Gama Aviation acquires Jet East Aviation for $8m


Gama Aviation maintenance

Gama Aviation, the London Stock Exchange listed company (LON: GMAA), has acquired US maintenance company Jet East Aviation.  It is paying $7.7m in cash with a further $1m deferred payment.

Jet East has bases in New York, Boston, Philadelphia, Cleveland and Cincinnati, so has little overlap with Gama’s existing US maintenance business. It almost doubles Gama Aviation’s US maintenance business.

“It allows us to grow capabilities with an almost unrivalled footprint in the US,” Marwan Khalek, chief executive of Gama Aviation told Corporate Jet Investor. “It is a great fit, a great business and with great people.”

Jet East has 200 employees. In 2019 it had sales of $29.5m and earnings of $1.2m (including a $300,000  depreciation charge). It had $6.7m in net assets at the end of December 2019. Jet East will be merged with Gama’s existing US maintenance business. In the first half of 2020, Gama had US maintenance (or what it calls ground) sales of $20.5m with a $1.1m profit.

Branded Jet East, the combined company will have 10 scheduled maintenance bases and more than 90 mobile technicians covering 65 cities.

90 mobile technicians covering 65 cities

Jet East Aviation MRO spread

“The footprint we have is important,” said Steve Maiden, CEO and President of Jet East to Corporate Jet Investor, “We already have it for a start – anyone wanting to replicate it would need to acquire or scramble for customers. So, we already have the sticks of the house in place and good existing customers. We just need to fill it with more.”

Maiden was appointed CEO in March 2020. Before joining Jet East, he was president of Directional Aviation’s Constant Aviation for 13 years. During this time, Constant grew from $3m in revenues, with 25 employees to more than $220m in sales and more than 1,000 employees.

The sale was close to be being signed in March 2020 but was delayed by Covid-19. Jet East’s revenues fell in 2020 but Gama is confident they will come back when lock downs end.

Jet East was founded in 2006 by Gary Lee and Brian Weiss. In 2015, Francis John joined as an investor and chair and brought in around 15, mainly private equity, shareholders.

Gama has a very strong business modifying and supporting UK defence aircraft and Khalek says that Jet East as a Gama Aviation company is keen to grow its US government business.  (we want to make sure people understand that its is ‘Jet East, a Gama Aviation company’ so that there is no confusion about who bought who)

He is also confident that independent maintenance shops can compete with manufacturers.

‘Customers want a choice’

“OEMs are clearly making life harder for independents, but there will always be room for them,” says Khalek. “Customers want a choice. We want to be a one-stop shop for them.”

He says that it is important to remember that there are three types of maintenance: heavy maintenance, such as 96-month checks, refurbishments, upgrades and completions; Regular work – such as 400-hour checks and overhauls; and daily tasks like changing light bulbs, or inflating tyres.

“There are lots of companies that will pitch for the first two, but only a handful that will come out and change a light bulb at 10pm on a Friday night,” says Khalek, “and even fewer that offer the full range.”

Maiden, who also worked at Hawker Beechcraft, agrees. “All OEMs are looking to services, especially with deliveries down, but after warranties end, they have to earn the customer. We are very focused on the customer and quality – and getting the right people to deliver this. In 2019 we saw real competition for talent, and it will come back.

“Our footprint gives us the opportunity to provide a one-stop shop and give opportunities to great people,” he adds. “We want customers to know that we will be there at 10pm on a Friday, holiday or Christmas Day if they need us and if they need a big inspection or a whole cabin completion.”