Cobham - Going, Going, Gone

[longlegs]

COBHAM GETS TAKEOVER OFFER, STARTS STRATEGIC REVIEW OF AUSTRALIAN BUSINESSwritten by Chris Milne (https://australianaviation.com.au/author/chris-milne/)July 25, 2019
https://australianaviation.com.au/wp-content/uploads/2019/05/Cobham-Embraer-E190_1170.jpgA 2019 supplied image of an Embraer E190 in Cobham livery. (Cobham Aviation Services)

Cobham Aviation Services Australia faces new ownership with global private equity company Advent International lobbing a takeover bid for British parent Cobham Plc.

The takeover offer from Advent of 165 UK pence per Cobham Plc share valued the target at about 4 billion UK pounds.

It was announced on Thursday morning (UK time), alongside the company’s financial results for the first half of calendar 2019.

Cobham Plc’s board of directors recommended shareholders to vote in favour of the deal, noting the offer price represented an “attractive premium” on the share price of 123 UK pence on 24 July 2019, prior to the takeover being made public.

“The Cobham directors believe that the acquisition recognises the quality of Cobham’s businesses and its prospects,” the company said in a regulatory filing.

“The acquisition represents an opportunity for shareholders to realise their investment in Cobham in cash in the near term.

“As a leading global private equity firm, Advent provides an experienced partner for Cobham’s customers, employees and other stakeholders.”

Advent International Plc managing director Shonnel Malani said: “We strongly believe in the importance and potential of Cobham’s businesses and look forward to bringing our long track record of successful stewardship of companies to ensure that Cobham flourishes under our ownership.”

Cobham said it would undertake a “strategic review” of the Australian operations of its Aviation Services business.

This process, of which Advent was aware, would enable the company to decide “how best to optimise the value” of the Australian arm, Cobham Plc chief executive David Lockwood said.

Advent supported the review, he added.

Cobham plc said its Aviation Services business in Australia generated revenues of A$386 million in calendar 2018, with “organic revenue growth of 10 per cent in the first half of 2019”.

The company’s Australian operations include the Coastwatch contract, worth more than $1 billion over 15 years; the QantasLink Boeing 717 contract (https://australianaviation.com.au/2016/07/cobham-gets-10-year-contract-extension-for-qantaslink-717-flying/), involving 20 aircraft and contracted to 2026 under a $1.2 billion contract; the Australian Maritime Safety Authority’s search and rescue contract (https://australianaviation.com.au/2014/10/cobham-wins-640m-amsa-search-and-rescue-contract/), worth $640 million and involving four Bombardier CL-604 jets; and several fly-in/ fly-out (FIFO) contracts with mining groups.

https://australianaviation.com.au/wp-content/uploads/2019/02/SAR-AMSA-604ramp-8_1170.jpgCobham operates four specially-modified Challenger 604s under its AMSA search and rescue contract. (Cobham)

Cobham Australia chief executive Ryan Both told staff on Thursday afternoon the local operation was facing “an exciting new time”.

Both said the recent arrival of an Embraer 190 (https://australianaviation.com.au/2019/05/embraer-e190-returns-to-cobham-fleet-for-fifo-work/) for work on Chevron’s North West Shelf petroleum operation and the impending arrival of the first Dash 8 Q400 for FIFO work would help to transform the business.

However, he added, the Australian arm would need more capital to drive growth “and realise our full potential”.

Cobham Plc reported net profit after tax of 47.9 million UK pounds for the six months to June 30 2019, down from 166.7 million UK pounds in the prior corresponding period.

Revenue rose 11 per cent to 1.03 billion UK pounds.

[havick]

Cue the private equity firm to slash as much as possible, make the company appear to be more profitable than it was when they bought it, then sell it again in about 2 years time.

[Chris2303]

Look what happened when a private equity firm took over Dick Smith Electronics

[Zhoottoo]

Cobham Aviation up for sale
DAMON KITNEY (https://www.theaustralian.com.au/author/Damon+Kitney)https://cdn.newsapi.com.au/image/v1/48077d39b5360b0ce22bb8333c51813e?width=650 (https://cdn.newsapi.com.au/image/v1/48077d39b5360b0ce22bb8333c51813e)Cobham Aviation chief executive Ryan Both at Essendon Fields Airport. Picture: Stuart McEvoy

12:00AM JULY 26, 2019
NO COMMENTS (https://www.theaustralian.com.au/business/aviation/cobham-aviation-up-for-sale/news-story/12477081bfc043714d9a1141fa0f97ff#coral)

One of the nation’s biggest aviation groups, Cobham Aviation Services Australia, has been put up for sale by its UK parent after the London Stock *Exchange-*listed company agreed to a £4 billion ($7.2bn) takeover offer from US buyout group Advent International.

