Gama Aviation shows how Covid-19 is also hitting aircraft maintenance
As one of a few listed business aviation companies, Gama Aviation offers a unique insight into the state of the industry. Today, it updated its investors on the impact of Covid-19.
Marwan Khalek, Chief Executive Officer of Gama Aviation said:
“While we are undoubtedly facing significant challenges posed by the impact of Covid-19, Gama Aviation has a good level of liquidity and the Group’s resilient business model is supported by our essential contracted services and global reach. With the continuing support of our people, clients and shareholders, we believe we will be able to navigate these challenges and re-focus on delivering sustainable returns once the impact of Covid-19 has receded.”
Gama Aviation splits its divisions into air – operating aircraft; ground – maintenance and completions; and global – . All its divisions are operating, but they are being hit by Covid-19.
The company says that US Ground division achieved 85% of planned maintenance activity in March but is now suffering a marked decline with activity below plan by over 50% in the first week of April. It is also applying for financial support from the federal government’s Paycheck Protection Program.
A significant part of its European business is made up of long-term contracts with NHS Scotland, the MoD and other government agencies. All of these are performing well.
However, a cut in charter sales is heavily impacting its Europe Air division and a significant number of maintenance contracts and orders have been cancelled or delayed in the Europe Ground division. Gama Aviation says that Europe Ground labour hours were below plan by more than 20% in March and are down by 50% in April so far. The company has furloughed some staff in both divisions using the UK government scheme.
After a brief shutdown of flights in March, operations at Sharjah have resumed at around 60% of the forecasted levels. The company says it is benefiting from a waiver of airport fees and rental charges for three months. It is also cutting costs.
Gama Aviation’s Hong Kong business is still severely disrupted with major impact on the Group’s CASL associate – which is very reliant on airlines. The Asia Air and Ground divisions have been less affected. A drop in flying hours has been offset by maintenance on parked aircraft.
The company’s tech businesses – FlyerTech and Myairops – have had some sales delayed. But Gama says that it seeing strong market interest in Myairops software products which is well adapted to home-working.
Gama Aviation has a $50m credit facility with HSBC of which $30m remains undrawn. It is also holding $17m in cash following the receipt in March of a substantial annual advance payment in respect of a long-term contract.
Like many listed companies, Gama Aviation has suspended its financial guidance for 2020. It also plans to report its annual results in July 2020 rather than June (the AIM stock market has announced this as an option for companies preparing results during Covid).