Gama Aviation and Hangar8 is not the start of operator consolidation
The merger of Hangar8 and Gama Aviation is a significant one. It will result in a global business jet operator with 144 aircraft under management and revenues of more than £250 million ($400 million) based on 2013 revenues. The logic behind the merger is sound and there is little geographic overlap. It is an exciting opportunity for both companies. Since it listed in 2010, Hangar8 has doubled both the number of aircraft it manages and its share price. Gama Aviation could grow just as fast.
But it is not even the start of the beginning of operator consolidation.
After the merger, Gama Aviation’s market share in both the US and Europe will still be under 2%. In fact, if you add together all of the operators in the world which manage 100 aircraft they still account for less than 10% of the fleet. With 75% of US operators and 80% of European operators managing less than five aircraft it is hard to think of any more fragmented global industry.
The most exciting transactions will be the ones Gama does from now on. As a listed company it will have access to capital and as soon as the deal formally closes it will start looking for new acquisitions. As well as growing organically.
“It is becoming a harder market and operators are battle-weary both because of regulations and the market.”
Marwan Khalek, Gama’s CEO, says that there is still a place for smaller operators (Gama itself started with one Beech Barron) but he is confident there will be more acquisition opportunities. He adds: “It is becoming a harder market and operators are battle-weary both because of regulations and the market.”