Cobham, which turns over almost $400 million annually and is one of the nation’s biggest aviation groups, is the largest provider of contract aviation services in Australia and flies Boeing 717 aircraft for QantasLink.

It also operates search and rescue aircraft for the Australian Maritime Safety Authority (AMSA) and patrols the nation’s coastline for the Australian Border Force.

Delivering the Cobham interim results yesterday, chief executive David Lockwood announced it had started a strategic review of Cobham Australia, *noting it would decide the best way to *optimise value in the interests of the company and its stakeholders.

He said Advent International was “aware and supportive” of the review of the Australian business.

Last year Cobham restructured its Cobham Aviation Services unit into two regional businesses, one focused on Australia and the other on Britain, Europe, the Middle East and Africa.

As a result, 37-year-old Ryan Both, a former Virgin Australia and Melbourne Airport executive, took over as chief executive of the Australian group from Peter Nottage, who had been in the top job with Cobham Australia since 2006.

Mr Both has since pushed to introduce types of aircraft better suited to the demands of FIFO customers, as the industry rides a recovery in the resource sector, including the Q400, the 70-seat Bombardier and the 98-seat Embraer E190.

“We are about to enter an exciting new phase with the arrival of our first Q400 next week, which brings a game-changing, modern, in-production aircraft to the FIFO sector,” Mr Both said yesterday.

“As a progressive and innovative organisation, it’s not surprising that we are taking stock and reviewing where we’re at.

“Modern aircraft, like the Q400 and the recently introduced Embraer 190, are expensive. They are transforming our business but we need more capital to drive our growth so we can realise our full potential.”

He said the potential of *Cob*ham was largely an “untold story”.

“We have 1300 people, operate more than 50 aircraft, blue-chip customers and a national footprint,” Mr Both said. “Cobham Plc has high expectations for our business and remains committed to the success of CAvS (Cobham Aviation Services Australia) in Australia during this process.”

[Traffic_Is_Er_Was]

Another "game-changer"! Must be looking for more QF work.

Modern aircraft, like the Q400 and the recently introduced Embraer 190, are expensive
Which is why the opposition doesn't use them.
They are transforming our business but we need more capital to drive our growth so we can realise our full potential
Something the opposition doesn't have to worry about.

[Blitzkrieger]

One thing appears certain and that is my friends who work there will be rid of that particular management team. I just hope they aren’t thrown a contract that they end up signing under desperate circumstances.

[Icarus2001]

https://www.bloomberg.com/news/articles/2019-07-25/advent-to-buy-u-k-defense-firm-cobham-in-5-billion-deal

Opposed by their largest shareholder.

This is not a done deal yet.

[topend3]

Yes opposed by largest shareholder Silichester but likely they are just looking for a better deal if you read the extracts from their opposition

[Icarus2001]

Agreed topend, I think it is mostly posturing to get a better deal. The regulatory issues also have to be overcome.

Anyone remember this...https://www.theguardian.com/business/2006/dec/14/australia.theairlineindustry1

[Daddy Fantastic]

How does this all play out for the current pilots working there? Will there be job losses, will they still carry on with their current hiring requirements etc? A mate of mine has a 717 interview/sim session coming up in September/October (dates not confirmed yet), will they still look at bringing these guys on board?

[Snakecharma]

Crikey Daddy, you don’t want much!

the paper runs a story on what MIGHT happen and you want detailed plans on what they will do with pilots!

I don’t mean to be cruel but how is anyone, the least of all being the management of Cobham Australia, going to know the answer to that!

it will depend on who, if anyone, buys the business, what their strategic plan is, assuming they have one (and in aviation that is a pretty big assumption) and then however long it takes to implement said mythical plan.

this sort of stuff can take years to play out, and it goes without saying there are union negations to be had and all manner of consultations, so if anyone tells you what is happening, they are bull****ting you.

[Daddy Fantastic]

Crikey Daddy, you don’t want much!

the paper runs a story on what MIGHT happen and you want detailed plans on what they will do with pilots!

I don’t mean to be cruel but how is anyone, the least of all being the management of Cobham Australia, going to know the answer to that!

it will depend on who, if anyone, buys the business, what their strategic plan is, assuming they have one (and in aviation that is a pretty big assumption) and then however long it takes to implement said mythical plan.

this sort of stuff can take years to play out, and it goes without saying there are union negations to be had and all manner of consultations, so if anyone tells you what is happening, they are bull****ting you.

