DALLAS — William Koch, president/COO of Seven Bar Enterprises, Inc., based near Love Field, seems primed for the position of growing a 59-year old family business. He comes from an aviation family — father Don spent most of his career with Aviall and companies — and has been involved in real estate, flight operations management, and operating fixed base operations, having served as president for the AMR Combs chain when it was owned by AMR Corporation. In February, 2003 Koch was hired by the Black family, owners of the 7Bar Ranch in New Mexico for three generations along with owning three FBOs and offering fixed wing air medical services. With training and sophisticated systems in place, Koch says the intent is to grow both sides of the Seven Bar business.
A. Rolfe Black took over as president of the family-owned Seven Bar Flying Service in 1969, and today serves as chairman. Son Wade Black is CEO and moved the aviation company’s headquarters from Albuquerque to Dallas, partly to begin an era of expansion. It was a common interest in the business, particularly in the FBO acquisition arena, that brought Wade Black and Koch together, recalls the latter. “I was involved with an investor group looking at acquisitions, and one of the best resources I had was Wade Black. We got together often for lunch.
“We seemed to have the exact same vision of what we wanted,” explains Koch, “so we decided to team up. This company reminds me so much of the culture of Combs[-Gates]. It is today a 59-year old, third generation family business, and it feels like family. Yet, we’re as sophisticated as an AMR Combs was — the IT systems, the accounting systems, the highest standards of training. It’s the sophistication of a big company with the feel of a mid-sized company.”
Three FBOs; Expanding Air Medical Bases
Seven Bar Enterprises, Inc. is today a $25 million (annual revenues) company, according to Koch, with some 150 employees. It has three full-service FBOs: Seven Bar Albuquerque at Albuquerque Inter-national Airport; Seven Bar Four Corners at Farmington (NM) Four Corners Regional Airport; and, Sun Valley Aviation at Friedman Memorial Airport in Hailey, ID.
It operates under contract for fixed-wing air medical services for the University of New Mexico Hospital; UNM Children’s Hospital Newborn Transport Program; Children’s Medical Center of Dallas; Aerocare (Lubbock, TX); Texas Children’s Hospital (Houston); and, Vanderbilt University Hospital Lifeflight (Nashville). King Airs, Citations, and Learjets make up the fleet of 15 business aircraft.
“Our two major lines of business are FBOs and a very solid flying operation,” explains Koch. “We also have some retail charter and a fractional ownership program, but it’s limited — three airplanes, and not a strategic part of our business in terms of growth going forward. Air medical is certainly our primary flying mission.” The company’s fractional program, Ascend, offers 1/8-to-1/2 shares with a monthly fee. The company also offers aircraft management.
“Our newest additions have been the Texas Children’s Hospital in Houston, a program we launched last year, and our latest is Vanderbilt University in Nashville. They have four helicopters based in Nashville to serve about a 100-mile radius. We serve the next band to about 400 nm with a King Air B200; then beyond that we have a Lear 35. They are so prominent in certain specialty areas that the scope is national and even international.”
Of the three FBOs, the one that generates the most revenue, Sun Valley Aviation, is also the one that brings with it the greatest uncertainty. That is, will the airport itself be relocated, and this after Seven Bar owners totally redeveloped its existing FBO at Friedman Memorial Airport.
Explains Koch, “We spent about ten years trying to renegotiate with FAA at the airport — we were too close to the runway and needed to clear the site. We went through an eminent domain process for the land, and generated a more efficient and all-new facility that is spectacular. It set us up for a new 30-year term.” The new location includes a 30,000-sq.ft. hangar complex.
However, because of the growing popularity of the Hailey, ID region as a resort area, both in summer and winter, the community is exploring the concept of building an entirely new airport. “Local politicians have been advocating the building of a whole new airport way out in open space,” says Koch. “The current airport is 12 miles south of the primary resort, which is the primary reason for having the airport. And, if you move it another 20-30 miles south, now you’re 45 miles from the destination. We would certainly want to see Friedman Memorial Airport continue to develop. It has a great operating history.”
[In early February, it was reported that FAA has tentatively approved $50 million for design and construction of a proposed new airport to serve Sun Valley. The proposed airport with an 8,500-foot runway consists mostly of federal Bureau of Land Management property. The site is some 14 miles south of the existing airport. An environmental impact study is the next step.]
Next Step: Growth Through Acquisitions
According to Koch, the company anticipates growth through additional fixed wing air medical contracts, in which hospitals provide medical and Seven Bar provides flight services, and expanding the scope of the FBO business through acquisitions.
While at AMR Combs, Koch was involved in FBO acquisitions during the mid-90s. “There’s a top tier market, which was the one I spent a large portion of my career competing in,” he says. “That market has changed considerably from ten years ago, where it was really only a handful of big operators duking it out. Now, it’s a similar handful of large operators and a whole new group of private equity entrants who are trying to stake their claim in that top tier market. I call that a Top 100 FBO market, based on fuel volume.”
Koch says it’s the next tier of FBOs that fall into the Seven Bar acquisition model. “Our company’s growth will come by developing the current businesses, and acquisition of FBOs in similarly situated markets — medium to larger business and/or resort markets, primarily in the Western half of the U.S.
“If an owner’s thinking about retirement or selling because there isn’t a family member in line, Seven Bar would be the kind of potential buyer that they would want to consider from a standpoint of who we are as a corporate culture. We may be a very, very good fit.”