Buffett’s NetJets Cedes Plane Management Lead as Rivals Join

  • BBA-Gama deal creates U.S. fleet of about 200 aircraft
  • Private jet demand seen prospering under Trump presidency

There’s a new leader in the U.S. market for corporate aircraft management, as a merger of the American fleets of BBA Aviation Plc and Gama Aviation Plc elbows aside a unit of Warren Buffett’s NetJets Inc.

The deal brings together about 110 U.S.-based aircraft managed by Gama and 90 overseen by BBA, the companies said Tuesday. While similar in size to the Executive Jet Management division of NetJets, the new venture will have significantly higher flying hours because of its customer profile, said Gama Chief Executive Officer Marwan Khalek.

Trading under the name Gama Aviation Signature Aircraft Management, the business will also rank among the top handful of providers worldwide, Khalek said in an interview. BBA mainly manages planes located in the western U.S. while Gama is stronger on the East Coast, he said. 

“Scale is important,” Khalek, who founded Gama with a single plane in 1983, said by telephone. “This is a very fragmented business, even in the U.S., and you have to have a national profile, coast to coast.”

A spokesman for NetJets declined to comment.

Merger Benefits

Savings from the merger between London-based BBA and Farnborough, England-based Gama should amount to about $2 million, though initial costs mean it won’t add to profit in the first two years, Khalek said.

The business will compete with Jet Aviation Management AG, a Zurich-based unit of General Dynamics Corp.; Tag Aviation, which also has its headquarters in Switzerland; and the newly merged Luxaviation and ExecuJet. The fleet of Gama includes about 50 turboprops while BBA oversees only jet aircraft.

Further gains should come through tapping BBA’s network of business jet bases to encourage more customers to sign up for plane-management services, Khalek said. Of an estimated 10,000 to 12,000 private aircraft in the U.S., only about 30 percent are under professional management, he estimates.

For more on the outlook for private jets in the Trump era, click here

BBA chose to partner with Gama after inheriting a fleet of managed aircraft through a $2.1 billion purchase of U.S.-based Landmark Aviation from Carlyle Group LP, completed in 2016, which consolidated its position as the world’s largest provider of airport bases for business jets.

Bars on foreign control of aviation companies meant BBA needed to sell the management business or find a partner with mostly U.S. shareholders, something Gama already had in place. Under the new structure the companies will each have a 24.5 percent stake, with 51 percent owned by U.S. shareholders, including the enlarged unit’s operational management.

Share Gains

Khalek said a U.S. administration led by President-elect Donald Trump is likely to prove more business-jet friendly than that of President Barack Obama, while suggesting that the industry accepts there’s unlikely to be a return to the levels of corporate demand seen before the 2008 global economic crisis.

Gama’s markets aren’t in any case directly linked to plane utilization -- unlike refueling services, say -- since a reduction in flying hours has no impact on the requirement for plane management, he said.

Gama rose 14 percent in London, the most since 2012, while BBA closed 0.7 percent higher.

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