Gama Aviation went public in 2014 when it acquired Hangar8 which was already listed on London’s Alternative Investment Market. In theory, the reverse takeover gave the company access to more capital for acquisitions. At the time, Gama Aviation was managing all of Wheels Up’s King Air flights and the merged company had almost 150 aircraft under management. (It later sold its share of its US aircraft management business to Wheels Up.)

Many listed company CEOs believe that the market does not truly understand or value their business. But Khalek was able to prove this last year when Gama Aviation sold Jet East, its fast-growing US maintenance business. Jet East made up a third of Gama Aviation. At the time Gama Aviation had a market capitalisation of about £60m.

In November Gama Aviation sold West Star for $131m (netting $100m). Steve Maiden, who led the fast growth of Jet East, was this week appointed CEO of West Star.

Some of the cash from this sale has been used to take Gama Aviation private. Perhaps surprisingly a significant number of investors have chosen to keep their shares even though they are no longer easily tradable. One high-profile UK investor bought 2% of Gama Aviation after the de-listing was announced. 

Khalek is excited to be back running a private company. He estimates that between 25% and 40% of his work life has been taken up by the demands of being listed.  Now freed up, he wants to grow Gama Aviation. “I am not sure everyone in the business is as excited that I will have more time,” he jokes.

Gama Aviation is looking to grow its FBO business. It has just completed a parking apron at Sharjah Airport, near Dubai, and is now starting on a new 14,000 sqm hangar and FBO due to open next year. The company is working through planning for its Jersey FBO in the Channel Islands. 

It has also hired Graham Williamson, formerly of ACASS Europe and TAG Aviation, to grow its aircraft management business. Williamson, who has been a competitor of Gama Aviation for many years, likes growing companies. He was at Emirates Airlines when it had three aircraft.

“It is exciting when you are growing and the opportunity for Gama Aviation is huge,” says Williamson.

Gama Aviation is in talks to buy Austrian operator Tyrolean Jet Services (one of its last stock exchange announcements was on this deal). Tyrolean Jet Services was the first Austrian business jet operator.

“We want to create bespoke operations in different locations like Four Seasons does with hotels”

“We want to create bespoke operations in different locations like Four Seasons does with hotels,” says Williamson. “We want to develop local presence in combination with our engine room in Farnborough. We want to provide great service, great product and be more focused on small numbers of highly bespoke clients.”

Khalek says it is not about trying to build one global operator. “One of the reasons that consolidation is tough is that aircraft management is a very personal business. You don’t want to grow into a big monster chain, you want guests to feel that they are staying at a boutique hotel where everyone knows their name.”

It is looking to build a series of small management companies – with no more than 25 aircraft – with local management. Gama Aviation believes that it can get economies of scale in back-office functions like finance, trip planning, maintenance and purchasing. Khalek adds another simile: “It is like a Michelin Star restaurant – you want a unique maitre d’ but the kitchen needs to be producing a consistently strong product.”

Khalek never hid his frustrations with running a public company (including to the Wheels Up team before they floated). He is clearly excited about the freedom the business now has. “We have all been weighed down with regulatory issues, things like Brexit, Covid, supply chain issues and others,” he says. “We need to shake ourselves out of this and go back to why people go into this industry. People do it because they love it and they are passionate about it. We need to remember how enjoyable this industry is.”

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Gama Aviation has issued a stock market announcement revealing it is in talks to buy Austrian operator Tyrolean Jets & Services.

Although Gama Aviation is de-listing from London’s AIM exchange and is no longer publicly trading it needed to comment on speculation under UK law as shares are still outstanding.

The statement says that the sale has not been completed but the two companies are in discussions.

Tyrolean Jets & Services (TJS) launched in 1978 as Austria’s first business jet operator. As well as Austria it also holds air operator certificates (AOCs) in Malta and San Marino.

Marwan Khalek, CEO of Gama Aviation, said at Corporate Jet Investor Middle East that the business is keen to grow its aircraft management business. Gama Aviation has cash for acquisitions following the sale of its US maintenance business Jet East in October 2023 (although some of this has been used to take the company private). Gama Aviation has also hired Graham Williamson, formerly of ACASS Europe and TAG Aviation, to grow its aircraft management business.

Gama Aviation already has bases in the UK, Dubai and Jersey. TJS would give it the opportunity to add Austrian, Italian and Swiss owners.

“Discussions between the Group and TJS are ongoing, and they remain subject to further negotiations, diligence, and Board approval; as such they are not expected to be concluded until after the Company’s delisting from AIM. Accordingly, there can be no certainty any transaction will be completed and, if it does, on what terms such a transaction might take place,” said Gama Aviation in the statement.

TJS was founded as Aircraft Innsbruck as the flight department for Swarovski the jewellery and crystal company. It is one of the best known Austrian operators.

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Under the delisting plan, the company has proposed to return up to £32.6m to shareholders by way of a tender offer at 95 pence per ordinary share capable of acceptance by all eligible shareholders.

