Hangar8 proposal to raise capital
Hangar 8 plc (“Hangar8” or “the Group”), one of Europe’s largest operators of privately owned passenger jet aircraft, announces its intention to seek admission to AIM and to raise up to £2 million by way of a placing. The Directors intend that the net proceeds of the placing will be used for working capital to fund identified growth, market the business to new aircraft owners and potential charter customers and to invest in staff and equipment to internalise specialist maintenance of the aircraft managed by the Group.
The Group derives income from both aircraft owners and third party charter customers and currently manages a fleet of 19 aircraft. As the Group does not own any aircraft itself, it does not carry the risk of high capital investment or depreciation.
Hangar8’s strategy is to concentrate on certain aircraft types to obtain economies of scale, and to increase the size of the fleet it manages both organically and through the potential acquisition of other private jet charter operators with the intention of being able to provide an aircraft to a charter customer at any airport in any EMEA location within three hours of an order being confirmed. By increasing the size of the fleet managed by the Group and locating the aircraft at strategic airports, the Directors intend to reduce the time needed to provide an aircraft to charter customers and owners around the world and leverage efficiency benefits through spreading certain costs, such as crew, over a larger number of operating bases.
Hangar8 is one of Europe’s largest operators of privately owned passenger jet aircraft, based on the size of its fleet available for charter, as listed on Avinode (the world’s largest business to business database used by charter aircraft brokers and operators to assist in chartering and booking services including providing the profile of each aircraft offered for charter). The Group holds a worldwide Air Operator’s Certificate permitting the Group to provide charter flights across the globe (with certain exceptions such as Northern Canada, Northern Russia and Australia) and at any one time, the fleet of aircraft managed by the Group is typically spread across airports in the UK, Europe, the former Soviet Union countries, and the Middle East. In addition, the Group has a US visa waiver agreement with the US Department of Justice which enables the Group’s customers to fly to the US at short notice without having to obtain a visa. The Directors believe that this provides an advantage to the Group over other private jet operators who have not been issued a similar waiver agreement.
The aircraft managed by the Group are configured to carry between 5 and 10 passengers. The medium weight aircraft typically have a range of between 1,850 and 2,950 miles while the Hawker 4000 can reach the east coast of the US from the UK without refuelling. The heavy weight aircraft typically generate higher charter revenues as these can be chartered on longer flights. It is the intention of the Directors to seek to attract more heavy weight aircraft in addition to increasing the overall size of the fleet.
The fleet currently comprises:
· Three heavy weight aircraft (Falcon 2000EX, Challenger 601 and Hawker 4000.)
· Ten medium weight aircraft (Hawker HS125s and Cessna Citation XLSs)
· Six light weight aircraft (Citation Jets and a Beech B200 Super Kingair Aircraft).
The Group manages the largest charter fleet of mid-size Hawker aircraft in the world.
Avinode shows that the European charter market is fragmented in that the average operator has a charter fleet listed of just 3 aircraft. Of the aircraft showing on Avinode as available for charter, the Group has around a 10 percent. share of the UK corporate jet charter market in terms of fleet size, and around a 1.5 percent. share of the Europe and Middle East market in terms of fleet size.
Dustin Dryden, Chief Executive of Hangar8 said: “We have developed a simple, scalable business model with minimal risk – we are a service business with no large capital assets, base costs are typically covered by contracted management fees and revenues are tied to hours flown rather than number of passengers. “The very fragmented charter market is growing with business aircraft traffic forecast to grow by 5% per annum from 2011. Hangar8 is perfectly positioned to take full advantage of its growing market and to act as a consolidator of smaller operations. We are looking forward to meeting the challenges of our next phase of growth.”