Rebounding private flights fuel M&A interest in corporate jet services providers

Fixed base operators, or FBOs, play a key role in keeping private jets flying, offering services like hangars and fueling, and some buyers are betting the revival in flights could spill over into allied industries.

While business jet orders and deliveries dropped in 2020, private flights, which carry smaller groups and promise wealthy passengers less risk of exposure to the coronavirus, have generally fared better than commercial. That is underpinning investor interest in FBOs.

The sector recently made headlines when Gatwick Airport owner Global Infrastructure Partners joined forces with Blackstone and Bill Gates’ investment vehicle to make a $4.73 billion offer for Signature Aviation, the largest private jet services firm.

There are other deals brewing too. Macquarie Infrastructure Corp has said it is seeking buyers for Atlantic Aviation, the second-largest FBO network, for a deal by year’s end.

Most of the deals are smaller in scope, with networks growing one site at a time.

FBO network operator Luxaviation Group, which added a site in Miami in March and has plans for another location in New York, is seeing investor interest even as it eyes acquisitions.

“We currently see some interests from private equity firms in our activity and we are carefully assessing our best way forward to expand our FBO business especially in the USA,” Luxaviation Chief Executive Patrick Hansen said by email.

“Raising capital is part of such plans and so it is good to see some transactions like Signature that draws attention to this sector.”

Airlines and corporate plane operators cut flights as demand plunged due to the pandemic last year. But with U.S. airlines resuming pilot hiring and corporate charters expecting a recovery in summer travel due to vaccinations, FBO operators are dusting off their growth plans.

Florida-based Sheltair Aviation Services plans to add to its 24 locations, said spokesman David Buritica.

While business aviation investments are too small to track, Refinitiv data show airline deal volumes recovered to $5.85 billion in the first three months of 2021 after hitting a more-than 10-year low of $60.7 million in the first quarter of 2020.

Source: Reuters

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