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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Jet East has bases in New York, Boston, Philadelphia, Cleveland and Cincinnati, so has little overlap with Gama’s existing US maintenance business. It almost doubles Gama Aviation’s US maintenance business.

“It allows us to grow capabilities with an almost unrivalled footprint in the US,” Marwan Khalek, chief executive of Gama Aviation told Corporate Jet Investor. “It is a great fit, a great business and with great people.”

Jet East has 200 employees. In 2019 it had sales of $29.5m and earnings of $1.2m (including a $300,000  depreciation charge). It had $6.7m in net assets at the end of December 2019. Jet East will be merged with Gama’s existing US maintenance business. In the first half of 2020, Gama had US maintenance (or what it calls ground) sales of $20.5m with a $1.1m profit.

Branded Jet East, the combined company will have 10 scheduled maintenance bases and more than 90 mobile technicians covering 65 cities.

90 mobile technicians covering 65 cities

Jet East Aviation MRO spread

“The footprint we have is important,” said Steve Maiden, CEO and President of Jet East to Corporate Jet Investor, “We already have it for a start – anyone wanting to replicate it would need to acquire or scramble for customers. So, we already have the sticks of the house in place and good existing customers. We just need to fill it with more.”

Maiden was appointed CEO in March 2020. Before joining Jet East, he was president of Directional Aviation’s Constant Aviation for 13 years. During this time, Constant grew from $3m in revenues, with 25 employees to more than $220m in sales and more than 1,000 employees.

The sale was close to be being signed in March 2020 but was delayed by Covid-19. Jet East’s revenues fell in 2020 but Gama is confident they will come back when lock downs end.

Jet East was founded in 2006 by Gary Lee and Brian Weiss. In 2015, Francis John joined as an investor and chair and brought in around 15, mainly private equity, shareholders.

Gama has a very strong business modifying and supporting UK defence aircraft and Khalek says that Jet East as a Gama Aviation company is keen to grow its US government business.  (we want to make sure people understand that its is ‘Jet East, a Gama Aviation company’ so that there is no confusion about who bought who)

He is also confident that independent maintenance shops can compete with manufacturers.

‘Customers want a choice’

“OEMs are clearly making life harder for independents, but there will always be room for them,” says Khalek. “Customers want a choice. We want to be a one-stop shop for them.”

He says that it is important to remember that there are three types of maintenance: heavy maintenance, such as 96-month checks, refurbishments, upgrades and completions; Regular work – such as 400-hour checks and overhauls; and daily tasks like changing light bulbs, or inflating tyres.

“There are lots of companies that will pitch for the first two, but only a handful that will come out and change a light bulb at 10pm on a Friday night,” says Khalek, “and even fewer that offer the full range.”

Maiden, who also worked at Hawker Beechcraft, agrees. “All OEMs are looking to services, especially with deliveries down, but after warranties end, they have to earn the customer. We are very focused on the customer and quality – and getting the right people to deliver this. In 2019 we saw real competition for talent, and it will come back.

“Our footprint gives us the opportunity to provide a one-stop shop and give opportunities to great people,” he adds. “We want customers to know that we will be there at 10pm on a Friday, holiday or Christmas Day if they need us and if they need a big inspection or a whole cabin completion.”

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