I was asking for opinions, not cold hard facts....calm down dear!!

[Icarus2001]

Whoever owns the company they will need pilots, cabin crew and engineers to make the aircraft move. That much will not change.

[bazza stub]

Seriously the sooner the better is say, get rid of management and get someone else in to run the place.

[harrryw]

This may be a silly question but what would happen to our surveillance contract if Cobham (Australia) was sold to say Indonesia. Would the contract continue.

[uhoh]

This may be a silly question but what would happen to our surveillance contract if Cobham (Australia) was sold to say Indonesia. Would the contract continue.

I highly doubt the Australian Government would allow it!. According to an article by FlightGlobal the Surveillance Contract might be retained by the new owners of Cobham plc should they sell off Regional and Airline services.

[onehitwonder]

Impending announcement this week...crew very worried

[bazza stub]

About what?

[uhoh]

Impending announcement this week...crew very worried

What's the scuttlebutt?

[YendorB]

Cobham to operate A220's for Qantas contract

[Going Nowhere]

Cobham to operate A220's for Qantas contract

A220 is coming to SYD this week for QF.

[noclue]

Cobham to operate A220's for Qantas contract

You spelt “network” wrong

[Cool banana]

Airbus A220

Swiss grounded all their A220 due to engine troubles last week and only been returned back to service after engineering inspections have been carried out while Air Baltic has operated 13 Airbus A220 in the first two years have had 50 engine replacement due to various reasons. Sounds like The GTF seems to be a highly unreliable engine with a lot of teething issues. but once all the problem has been resolved will be a great engine with wonderful fuel burn saving.

[bazza stub]

https://en.m.wikipedia.org/wiki/Spelt

[ScepticalOptomist]

https://en.m.wikipedia.org/wiki/Spelt


From Cambridge Advanced Learner's Dictionary:

spell (FORM WORDS) /spel/ verb [I or T] spelled or UK AND AUSTRALIAN ENGLISH ALSO spelt, spelled or UK AND AUSTRALIAN ENGLISH ALSO spelt


This means that you should say "spelled" in US English and you can use both "spelt" and "spelled" in UK/Australian English.

[red_dirt]

Quote:
Originally Posted by bazza stub
https://en.m.wikipedia.org/wiki/Spelt
From Cambridge Advanced Learner's Dictionary:

Quote:
spell (FORM WORDS) /spel/ verb [I or T] spelled or UK AND AUSTRALIAN ENGLISH ALSO spelt, spelled or UK AND AUSTRALIAN ENGLISH ALSO spelt
This means that you should say "spelled" in US English and you can use both "spelt" and "spelled" in UK/Australian English.


🤣🤣🤣🤣😂😂😂 get a life

[Icarus2001]

Impending announcement this week...crew very worried

Announcement by who?

[TBM-Legend]

This means that you should say "spelled" in US English and you can use both "spelt" and "spelled" in UK/Australian English.

I thought this was about race horses!

[StudentInDebt]

Isn’t Spelt a kind of wheat substitute ?

https://en.m.wikipedia.org/wiki/Spelt

:) (https://en.m.wikipedia.org/wiki/Spelt)

[benttrees]

Are crew very unworried now that the week is over ?

[ScepticalOptomist]

🤣🤣🤣🤣😂😂😂 get a life

:) :) :) :) :)

[JohnnoP]

Interesting considering that they recently had openings for next years Cadetship!

[Icarus2001]

Onehitwonder

Impending announcement this week...crew very worried What was announced?

[Hsveight]

Was there any announcement?

[A30_737_AEWC]

I highly doubt the Australian Government would allow it!. According to an article by FlightGlobal the Surveillance Contract might be retained by the new owners of Cobham plc should they sell off Regional and Airline services.

The AMSA contract is held by legal entity COBHAM SAR SERVICES PTY LTD, an Australian registered company.

As long as that entity exists, execution of the contract scope of services will remain the responsibility of that entity, regardless of its ownership. If the potential new owners elect to incorporate the AMSA SAR services into another part of their business operations (like into another legal entity), then novation of the AMSA contract will be necessary and will require agreement of the affected parties.

[LostontheLOC]

AMSAR is currently running at a 4 million dollar per year loss, any new buyer of cobham will seriously look at the viability of that current contract.

There is a reason cobham went through a series of restructuring over the last couple of years was due to this contract, and the majority of the people who were involved have been managed out of the business or taken retirement.

