StandardAero back on the sales block

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This article was published 14/12/2010 (5652 days ago), so information in it may no longer be current.

Once again, StandardAero is on the lookout for a new owner.

Industry sources have confirmed that senior company officials have said the company’s owners, Dubai Aerospace Enterprises, has been making discreet enquiries about possible buyers for the $1.4-billion-a-year operation.

The gas turbine engine maintenance, repair and overhaul (MRO) operation — whose main base of operation is in Winnipeg — has built an enviable reputation over the years for quality and efficiency. It is the largest independent gas turbine engine MRO in the world, but it has had a lengthy list of owners over the last couple of decades and current owners are out there looking for the right buyer.

Wayne Plucker, a San Antonio-based official with industry consultants Frost & Sullivan, confirmed that senior StandardAero officials have casually mentioned that the company’s owners were looking for someone with the financial wherewithal and operational expertise.

“Let’s face it, Dubai’s economic situation has changed rather markedly since its acquisition of StandardAero and Landmark,” Plucker said.

DAE acquired Winnipeg-based StandardAero and Tempe, Ariz.-based Landmark Aviation from the Carlyle Group in 2007 for $1.9 billion. The next year it merged the two into the current StandardAero based in Tempe.

“Originally, I think in DAE’s eyes this acquisition was going to allow them to become a centre for business aviation, especially, and allow them to leverage that knowledge and name into making them the go-to folks in that area,” he said. “It hasn’t quite worked out.”

Reuters reported on the weekend from New York that DAE has Standard- Aero on the auction block and that it had retained Deutsche Bank as its financial advisers.

Mike Turner, a spokesman for StandardAero in Tempe, would not comment on the report other than to say, “DAE is an investment company and it is constantly looking for new investors.”

While StandardAero’s business aviation division — the former Landmark operations — has suffered during the recession from a significant decline in corporate jet activity, its engine MRO business has held its own.

On Monday, it announced a new 10-year agreement with a small Australian airline, Pel-Air Aviation, to service the Pratt & Whitney PT6A-42 engines on its fleet of King Air B200 aircraft it operates as air ambulances.

Jennifer McNeill, StandardAero’s Winnipeg vice-president of sales and marketing and business development for the airline and fleet sector, said while the Pel-Air deal is small in size, “It’s fairly long — 10 years with an option for renewal. That means the engines will go through overhaul cycles during that time frame as well as other repair activities.”

This deal will not have nearly the impact of last year’s 12-year, $850-million contract to do all of the engine work for Calgary-based WestJet’s fleet of 81 Boeing 737s.

But it is an example of the company’s ability to ink deals with a range of carriers — including a sizable amount of military business — keeping its workflow diversified enough to smooth out the economic peaks and valleys.

Lee Ann Tegtmeier, editor-in-chief of Washington-based Maintenance & Overhaul, a monthly publication that is part of the Aviation Week stable of publications, said StandardAero has always done a good job at keeping a steady flow of work.

“The operators they have attracted are fairly diverse and they have done a good job at securing long-term contracts,” she said. “That gives them more predictable maintenance and revenue streams and enhances performance with longer terms.”

While there have been setbacks in the American business aviation division, the engine MRO work has remained steady and its Winnipeg workforce, now close to 1,400, has grown over the last few years.

martin.cash@freepress.mb.ca