The private equity owners of Cobham Aviation are reportedly preparing the airline for sale later this year with US$1 billion-plus expectations.
Adelaide-based Cobham Aviation Services is reportedly being prepared for sale. The under-the-radar airline operates a range of aircraft servicing contract and government customers flying fly-in-fly-out (FIFO), charter, surveillance, and search and rescue flights. It is reported the airline could fetch over US$1 billion in a two-part auction.
A report in The Australian Financial Review reveals the airline's private equity owners have brought in a high-profile investment bank to look at selling the airline. The airline is profitable, and while there is no immediate pressure to sell, the newspaper reports owners Advent International are looking at a sale timeframe spanning several months.
Cobham Aviation was best known for operating a fleet of Boeing 717-200s on behalf of Qantas via its National Jet Systems division. However, Qantas purchased National Jet Systems in 2020, bringing the operations of its 717-200 fleet in-house.
These days, Cobham's roster of contract and government customers has seen it weather the COVID-19 crisis relatively well. Not operating dedicated regular public transport flights has seen it dodge the full impact of the wider travel downturn.
Surveillance flying through an Australian Border Force contract, search and rescue missions via a contract with the Australian Maritime Safety Authority (AMSA), and a busy schedule of FIFO and charter work for big resource customers shielded Cobham Aviation from many of the financial and operational challenges now facing commercial passenger airlines.
Cobham Aviation flies a fleet of Challenger jets for the AMSA. In addition, Cobham operates a fleet of four Embraer 190 jets and six Dash 8-400 aircraft. Coinciding with news of the impending sale, Cobham’s sixth Q400 aircraft only landed in Perth on Tuesday. The aircraft will operate charters and FIFO services supporting large-scale mining, oil, and gas projects. The new plane is scheduled to commence flights in mid-February.
The airline's fourth Embraer E190 also only arrived two months ago. Both aircraft types are replacing Cobham's British Aerospace BAe 146 planes in the company's core Western Australia market. Cobham operated their last BAe 146 service there in November. Those distinctive-looking and sounding planes dated back to the days of Ansett and have relocated to Adelaide.
The BAe146 aircraft will continue to operate approximately 2500 flights annually carrying 25,000 tonnes of freight as they shuttle between Adelaide, Melbourne, Sydney, and Brisbane on behalf of Qantas Freight.
Cobham Aviation is a juicy asset with big corporate and government customers – the type of customers who can be counted on to spend up big and pay their accounts. The Financial Review reports the airline earned US$263 million in the 12 months to December 31, 2020, leading to pre-tax earnings of US$62.4 million.
On these numbers, Cobham is Australia's third-biggest airline after Qantas and Virgin Australia. A two-part auction would separate the airline's FIFO and charter work from its government contracts. The newspaper notes that the government contracts are the biggest money spinners for the airline.
The newspaper says many of the unsuccessful parties interested in buying Virgin Australia in 2020 are likely to run the ruler over Cobham. Interest is also expected from Brisbane-based Alliance Airlines, another big player in the Australian charter and FIFO sectors.
Lead Journalist – Southwest Pacific -.A Masters level education and appetite for travel combine to make Andrew an incredible aviation brain with decades of insight behind him. Andrew’s first-hand knowledge of the challenges and opportunities facing Australian airlines adds exciting depth and color to his work. Andrew is based in Sydney.