The company said that the legal and regulatory burden associated to trading on the AIM is disproportionate to its benefits. In addition, with average daily volume over the past 12 months of approximately 14,900 shares (0.02% of the issued share capital), the company said that the costs associated with maintaining the AIM quotation are high and could be better utilised. The company has not raised any fresh capital from AIM since 2018.

Gama Aviation announced delisting plans through a circular issued to shareholders. The plans will be considered by the company’s board at the general meeting scheduled to be held on May 15th, 2024.

Earlier in February this year, the company announced capital return worth £16.5m in view of its current and near-term working capital requirements. It had said that any increase in the size of capital return would reduce funds available for capital requirements.

Gama Aviation previously operated a US Maintenance, Repair and Overhaul (MRO) Business. They sold this MRO in October 2023 and announced they would return a portion of the proceeds from the sale to shareholders.

Since they were no longer receiving the operating cash flow from the MRO business, the Board had to carefully consider how much capital they could return to shareholders while still meeting the working capital needs of the remaining business and funding their strategic goals. This is why the initial offer to buy back shares was limited at £16.5 million.

However, two of the company’s top shareholders including Marwan Khalek and Bermesico agreed to undertake not to tender any of their ordinary shares in order to help the company retain funds to meet the investment capital requirements of these strategic projects.

Following this, Gama Aviation’s board decided to accelerate the return of capital to shareholders and increase the amount to be returned in the short term to shareholders up to £32.6m.

The continuing group is currently loss-making and experiencing cash outflows. They reported $74.3m in revenue and an adjusted EBIT loss of $0.6m for H1 2023. While FY2023 revenue is expected to be around $145m, margins have been impacted by inflation and supply chain issues.

However, the company forecasts growth driven by new contracts. The Wales Air Ambulance contract is expected to generate £65m over seven years, while oil and gas contracts are expected to deliver £130m over five years. Additionally, the Specialist Aviation Services acquisition is expected to add £27m annually in revenue.

The company acknowledges negative cash flow in the near future and said it is prioritising long-term growth through investments. 

However, the company expects the de-listing from AIM will generate savings.

Timetable for principal events for delisting:

• April 29th, 2024: Announcement of tender offer and delisting. 
• May 15th, 2024: General Meeting
• May 23th, 2024: Last date for receipt of Tender Forms and settlement of TTE Instructions
• May 30th, 2024: Last day of dealings in the Ordinary Shares on AIM
• May 31st, 2024: Cancellation of admission of the Ordinary Shares to trading on AIM

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Defined as “steady progress” the board remains cautious on its outlook for H2 2023. Any growth has been against the backdrop a challenging economic and business environment, said the firm. Margins were also impacted by inflationary cost pressures as predicted. 

Marwan Khalek, chief executive said: “The H1/23 results demonstrate the progress the Group continues to make in consolidating and building upon the significant improvement in financial performance that has been delivered over the last couple of years. This is the result of our diligent implementation of our organic growth strategy and the optimisation of our operational platform and cost base whilst continuing to deliver our clients’ mission.”

Revenue overall grew by 4% to $145m, up from $139.3m at the halfway mark last year. Gross profit was up 3% to $27.6m whilst gross profit margin was down by 0.2% at 19%. Gama posted adjusted earnings before interest and tax (EBIT) of $0.3m, compared to $1.8m in H1 2022.

Net cash inflow from operations came in at $11.6m down from $15.5m in H1 2022. On the other hand, net debt was $66.1m, whilst net bank debt decreased by $12.3m to $22.5m. As of September 21, 2023 cash balances were $9.1m. 

Gama said it will continue focusing on bettering operational performance and controlling costs to help mitigate the impact on margins whilst the inflationary and negative economic conditions persist in the UK.

Khalek added: “These results, delivered against a backdrop of a very challenging economic and business environment, again serve to illustrate the robustness and resilience of our business, as well as the unwavering commitment and dedication of our people to delivering our clients’ mission. Despite this uncertain economic backdrop, the pipeline of business opportunities continues to grow, and the Group remains well positioned for the future.”

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Adjusted EBITDA profit was up $11.1m to $22.9m while adjusted EBIT profit climbed $13.1m to $8.8m. The company reported net cash inflow from operating activities of $31.4m compared with $5.2m in the previous year. A loss of $1.4m was reported for the year down from a loss of $6.3m in 2021.

Marwan Khalek, chief executive, Gama Aviation welcomed the group’s improved revenue and EBITDA performance in core markets and highlighted the contribution of US maintenance, repair and overall (MRO) company Jet East. “It is particularly pleasing to see the transformative effect the addition of Jet East has had to our US MRO business and how the additional focus we’ve placed on the Special Mission sector will deliver future financial performance through the capture of attractive multi-year contracts,” said Khalek.

Part of its Business Aviation strategic business unit, Jet East was acquired in 2021. Gama highlighted continued investment in airport infrastructure with the acquisition of a hangar in Statesville, North Carolina, to provide additional capacity and fuel further organic growth. It also noted strong US sales of aviation, enterprise resource planning software products in its Technology and Outsource unit.

