Castle & Cooke, One FBO at a Time

EVERETT, WA — In late 2007, Castle & Cooke Aviation, based at Van Nuys Airport north of Los Angeles, bought the assets of fixed base operator Fliteline Services/Everett Jet Center at Paine Field here, bringing its number of locations to three, including Honolulu International Airport. The company has plans to expand in the U.S. and beyond, albeit at a one-at-a-time pace. It is owned by chairman and CEO David H. Murdock, who controls the company’s diverse portfolio of businesses that includes Dole food. Officials say that the Everett addition represents how they approach the market — buy an existing enterprise that is well-disciplined financially, and then explore opportunities for expansion.

Like many, the company grew into the FBO business via its corporate flight department operations, in this case at Van Nuys, relates executive vice president Steven Friedmann, who is based at Van Nuys and is responsible for the operation and growth of the mini-chain. Friedmann does this in concert with Richard Janisse, who is under contract as a consultant. Janisse is the former head of the AMR Combs chain of FBOs, which was subsequently bought out by Signature Flight Support.

Comments Friedmann, “We’re growing our FBOs one location at a time. Our model is more akin to organic growth, where we draw on one of our core competencies, real estate development. We consider ourselves a very disciplined buyer.

“In the case of Paine, we both bought a going concern and have begun developing real estate and an FBO simultaneously. And those are two different disciplines if you think about it.

“In Honolulu, we bought an aviation concern and a building there that was designed for an aviation use; and we’re renovating it, rehabilitating it, and turning it into a full-service FBO.

“We’ve watched the FBO consolidation and groups paying high multiples of earnings; we’ve chosen a different path. That’s to look for target markets, and carefully select airports with characteristics that we like and that give us the ability to go in and leverage on our strengths, which we believe are real estate development and buying businesses with a very disciplined approach to the financials.”

Castle & Cooke Aviation is a wholly owned subsidiary of Castle & Cooke, Inc, a diversified development, real estate, and operating company whose assets include master planned residential communities, commercial properties, and world class resorts along with transportation equipment leasing, brick and building material manufacturing, public warehousing, and corporate aviation servicing, according to the company.

Friedmann says the company considers itself a West-coast based network of FBOs and is focused first and foremost on what it already has in play. But opportunities exist, considering the parent’s resources and international presence.

Says Friedmann, “In time, once we create a steady foundation and base of business in Hawaii, it would be logical to look at the Pacific Rim for expansion.

“Dole food and Mr. Murdock have offices in 90 countries around the globe. He’s been in hundreds of FBOs around the world. We certainly would look at opportunities overseas.”

The paine field acquisition
In December, 2007, Castle & Cooke consummated a deal to acquire Fliteline Services/Everett Jet Center, owned by Jim Wilkinson, 70, since 1971, who has remained to serve as general manager. His minority partner, Terry Wilcoxson, has also stayed on as line services manager.

The FBO is the only one that sells retail fuel at Paine Field, which has a variety of aviation businesses but is dominated by the Boeing manufacturing plant that builds the 777 and the upcoming Dreamliner aircraft. While the airport allows corporate and other tenant self-fueling, including Boeing, the FBO has a 300,000-gallon fuel farm and has pumped more than six million gallons in a year. Much of that volume has been related to the former BF Goodrich Aerospace, now ATS, which overhauls airliners here.

The company is currently in the process of establishing a cargo handling business related to Boeing activities, and has invested a half a million dollars toward that venture. Explains Wilkinson, “It’s something that all of us here are really excited about. It’s thrilling that we have this new opportunity, a new chance to prove ourselves.

“Developing a new business and seeing it through – it’s what I love to do; it’s what Terry loves to do.”

Regarding the Castle & Cooke acquisition, Wilkinson says the move is a positive for Paine Field. “Number one, they brought some great people into the company with a tremendous amount of knowledge, such as Rick Janisse; it’s not only the financial resources. The company brings a tremendous amount of assets,” he says.

Wilkinson explains that through the years he has put his FBO up for sale a number of times, but the arrangement never seemed right for him, until he and Castle & Cooke began discussions in 2007.

Explains Wilkinson, “I put this company up for sale several times, but I was never happy with what people wanted to do with it, or they had problems. I talked with Mercury; talked with Trajen. So I just pulled my horns in and didn’t advertise the company.

“I heard from [aviation fuel supplier AirBP president] Mike Delk, who said he knew a company that wanted to expand ­— Castle & Cooke, who I’d never heard of. I gave them a call and they were interested; they wanted to be in the Northwest.

“So they came out and they found out that the airport was opening up this west side development. They said, ‘That’s what we want. If we’re going into the Northwest, we need a piece of land.’ And Paine Field is the only airport in the Northwest that has any land to offer.

“The timing was just perfect on that; there was one other company bidding for it. The county could see that Castle & Cooke was much better off than the other fellow, they gave it to Castle & Cooke.”

According to Wilkinson, the central component to the deal was the opportunity to expand, and the deal was contingent of Castle & Cooke’s ability to succeed with the bid for a 24-acre site. The company won the bid and has broken ground on a $15 million FBO hangar/office complex.

A focus on investment
While Castle & Cooke is a relatively new name around FBO chain circles, VP Friedmann explains that CEO Murdock has been involved with corporate aviation since the early 1970s. In fact, he says, Murdock was the second player to bring a business jet to Van Nuys Airport, the busiest general aviation airport in the world. “It was was just him and Clay Lacy at the airport, from a private jet standpoint,” says Friedmann.

At Paine Field, Castle & Cooke is embarking on an initiative to become a major player in the Seattle area. “Everett is a great airport,” comments Friedmann. “It has great characteristics. We think it represents the future of aviation in the Northwest.”

At Honolulu, the company acquired the former Circle Rainbow facility and has renovated the operation to look more like an FBO. Explains Freidmann, “The original developer of that building flew tourists on sightseeing tours; he had the lobby configured for large groups. He built 60,000-square foot of office space around a hangar facility. The building was never really completed. We’ve renovated it and are leasing the office space out. We have additional ramp space and additional acreage to grow the facility.”

Castle & Cooke is also investing heavily at its Van Nuys headquarters with an expansion that will total as much as $15 million. It is in the process of consolidating its leaseholds under a 30-year term, according to Friedmann.

“The other big news at Van Nuys is we’ve been awarded the exclusive right to negotiate with Los Angeles World Airports for the site formerly known as the Jet Center site,” explains Friedmann.

“That’s a four-year process that has been a real interesting roller coaster ride. The bottom line is, the one group that had been awarded the property decided for a variety of reasons not to proceed with the development. We apparently were the number two bidder, so the city came to us this past June. So, we’re working with the city and various interested tenants to develop that seven-acre site at the north end of Van Nuys airport. Our current facility is on the southwest side. We’ll have two separate sites.”