Air Partner’s profit up 35% as company continues to diversify from broking
Air Partner’s underlying profit was up 34.4% for the six months ending in July 2017 to £18.1 million. This was helped by commercial aircraft charter where sales were up 44% including strong demand for sports team charter.
Underlying profit from private jet charter fell 6% to £1.4 million. Air Partner says that this drop hid growth in jetcard sales and an increase in the number of US clients by 70% driven by its New York office.
Air Partner has also acquired SafeSkys, an air traffic control company, as part of its plan to diversify away from broking.
Corporate Jet Investor interviewed Mark Briffa, Air Partner’s CEO.
Corporate Jet Investor: What is the overall theme of these results?
Mark Briffa: Encouraging first half with further progress made against our long term strategic objective to build a balanced business mix – with a clear, long term approach that fully aligns us to our global customer base. We have confidence in our full year expectations.
Corporate Jet Investor: The last 10 years have been tough for business aviation; do you think we are back in growth now?
Mark Briffa: The last 10 years have played out against a challenging economic backdrop. As we always say, the world of aviation, especially the global charter industry, is a volatile industry. However, as a business, we have built a strong platform from which to grow and our aim to create a balanced business with two market leading divisions of broking and consulting/training should provide us with higher quality and increasingly visible earnings for our shareholders. We are confident that we have the right long-term strategy in place, in alignment with the needs of our global customer base. We enter the second half with continued confidence that our expectations for the remainder of the year will be met.
Corporate Jet Investor: Where are you seeing the strongest demand?
Mark Briffa: Commercial Jets has underpinned our strong first half performance, with gross profit increased by 33.4% to £9.4 million and underlying operating profit up 52.7% to £2.9 million. This growth was driven by pleasing performances from all territories with good business from both new and existing customers.
Corporate Jet Investor: Why did it take so long for you to target the US?
Mark Briffa: The US has been an important market for Air Partner for a long time, but there has certainly been a new impetus to focus on the region since the recent management changes. We have spent a significant amount of time over the years engaging with customers to really understand how they perceive Air Partner and what they want from a charter partner, what they expect from us, what they value from us, and where and how they want to work with us in the future. Those findings became the foundation of a clear, long-term strategy. It gave us the confidence to launch initiatives such as the Customer First programme, which has become central to our business transformation. We now have a strong platform from which to grow and last year we invested in our US growth. That investment is being rewarded with client numbers up close to 70% over the first half.
Corporate Jet Investor: There are a lot of online brokers saying they are trying to challenge Air Partner: are you losing customers to them?
Mark Briffa: We have a very loyal customer base. Our Customer First is driving customer loyalty with JetCard renewals up 24% over the first half. We sell jet cards to both corporates and HNWI. The latter are increasingly younger.
Corporate Jet Investor: In your 2017 Annual Report you say: “We fundamentally believe – and our customers seem to agree – that until technological capabilities have further developed, complex travel scheduling is better handled by people rather than machines” When do you see technology getting to this stage?
Mark Briffa: We don’t have a crystal ball. We closely monitor technology platforms in the Private Jet space, but currently they remain nascent and none of them is capable of offering a fully automated end to end service, and by their very nature they lack the ‘human touch’ and attention to detail which a Private Jet customer requires.
Corporate Jet Investor: You are without doubt one of the leading business jet brokers, but your overall market share is still small. Why is the market so fragmented?
Mark Briffa: We have been operating for over 50 years and our long term strategy to become a world class aviation services group provides us with considerable opportunity to grow multiple areas.
The market has changed dramatically over those 50 years and we believe that individual brokers and smaller operations will find it a lot tougher in the years ahead. Customers increasingly require their aviation partner to have expertise, scale and a local presence internationally, be a financially strong counterparty, be transparent and compliant with regulations, consistently act with integrity and to the highest standards, re-invest in their businesses and of course, deliver amazing service all the time every time anywhere in the world. Our strategy positions us for this future.
Corporate Jet Investor: Would you be interested in buying other brokers?
Mark Briffa: Our strategy is focused on growing our Consulting, Training and Managed Service business. We continually look to recruit key talent and skills from within the industry.
Corporate Jet Investor: Are you still looking for Air Partner Remarketing to sell business jets?
Mark Briffa: No, the market is too fragmented.
Corporate Jet Investor: In 10 years’ time, what proportion of Air Partner will be broking?
Mark Briffa: While our stated objective is to achieve balance between our two divisions over the long term, this does not exclude us from looking at any investment opportunity – if an opportunity meets our criteria it is given serious consideration.