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FBO titans cash out to investors expecting growth

The Signature FBO at Key West International Airport in Florida is among hundreds of facilities changing hands as investors eye post-pandemic growth potential. Photo by David Tulis.

A private equity consortium that includes Cascade Investments, which handles much of the personal fortune of Microsoft co-founder Bill Gates, purchased the largest global FBO provider, Signature Aviation, for $4.7 billion. That deal, approved by British regulators in May, followed a brief bidding war in January for the company that manages 13 million square feet of hangar, terminal, and office space in the United states.

The tussle over Signature prompted owners of the second-largest U.S. FBO network to test the waters: Macquarie Infrastructure Corp. put Atlantic Aviation, with FBO operations at 69 U.S. airports, on the market. The company announced an agreement June 7 to sell Atlantic Aviation to New York-based investment company KKR for $4.475 billion in cash and debt. The Atlantic deal is expected to close in the fourth quarter.

According to a July 2020 report by investment banking and wealth management company William Blair & Co., the two chains, combined with Jet Aviation, a General Dynamics subsidiary, manage about 10 percent of all FBO operations in the United States, with about 300 locations between them. Reuters reported in April that optimism about a rebound in aviation activity sparked investor interest in FBO chains large and small. Expectation of economic recovery following widespread vaccination and easing of travel restrictions related to the coronavirus pandemic, combined with the high-profile sales of Signature and Atlantic, set up a potential influx of capital as investors eyed acquisitions, and FBO chains eyed expansion. A spokesman for Florida-based Sheltair Aviation Services told Reuters the company planned to add to its portfolio of 24 locations. Luxaviation Group CEO Patrick Hansen told Reuters that the company was eyeing the New York market, having added a facility in Miami to its holdings in March.

“We currently see some interests from private equity firms in our activity and we are carefully assessing our best way forward to expand our FBO business especially in the USA,” Hansen said.

The sharp downturn in travel during 2020 took a huge bite out of Atlantic’s revenue, about 60 percent of which typically comes from fuel sales, according to Flightglobal. William Blair & Co. noted in July 2020 that funding from the CARES Act helped blunt much of the pandemic’s impact, though Atlantic also cut its workforce by about 12 percent to 1,760 employees at the end of the year, according to Flightglobal.

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