50 years on... and charter firm is really going places
The investment column that makes the most of your money
THERE is not much respite between the end of one football season and the start of another, but many clubs use that time to tour the world, playing exhibition games and drumming up sponsorship. Aviation group Air Partner plays a central role in these trips, chartering planes for clubs including Manchester City, Real Madrid and Juventus.
The company also transported national teams during this summer’s UEFA European Championships, working with club nutritionists to make sure onboard catering was up to scratch and even organising inflight physiotherapists.
Air Partner has been operating in the market for more than 50 years, chartering commercial, private and freight jets for customers ranging from footballers to car makers to entrepreneurs. The shares are 377½p, but should increase substantially over the next few years.
The principal business charters jets when large numbers of people need to be flown in or out of specific locations. This year, for example, the firm supplied the planes when a car maker was launching a new vehicle and needed to fly 15,000 people to a European city from destinations across the Continent.
Oil companies use the firm to transport staff to inaccessible areas and it also operates an emergency division, transporting people out of locations at speed, if necessary. When violence erupted in South Sudan earlier this summer, for instance, Air Partner airlifted expats from the country within just four hours.
The charter business accounts for around 60 per cent of Air Partner’s profits. It operates globally and last year grew by 12 per cent, with further solid growth expected during 2016.
The private plane division accounts for about a third of the group and is growing fast, with profits up 17 per cent last year. As terrorism becomes an increasing concern in busy, mainstream airports, wealthy individuals and high-ranking businesspeople are chartering private aircraft so they can fly in and out of smaller and possibly safer airports, such as Farnborough in the UK or Le Bourget, near Paris.
Chief executive Mark Briffa joined the company as a commercial jet broker in 1996 and worked his way up to the top job six years ago. Having been at the group for two decades, he is an expert in all aspects of plane chartering, but last year he decided to expand the company into a couple of new areas to broaden its range.
First, he bought Cabot Aviation, which tries to find new buyers for used aircraft. Kenyan Airways, for example, had four planes that were lying idle – Cabot was appointed to find new buyers for them.
In most cases, airlines want to offload older planes, but the group has recently begun selling on new aircraft too – planes such as the Boeing Dreamliner and the Airbus 350 that have been ordered by national carriers but are now considered surplus to requirements.
Before it was acquired, Cabot focused exclusively on commercial jets, but it has recently moved into the private plane sector where there is considerable potential for growth.
Second, a year ago, Air Partner bought aviation safety consultant Baines Simmons, which provides training and advice for airlines on regulation, compliance and related areas. Safety has always been paramount in the aviation industry but, as air traffic increases and terrorism dangers mount, it plays an even more central role.
As a top firm in the field, Baines Simmons is expected to deliver considerable growth.
The company also helped the Isle of Man to set up an aircraft registry business. Every plane in the world has to be registered with a national aviation authority to prove it is safe to fly and has complied with all the rules and regulations.
The Isle of Man specialises in private and corporate jets and, from a standing start in 2007, it is now the fastest growing aircraft registry in the world.
Baines Simmons was there from the beginning, working with the Isle of Man civil aviation team. And the company was recently awarded a further ten-year contract to survey aircraft that operators want to register on the island.
Air Partner is not immune to the uncertainty following the UK’s referendum on EU membership. However, business remains brisk so far and the group operates overseas, so it should benefit from sterling’s weakness.
Brokers expect profits to rise 16 per cent to £5million in the year to January 31 and to £5.7million in 2018. The company, which is expected to deliver a positive trading update this week, has a long history of generous dividend payments and it is forecast to pay 25p in 2017, putting the shares on a yield of more than 6 per cent.
Midas verdict: Air Partner is the only plane charter group on the London stock market and many customers take comfort from dealing with a quoted business. It has also been operating since 1961, so there are decades of experience within the company.
The shares tend to move in sync with those of normal air carriers, such as easy Jet or International Airlines Group, the owner of British Airways. However, this business is quite different. Knowledgeable brokers believe the shares are worth at least 600p. Yet they closed on Friday at just 377½p. Buy.