A Smart Route For Florida West?

It sounds like a business that wouldn't fly far these days. At a time when there's a glut of idle airplanes, Florida West Airlines is stepping up its "recycling" of used aircraft by rehabilitating and refurbishing them. "The economics of such recycling is sound and very profitable," argues money manager Charles Ganz, president of Ganz Capital Management. He has accumulated a 3.5% stake in Florida West, which is trading at 15.

Ganz insists the stock is undervalued, pointing to the potential of Florida West's three units: air cargo, maintenance, and resale or leasing of refurbished planes. Ganz puts the underlying value of the stock at 30 a share.

Florida West started operating in its present form in July, 1993, when an investor group led by Maury Joseph, now chairman and CEO, and Allen Beni, president, purchased the assets of Florida West Gateway, a 12-year-old cargo airline that had filed for bankruptcy.

The company spends as little as $750,000 for a used Boeing aircraft and puts it into shape at a total cost of under $1 million. The refurbished aircraft usually sells for $2 million or more, says Ganz, or can be leased out at even better returns. Demand is growing overseas, mainly in South America and Asia.

Analyst Bill Walling of RAS Securities in New York is also high on Florida West. He expects profits of $2 a share this year and $2.85 in 1995. Compared with the price-earnings ratios of air-cargo and trucking companies, notes Walling, Florida West is "a cheap buy."

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