The only reason AMSAR is still afloat is all because of the Border Force contract, however Cobham are strongly looking at losing this contract to Air Affairs when the renewal is due.
The follow on affect of this would be catastrophic for the company.

Cobham is ironically running on fumes, and we aren't taking about an Islander.

[Icarus2001]

AMSAR is currently running at a 4 million dollar per year loss,
How do you know this?

cobham went through a series of restructuring over the last couple of years
Can you explain what was restructured?

The only reason AMSAR is still afloat is all because of the Border Force contract
By AMSAR you mean the AMSA contract right? Which is completely different and separate to the border patrol contract.

Cobham is ironically running on fumes
Have you got anything to back that up? The freighter contract runs until at least 2025 and is profitable. The Qantaslink 717 contract runs until 2026 and is slightly profitable.

You seem very down on Cobham?

[Hsveight]

The only reason AMSAR is still afloat is all because of the Border Force contract, however Cobham are strongly looking at losing this contract to Air Affairs when the renewal is due.


How do you know they are strongly looking like losing the contract to Air Affairs? Do you have a contact in the government? It seems Air Affairs specialises in training.

[LostontheLOC]

How do you know this?


Can you explain what was restructured?


By AMSAR you mean the AMSA contract right? Which is completely different and separate to the border patrol contract.


Have you got anything to back that up? The freighter contract runs until at least 2025 and is profitable. The Qantaslink 717 contract runs until 2026 and is slightly profitable.

You seem very down on Cobham?
Base meetings and the VP standing infront of a group of 50 people saying it's a good asset to have, even at 4mil loss.

You are right it is AMSA, my apologies. By border patrol do you mean the Border Force aircraft known as the sentinel contract?

And your point being? There's one contract that props that company up, when they lose it, it's going to very be difficult to keep things moving.

I seem down about Cobham? nah, you have got that wrong, I spent many years there on a few different contracts, it's sad to see what the place has become.

[Blitzkrieger]

Finally some light at the end of the tunnel for my friends at Cobham!

https://apple.news/AzzFaIvRNSeub1q9qb6oTxw

[Icarus2001]

https://cimg1.ibsrv.net/gimg/pprune.org-vbulletin/950x322/tunnel_new_1592d6731fcc0c93386bde0548955de134dee343.jpg

[Chris2303]

Finally some light at the end of the tunnel for my friends at Cobham!

https://apple.news/AzzFaIvRNSeub1q9qb6oTxw



Private equity company = asset stripper = closure

[LostWanderer]

Private equity company = asset stripper = closure

This is historically true in some cases.

On a side note, I wonder if the Jetstar issues will potentially benefit Cobham? Could they end up being used as a cheap option to service destinations/flights being cancelled longer term if Qantas was to extend or amend their current contract and Cobham end up some of these 220s or lease some more E-jets? (there are a bunch of ex Virgin 190s sitting around) - Pure curiosity on my part and no idea what the cost/profit margin is like between the two... but seeing how the money always flows back to Qantas would it matter who actually operated the flight at the end of the day?

[regional_flyer]

Private equity company = asset stripper = closure

People need to remember that the Cobham's Australian ops rely exclusively on contract work, some of which extends as far as the middle of the next decade. It wouldn't be in Advent's best interest to shut shop as they would ultimately be responsible for any termination clauses in Cobham's contracts. It will be sold and more than likely folded into another airline, but shut down? Not if Advent wants to make money from it.

[ebt]

People need to remember that the Cobham's Australian ops rely exclusively on contract work, some of which extends as far as the middle of the next decade. It wouldn't be in Advent's best interest to shut shop as they would ultimately be responsible for any termination clauses in Cobham's contracts. It will be sold and more than likely folded into another airline, but shut down? Not if Advent wants to make money from it.

Advent is going to hold Cobham Australia for long - the sale was announced at the same time as Advent made their takeover offer, so it's clear that they see no value in continuing to hold it. Still need to watch this space for who will buy it, and with the year just about done, there must be something holding it up.

[Icarus2001]

Advent is going to hold Cobham Australia for long - the sale was announced at the same time as Advent made their takeover offer, That makes no sense.
I think may you be mixing up the two issues.

[Chris2303]

That makes no sense.
I think may you be mixing up the two issues.

I think the word "not" is missing... as in "Advent is NOT going to hold Cobham Australia for long"

[Blitzkrieger]

There are several parts to Cobham Australia, I would suggest Advent will hold onto the profitable part(s) and let the rest go. Surveillance and SAR are government contracts (pretty safe), the Regional operation seems to be self sustaining (also pretty safe). That leaves Airline, QF won’t let that go without significant oversight of its operation. Take that however you like.

