On the topic of multiples, and the upcoming NBAA show ...
An article on how the fixed base operator community has fared during the past year is featured on page 20. Here are some outtakes from those interviews ...
During the FBO acquisition frenzy of recent years — often by new money — the question was raised as to what prices were being paid for facilities — multiples times earnings. Were they too much? Where do we stand today?
Says Lou Pepper, president of Atlantic Aviation, which expects to remain a player, “I really don’t have a feel for where multiples are headed today. They’ve been high. So few FBOs are being purchased right now that it’s hard to determine. But they’ll seek the level of their demand.”
Comments Will Cutter, Jr., president of Cutter Aviation, “I’m sure there’s some significant unwinding coming soon, and at probably the right price. They had multiples of 10 and 12 and 14 before and that was ridiculous — you can’t ever pay for that. But in a roll-up you have to keep buying or you have to go backwards.”
Says Kim Showalter, president of Showalter Flying Service, “I think some of them [new entrants] are going away. I’m a little surprised that we haven’t lost more [FBOs] than we have. That doesn’t mean we have lost all that we will. I’m surprised that there hasn’t been a larger reduction in the size of the industry to this point. But I don’t think that part of it is done.”
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Last year’s NBAA Convention was held during the height of the investment community’s financial collapse. The common look among attendees was one of ‘deer in the headlights’. This year’s show is already shaping up to be a bit different: Some major aircraft manufacturers will only be exhibiting at the Static Display at Orlando Executive Airport.
What to expect?
Says Pepper at Atlantic, “We’ve not altered our plans a bit. We expanded our booth 40 percent last year and will keep that. It feels like things are infinitely better than last year.”
Says Cutter, “I think we’ll throw ourselves another big party out there.”
And from Showalter, whose FBO will be handling much of the Static Display, “I think it’s going to be down from last year, which was down from the last time it was here in Orlando in 2006. My sense is people feel like things are turning around a little bit. I don’t think anybody is feeling like they’re really, really free to go out and spend.
“Looking for advance reservations, which are slow, isn’t a good monitor. For us, it’s number of room blocks, number of rental cars. And we’re not even beginning to push the envelope on the rooms that we’ve got in room blocks. We’re also not concerned that the hotels will fill up, which was a problem in the past. Rooms are so readily available in Orlando right now.
“Because Cessna and Hawker are only displaying at the Static Display, that may drive some more business to this airport.”
Thanks for reading.
