CEO statement
BBA Aviation's overarching objective is to grow exceptional, long-term, sustainable value for all its stakeholders.
In the last few years, our proven management team has actively managed all aspects of the business in order to deliver a robust performance through the downturn and has generated strong cash flow and returns above cost of capital. Our high quality businesses have leading market positions in markets with barriers to entry, generate strong margins and cash flow and are well placed to benefit from both cyclical and secular growth in the B&GA and commercial aviation markets. BBA Aviation is the only listed exposure to business and general aviation services.
Approximately two thirds of BBA Aviation’s revenue is driven by demand for B&GA travel, a quarter by commercial aviation movements, and the balance by military aviation.
In business aviation, BBA Aviation’s performance is primarily driven by flying activity and, in particular the number of hours flown. Cyclical recovery, together with an overall expansion of the B&GA fleet, are the factors that will drive market growth in the coming years. Deliveries of new aircraft give us an indication of future market strength and our businesses are well positioned both geographically and technically to service these aircraft and to take advantage of consolidation opportunities over the next decade.
In commercial aviation, our reputation with customers and position at some of the world’s busiest airports will allow us to take advantage of growth opportunities and consolidate our position as a leading independent service provider. Our businesses with exposure to the military sector are likely to benefit from the extension of the service lives of selected legacy platforms and from the outsourcing of support and supply chain services.
There are five critical factors which will contribute to the continued success of BBA Aviation in the future:
Market leadership
- We are market leaders in the markets in which we operate with strong, recognised brands.
- Signature is the world’s leading FBO network with 90 wholly owned worldwide locations and 22 additional locations in which we have minority interests.
- ASIG is the largest independent refueller in the world.
- Our ERO business has market leading positions in the programmes in which it participates.
Barriers to entry
- The requirement for a lease from an airport authority to operate an FBO; the average unexpired lease term of our FBO network in the USA is 17 years.
- The need for an authorisation to provide commercial aviation services at individual airports and the required technical capability around into-plane refuelling.
- The need for a licence from an OEM to service its engines; we are authorised by OEMs for engine overhauls on 80% of B&GA engines now in service.
- Intellectual property on aviation component systems and sub-systems which we develop ourselves or which we license from OEMs.
Service orientation
- Our businesses have a service focus with low asset intensity, a naturally flexible cost base and are highly cash generative which makes them inherently well suited to deal with market cyclicality as demonstrated through this cycle.
Growth
- There are significant growth opportunities across all of our businesses resulting from cyclical recovery, structural growth and the scope for consolidation in fragmented markets.
Common focus
- The business is actively managed by an empowered, experienced and motivated management team with a defined common group-wide focus as expressed in our vision, mission and values.