[ebt]

I think the word "not" is missing... as in "Advent is NOT going to hold Cobham Australia for long"

Yes, this is what I meant to say - my bad for not spotting it before posting.

I imagine that splitting up Cobham along the government and defence against airline lines would make the most sense. Advent could keep the juicy defence contracts - which include supporting Predator UAVs and spin off the civil stuff. Problem is, what value is inherent in just the regional services and Qantas work? FIFO probably pays its way, as would the night freight ops, but the 717 contract has been changed so many times that surely it just gets by. How does any potential investor come in and see how to grow the operation or strip out any further costs with the environment the way it is? I can't see it, but perhaps others can.

[PPRuNeUser0198]

Private equity company = asset stripper = closure

Not really. PE buys an asset to make money from it. Not liquidate it. That's only done if it is a dead horse. They'll get improved margins, then usually sell it for a hefty profit.

[regional_flyer]

Advent is going to hold Cobham Australia for long - the sale was announced at the same time as Advent made their takeover offer

I'm well aware of when it was announced, as I'm one of the many that any decision they make will affect. As much as we can read between the lines, the pedant in me would like to point out that Cobham has never referred to it as a "sale", they've carefully stuck to their story of "strategic review".

[Bignose101]

Job losses already being reported at Cobham UK.

[regional_flyer]

Job losses already being reported at Cobham UK.

Which are roles that Advent already hinted at going last year, mainly relating to its now-former life as a plc. Helps to tell the whole story.

[empire4]

There are several parts to Cobham Australia, I would suggest Advent will hold onto the profitable part(s) and let the rest go. Surveillance and SAR are government contracts (pretty safe), the Regional operation seems to be self sustaining (also pretty safe). That leaves Airline, QF won’t let that go without significant oversight of its operation. Take that however you like.

What part of Cobham Australia do you suggest is profitable?

Border Force ending in 2 years, SAR loss making as the bid was half everyone else's, rumours Qantas is looking for people to develop B717 courses with only limited life left in em anyway and regional only very small. Be great to understand why Border Force or SAR would be retained? Safe for staff yes, safe from sale.....no.

[AerocatS2A]

Border Force is the reason Cobham bought National Jet in the first place. I’d be surprised if it was put up for sale, particularly if other Australian business units were retained.

[Hsveight]

What part of Cobham Australia do you suggest is profitable?

Border Force ending in 2 years, SAR loss making as the bid was half everyone else's, rumours Qantas is looking for people to develop B717 courses with only limited life left in em anyway and regional only very small. Be great to understand why Border Force or SAR would be retained? Safe for staff yes, safe from sale.....no.

A real glass half full kind of guy aren’t you.

[dontgive2FACs]

Can anyone comment on likely future the Surveillance branch?

What impact does technology (ie Satellites/UAVs) have on the future of maritime surveillance in Australia?

[gordonfvckingramsay]

A real glass half full kind of guy aren’t you.

Do you work at Cobham?

[maesaithwameh]

Hearing rumors of more Ejets and Q400s coming. Can anyone confirm?

[uhoh]

Hearing rumors of more Ejets and Q400s coming. Can anyone confirm?

I'm hearing those rumours as well.

3rd Q400 arrives this week with upto 6 by the end of the year. As for the EJet, sounds like the current one will be returned but not before another arrives in its place. But hearing there could be 3-5 EJets by the end of the year.

[Office Update]

Q400 about to depart Bali for Broome; OE-IIQ

[LostontheLOC]

SAR pilots for Cobahm have voted for PIA and have been approved, with the observers finding out shortly if their vote has been successful.

Anyone know the details?

[Icarus2001]

Were Cobham planning on using the Flybe sim?

[uhoh]

Were Cobham planning on using the Flybe sim?

Yes they are using it. I believe recurrent Sims are now finished.

[regional_flyer]

Cobham Aviation Services Australia CEO replaced, effective immediately...

[Hsveight]

Any more information?

[topend3]

Probably a good thing, he always came across as a young know it all tosser.

[directimped]

Yes, Cobham Airline Services going, going gone to Qantas. This just shows how much clueless bullsh!t gets posted on this forum.
Prune is a sad place these days

[Icarus2001]

So which business will Cobham sell next?

[AerocatS2A]

Who knows? My guess would always be the businesses that are not representative of Cobham's core product, so Special Missions would be kept and mining charter and freight would go. But then, if they make money, why sell them?