Gama Aviation acquires US-based Jet East in $7.7m deal

Gama Aviation announced the acquisition of Jet East Aviation from East Coast Aviation on Friday, which it said would “significantly expand” its existing US aircraft maintenance operations.

The AIM-traded firm described Jet East as a full-service business aviation aircraft maintenance provider with about 200 employees.

It said it supplies a range of maintenance services at high-traffic business aviation airports, including in the cities of New York, Boston, Philadelphia, Cleveland and Cincinnati.

Jet East's maintenance network was said to be “highly complementary” to Gama’s existing US operations, with little service or geographic overlap.

The acquisition of Jet East had taken place under the group’s wholly owned US subsidiary Gama Aviation Engineering (GAEI) for $7.7m in cash, with a further $1m in deferred cash payable over two years, and the assumption of $3.2m of Jet East debt.

Gama said the transaction had been entirely funded from its existing resources.

In 2020, Jet East's performance was negatively impacted by Covid-19, but in 2019, it reported revenues of $29.5m and an underlying EBIT of $1.2m, including a depreciation charge of $0.3m.

Its net assets as at 31 December 2019 totalled $6.7m.

The Gama board said the acquisition would “substantially enhance” its “already extensive” maintenance capability within the US, capturing further market share in the world's most valuable business aviation market, with around 15,000 active business aviation aircraft.

It said the enlarged business would provide “unparalleled” coast-to-coast coverage and capability that would enhance its service offering to the market, and “significantly strengthen” its trading relationships with key customers.

The addition of three experienced executives would also strengthen the group's US business operations, the board claimed.

It added that a tailored long-term executive incentive plan, which would include potential awards of GAEI stock linked to value accretion, would ensure alignment of management interests with that of the group's shareholders.

The increased scale and competencies of the enlarged US maintenance business and the expected revenue synergies and operational efficiencies were expected to be enhancing to group earnings following the first full year of acquisition.

“This strategically important acquisition enlarges and strengthens our presence in the US, the world's largest business aviation market,” said chief executive officer Marwan Khalek.

“We are taking two entirely complementary businesses and combining them to provide a highly capable, coast-to-coast maintenance operation that supports our customers evident need to rationalise their supply base.

“The combination will provide our customers the advantages of operational efficiencies that only a single-source strategic supplier relationship can deliver.”

Khalek said the combined business would also be well positioned to benefit from the “inevitable recovery” in US business aviation activity once the pandemic impact subsided.

“This is a deal that enhances our service offering to our clients, is anticipated to be value accretive to our shareholders and will provide opportunity for our people.”

At 1029 GMT, shares in Gama Aviation were up 13.64% at 43.75p.