BBA Aviation outlines Signature and Ontic growth plans
By Josh White
Date: Tuesday 13 Nov 2018
(Sharecast News) - Aviation support and aftermarket services provider BBA Aviation told shareholders of the stages through which it planned to deliver more value on Tuesday, as it held its first of two capital markets days this week at its Luton Airport fixed-base operation (FBO).
The FTSE 250 firm said that at its 'Signature' business, its aim continued to be to outperform the growth in United States business and general aviation flight movements by building on its "unique" network platform, and through its range of commercial initiatives.
It said it would then become more relevant to its customers' "many purchasing transactions" when they flew their planes.
Within Signature, BBA had four stages through which it planned to deliver more value, which it stated were organic growth, core revenue source optimisation, non-fuel revenue growth, and new services and asset utilisation.
"Building on the network pricing agreements put in place last year for our larger customers, we will set out the strategy for improved yield management of both fuel and non-fuel revenues from our real estate footprint through both customer segmentation and technology," the BBA board said in its statement.
"In addition, we will set out our plans for the further development of our existing non-fuel services, through the increased penetration of our Signature/Epic card services programme."
The company said it would also leverage the increased opportunity in advertising throughout its real estate, which built on its unique customer group that controlled significant wealth.
With regard to new services being brought on line over the next few years, BBA said it would be focusing on 'Elite' - our commercial passenger interconnect service - as further evidence of Signature redefining the market reach for business and general aviation (B&GA) infrastructure.
"Through this range of growth opportunities, we are today setting a new target for Signature's market outperformance of US B&GA movement growth by some 250 basis points over the medium term."
The firm said it was continuing to work through a number of investment opportunities that it said would further "enhance and fortify" Signature's unique real estate network, as it continued to lead the development of the B&GA market.
All investments continued to be screened at ots 12% pre-tax return on invested capital threshold.
At its Ontic operation, BBA said it was taking the opportunity to further explain the Ontic operating model and what drove value creation through the licencing of intellectual property (IP) for mature and legacy aviation parts from original equipment manufacturers.
BBA said the business would also demonstrate how it managed the acquired IP portfolio which, in most cases, it said represented a perpetual licence with sole source rights to ensure it value priced the parts throughout their lifecycle.
"Our Ontic business also continues to see a healthy pipeline of new licence acquisitions and we were pleased to announce the acquisition of Firstmark in September," the board said.
"This business has a product portfolio which is highly complementary to Ontic's and offers organic growth opportunities through its military products and know how."
It said that, through effective execution of the licence and merger and acquisition opportunities available to Ontic, it expected to reach $100m of EBITDA by the end of 2021.
It was also continuing to screen those opportunities at its 12% pre-tax return on invested capital threshold.
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