Buying aircraft brokerages: Jetcraft acquires ExecuJet Aircraft Trading
Buying other brokers is the dumbest, stupidest thing a human being could do,” says Alireza Ittihadieh, chairman of Freestream Aircraft.
What is an aircraft brokerage actually worth? It is a surprisingly hard question to answer. Jetcraft looked at three Ps – planes, profits and people – as part of its acquisition of Execujet Aircraft Trading.
First, it looked at the number of aircraft listings that ExecuJet have today. This a pretty easy calculation of future commissions as long as owners do not move aircraft to other brokers.
After that, it looked at how profitable the group had been for the last few years, how consistent it was and how profits were growing.
But even though Jetcraft knows the ExecuJet team well, the hardest thing to value is the people. There is nothing to stop someone leaving to set up another brokerage. Jetcraft hopes that the good people at ExecuJet Aircraft Trading will stay, so it can give them the opportunity to close more deals (and earn more commission).
“If they had wanted to leave they could have left already,” said Jahid Fazal-Karim, co-owner and board member of Jetcraft. “We are a deal company, so our aim is to give the really good people joining us an environment to double or triple their deal flow.”
Chad Anderson will remain as president of Jetcraft and Andrew Hoy, formerly managing director, EAT, will oversee sales in Europe, Africa and the Middle East. Jetcraft is definitely now one of the most global aircraft brokerages.
It is an exciting deal for the industry and could encourage others to merge. But it is not the start of industry wide consolidation. In fact, not every aircraft broker agrees with buying others. “Buying other brokers is the dumbest, stupidest thing a human being could do,” says Alireza Ittihadieh, chairman of Freestream Aircraft.
Jahid clearly disagrees with Alireza. And not for the first time.