Two contract wins in the fourth quarter of 2022 achieved by its Special Mission strategic business unit also boosted the company’s full-year financial performance, according to the results statement. These were the award of seven-year, five-aircraft contract with the UK Air Ambulance Charity and  a North Sea offshore, multi-aircraft contract with Bond Helicopters running for five years. (Bond Helicopters is the group’s joint venture with Peter Bond, launched to target opportunities within the UK offshore energy market).

Khalek said the business would continue to build “positive momentum” this year despite the challenging environment. That was despite the challenging environment created by the high inflation, high interest rates and the uncertainties arising from the “protracted conflict in Europe”.

Meanwhile, in a separate development, Gama Aviation has won the tender for the construction of a new hangar to be built at Jersey Airport work from Ports of Jersey. The 60,000sqft (5,574sqm) facility its expected to take up to two years to complete  and is subject to planning approval. The plans are said to include provision for new facilities to transfer patients by air ambulance, aircraft servicing space and a terminal for private jet passengers. (Pictured is a Citation XLS).

Gama Aviation 2022 results – at a glance

• Gross profit up 33% to $55.1m
• Revenue up 21% to $285.6m
• Adjusted EBITDA profit up $11.1m to $22.9m w
• Adjusted EBIT profit up $13.1m to $8.8m.
• Net cash inflow from operating activities of $31.4m compared with $5.2m in 2021
• Loss of $1.4m, down from a loss of $6.3m in 2021.

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Hamilton previously worked at Jet East as vice president of Operations and Fleet Accounts between 2017 and 2018, before moving on to Constant Aviation as regional sales manager.

Stephen Maiden, president and CEO, Jet East said Hamilton’s work experience and expertise will be “invaluable” in achieving the company’s goals. He said: “With his impressive track record, we look forward to achieving even greater success and delivering exceptional service to our valued customers.”

Hamilton said: “By implementing fresh ideas and new strategies to drive sales within the company, the sky is the limit.”

It is the second appointment in recent weeks, with the company having appointed Mark Daniels as product director for Cessna Citation jets at the start of the month.

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Daniels, who previously worked for Cessna for 25 years, will be based at Jet East’s Dallas facility. The maintenance firm said he will “use his expertise and skill set to advance the company’s growth”.

Brian Leitschuck, general manager, Dallas facility, Jet East said: “There is no better feeling than knowing that the Jet East name is being represented by the best that the aviation industry has to offer. Mark’s knowledge, coupled with the relationships he has established, make him the perfect candidate for this position.”

Daniels said: “I believe this is a company that truly values its employees and customers alike. I am devoted to contributing my best to the team and helping the company reach new heights.”

In October last year, Jet East acquired a full-service maintenance facility in Statesville, North Carolina.

The company was acquired by Gama Aviation in January 2021 for $8m to grow its market capabilities and close to double its US maintenance business.

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The new base includes 75,000sqft of hangar space, 40,000sqft of office and back shop space and additional adjacent land for future growth.

The estimated opening date of the facility is the first quarter of 2023, with plans to later construct a new paint facility at the site.

 Key aircraft that will be serviced at the facility include Cessna, Gulfstream, Bombardier and Embraer jets. Jet East estimates bringing 250 jobs to the area as a result of the new location.

“The facility at SVH offers an amazing opportunity for Jet East and allows us to expand our capacity, capabilities and reach within a key region of the US,” said Stephen Maiden, CEO and president, Jet East. “The facility is in impeccable condition. The energy for this new endeavor is high and this is truly a milestone moment for the Jet East team and the customers we serve and support.”

Gama Aviation acquired Jet East in January last year for $8m to grow its market capabilities and close to double its US maintenance business.

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The charter and aviation services company reported that its revenue for the first six months to June 30th 2022 was $139.3m, up from $107.3m in the first half (H1) of last year. A significant proportion of this ($20.3m) came from the company’s maintenance, repair and overhaul (MRO) services firm Jet East, which the group acquired in January last year. Due to acquiring the company, Gama spent $244,000 on related costs.

Gross profit also increased by a third (32%) from $22.3m in 2021 to $29.5m, with the gross profit margin up by 0.4 percentage points. Gama’s cash-in-hand increased as well, from $10.2m in H1 last year to $11.4m this year. The firm’s net debts have been reduced from $100.6m to $86.4m.

Marwan Khalek, CEO, Gama Aviation said: “This improvement is underpinned by the group’s focused growth strategy and the continued operational improvements made across the business, demonstrating the continued resilience of the group’s business model.”

Margins are likely to be impacted by inflationary cost pressures and supply chain challenges in the coming months, according to the group, causing the board to “maintain its cautious approach” for the remainder of the year. Despite this, the board said it expects full-year results to be in line with management expectations.

Gama said it continues to pursue the recovery of long-standing trade receivables amounting to about $3m. The litigation has been ongoing for years, involving the founder of Hangar8 (a business which merged with Gama in 2015) Dustin Dryden. Gama and Dryden settled, with Dryden handing over cash and assets worth an undisclosed amount, however Gama announced in its full- year accounts for 2019, published in 2021, that it was still pursuing recoveries.

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