Hawker Pacific in strategic partnership to support regional growth

In October last year Hawker Pacific announced plans to enter into a strategic investment agreement with SEACOR, a global provider of services and equipment mainly to the offshore oil and gas industry and the marine transportation industry. As part of that, SEACOR owns, operates, leases and distributes fixed and rotary wing aircraft, as well as manufacturing and distributing aircraft parts.

Four months down the track, Aviation Business explored the genesis and direction of the deal with Hawker Pacific’s Chief Executive Officer, Alan Smith.

ABM: What was the thinking approaching the deal with SEACOR?

AS: For some time we had been looking for an additional investor to join the Lynton and Saab shareholders in order to further strengthen our balance sheet. We felt this was necessary so that the company could take advantage of the real growth opportunities in all of the regions we operate in but, especially in Asia.

The criteria for a new investor were not just financial strength but, equally important, they had to share a longer term investment outlook with our current shareholders and be an active participant in complementary areas of the aviation industry. SEACOR meets all of the selection criteria plus has the advantage of being a highly regarded and experienced investor. Their involvement in Hawker Pacific will make a significant contribution to the company’s growth prospects, especially in emerging markets such as China and India where they already have significant interests.

ABM: How has the strategic vision evolved since the announcement of the investment?

AS: Our vision to be the leading, best practice, aviation sales and total support organisation in the region stretching from the UAE, through Asia, to the Pacific hasn’t changed. The investment by SEACOR strongly supports and confirms this vision.

ABM: Has the vision been converted into factual application?

AS: The conversion of the vision for Hawker Pacific into strategic actions is actually an ongoing process. The SEACOR investment was only finalised in December last year, so the practical application of funds and business synergies is really just beginning; but we have some agreed allocations of funding and business focus.

Firstly, there is the investment in a new, purpose built facility at Singapore’s Seletar Airport. The new facility will provide separate hangars for line and heavy maintenance, a “state of the art” paint facility and extensive customer facilities including lounges and customer /OEM representative offices. The facility is over 9000 square metres in size and will further reinforce our focus on corporate and general aviation in the Asian region.

The second agreed focus is the continued investment in the Shanghai Hawker Pacific joint venture with the Shanghai Airport Authority. We are seeing substantial growth in movements through the FBO and are a long way down the track to provide OEM authorised Service Centre support to the growing fleet of business aircraft in China.

Funds are also earmarked to support our long-held interest in being a part of the Indian market. We already see significant work from India in our facilities, particularly Singapore, however as the establishment of our Service Centre in Manila some years ago proved, there is a domestic customer base in each country that requires a local presence/capability. Our market share in the Philippines has grown substantially because of our “local” presence. This also true of Malaysia and we believe India holds similar potential on a much larger scale.

Finally, the investment will fund a plan to aggressively strengthen our aircraft sales force throughout the region. We would like to, at least, double our existing sales force and place more focus on each of the individual, national markets in the region.

ABM: Apart from the injection of capital what are other advantages of the investment by SEACOR?

AS: As mentioned earlier, the potential synergies created by the alignment of Hawker Pacific with SEACOR’s other aviation interests are immense. They own ERA Helicopters in the USA who are one of the larger operators in the USA with a fleet of around 180 helicopters. ERA have a recognised expertise in aircraft operating leases which should provide significant opportunities in the Asia Pacific region where Hawker Pacific can assist their growth aspirations.

Additionally, both SEACOR and Hawker Pacific are active in the distribution of spare parts and accessories in the region. Alignment of these activities can only enhance our customer support focus and overall business across the market.

This is also true regarding aircraft sales activity and I’m confident that the investment brings new opportunities for Hawker Pacific and strengthens our focus on both products and market. There is a nice “cultural fit” and we are delighted with the capability and expertise that SEACOR brings to the relationship.

ABM: Are there any other similar opportunities available to HP to facilitate growth in the region?

AS: While not immediately obvious, if another suitable investor was identified we would certainly consider the merits of their involvement. The suitability criteria would remain very selective and the issue of cultural “fit” remains of prime importance. I feel a more likely scenario is further joint ventures, or possible acquisitions, in selected markets especially where a degree of local expertise or involvement is necessary.

Hawker Pacific has a unique regional footprint and expertise. We have a recognised brand, excellent OEM relationships and a portfolio of products and services that will continue to make us attractive to organisations seeking to establish operations within the region and to support the growing business aviation customer base.