GA Telesis

Flight plansIn less than six years, GA Telesis has grown to become a worldwide presence in the aircraft business. CEO Abdol Moabery told Ruari McCallion how it got there and how it plans to continue to grow. The aircraft industry was showing signs of market decline before 9/11, but that disaster brought air travel to a juddering halt, directly affecting not only the airlines, but associated businesses. It may seem strange, then, to start a business to serve airlines and the aircraft industry shortly afterwards. But Abdol Moabery, CEO of GA Telesis, was not deterred.ÔÇ£We started six months after 9/11, right in the downturn,ÔÇØ he said. ÔÇ£Our competitors were struggling and we figured the situation was an opportunity to capture market share.ÔÇØ GA Telesis now is very likely the fastest-growing business in its sector and has come from nothing to become one of the top five in less than six years. Headquartered in Fort Lauderdale, Florida, it has five offices in North America, plus UK and Singapore representation, and is growing ever stronger. It operates in three areas: maintenance, repair and overhaul (MRO); leasing of aircraft and engines to commercial operators; and supply of replacement parts to other airlines and other MROs. Revenues are around $200 million, generated by just 150 people worldwide.ÔÇ£We are a lean business operation but, if you think about it, the financing side of the business isnÔÇÖt labor-intensive,ÔÇØ Moabery said. ÔÇ£The management of our leased portfolio is computer-based; when thereÔÇÖs an event related to an asset, an e-mail is generated to the relevant party or department. If rent is due on a certain aircraft on a certain day, for example, the accounting or finance department is reminded by email directly.ÔÇØ If all is well, nothing more needs to happen. Lease extensions and maintenance schedules are all automated, so GA Telesis does not need rooms full of accountants. Maintenance, however, is a different matter. Here, you need people on the ground at the ready, 24/7.ÔÇ£We just got into the maintenance side last year, when we acquired our first company, GAT CRG Southwest, in Tucson, Arizona. WeÔÇÖre now in the process of acquiring our second,ÔÇØ he said. ÔÇ£Our intention from the outset has been to get good at it and then take it global. Our objective is not to be the biggest provider in North America, we want to be the best worldwide. We want to grow that business by acquiring or building maintenance organizations in the Middle East, India, China, North Africa and South America.ÔÇØ GA Telesis has at least one of every Boeing aircraft (727 to 777) in its lease portfolio, either owned or managed. It also has every Airbus model except the 330 series; also Bombardier CRJ 100s and 200s. That spread reflects GATÔÇÖs expertise in devising a diverse portfolio and means it can support the vast majority of commercial airlines. The route to growth is not by simply servicing the companyÔÇÖs own aircraft support needs; it provides services to third parties, budget and full-cost airlines alike. Currently, maintenance is third in size and importance, behind finance and parts distribution, but that will change as GA Telesis continues its strategy to be a multi-service company.ÔÇ£What we want to do is consistently provide new solutions to airlines; thatÔÇÖs our core value, thatÔÇÖs our mission,ÔÇØ Moabery said. ÔÇ£We look at where airlines have challenges and how we can provide solutions. We canÔÇÖt help the cost of oil and inflation but we can help reduce costs in other areas, like finance, replacement and repair of parts. These are some of their highest fixed and variable overheads. By seeking better ways to fix costs in the areas we can affect, airlines can better plan financially, which will help their overall performance.ÔÇØ Low-cost airlines donÔÇÖt have the 50-year legacy of infrastructure and internal support and service staff of the ÔÇÿflag-carriersÔÇÖ and the big airlines have been obliged by market pressures to change, too. Northwest has sold or closed maintenance bases and now outsources those services. Others, like Delta, British Airways and Lufthansa have started selling their services to third parties. GA Telesis offers the prime players even more.ÔÇ£For example, we lease aircraft or engines to a main airline like British Airways and, at the same time, we may provide parts to them for their entire fleet. And we repair parts as well. Thus, we become an important and integrated supplier to them,ÔÇØ he said. ÔÇ£IÔÇÖm not diversifying our business, as such; we might be diversifying cash-flow but weÔÇÖre actually horizontally integrating our operations. WeÔÇÖre offering airlines a menu of options and presenting ourselves as people who are interested in solving their problems for both the short and long term.ÔÇØRapid growth and diversification of revenue streams is not something that should be taken on without a secure financial foundation, both to avoid strain on resources and to encourage customer confidence. The announcement in 2007 that Global Principal Finance Company, a wholly owned subsidiary of Merrill Lynch, has taken a 49-percent stake in the company can only enhance GATÔÇÖs value to its customers.ÔÇ£GPFC/Merrill Lynch has its own financial and leasing operations and we have worked together in the past. What they were looking for was a platform to better manage their own fleet,ÔÇØ said Moabery. ÔÇ£They offered to invest in our company to help us grow and, hopefully, to build our company and theirs into one large cross-selling operation.ÔÇØ The future will see challenges, not the least of which is how to grow, when the worldÔÇÖs main markets are pretty stagnant.ÔÇ£The Middle East, Indian subcontinent and parts of Africa have traditionally been underserved, with one or two, state-owned airlines. Those markets are now growing very fast. They have placed record numbers of orders and are targeting people who have never flown before,ÔÇØ Moabery said. ÔÇ£The challenge will be that because local income levels are so low; they will have to fill entire aircraft at $15-$20 a ticket. The issue is: can they entice their populations to fly, rather than take the train or a 40-hour bus ride? I believe they can successfully do this which represents a tremendous opportunity for growth in the industry.ÔÇØ  First published March 2008┬á