 EBITDA – but both acquirers have talked about growing the group. KKR is using funds from its Global Infrastructure Fund. Other FBO chains have prepared investment pitches ready.
It is hard to keep up with how quickly things are moving. Electric aircraft manufacturer Bye Aerospace last week announced Jet It and JetClub as launch customers for its seven-passenger, all-electric turboprop the eFlyer 800.
Embraer is also in talks to spin-off Eve, its electric vertical takeoff and landing (eVTOL) business. Eve announced a launch order from Directional Aviation a few weeks ago. A lot of companies talk about synergies – where the value of combined companies is worth more than the two parts (1+1=3). Kenn Ricci, Directional’s founder, sees this as the starting point.
He is looking for a 1+1 to at least equal five. Past examples include launching Nextant to remanufacturer aircraft operated by his fractional Flight Options; buying jet card operator Sentient Jet to create lift for Flight Options during a downturn; or buying Flexjet from Bombardier at a discount in return for ordering Bombardier aircraft. So, it is no surprise that his SPAC – Zanite Acquistion – has been revealed as the planned merger partner of Eve.
After placing the order, Ricci stressed that they saw Eve as the most credible eVTOL maker partly because of Embraer’s experience of certificating and manufacturing aircraft. Helicopter booking platform Blade, which is also planning to go public through a SPAC, has also signed an agreement with Eve this week.
“This is the most exciting period in aviation since the Wright Brothers,” Ricci told Corporate Jet Investor. This is the Fourth Aviation Revolution (and, co- incidentally, our fourth Revolution.Aero conference starts today (June 29th) with both Kenny Dichter from Wheels Up and Rob Weisenthal of Blade speaking. It is free to attend.)
Luxaviation and Jet Aviation have been interlinked on other deals. Jet Aviation’s acquisition of Hawker Pacific led to Dassault buying Luxaviation’s ExecuJet maintenance business. It will be fascinating what Luxaviation does next.
The money flowing in and the propellors of electric aircraft are going to keep blowing change through business aviation. We will see a storm of more deals coming.
