Restructuring Aviation Businesses During Challenging Times

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With more institutional equity investors using
Direct Infrastructure Investment as a method of
returning long-term secular growth, it is time to
look at strategies for managing these investments
in turbulent times.
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Aviation infrastructure has received a lot of
attention recently, and the COVID-19 disruption
is having a significant impact across virtually
all aviation segments. We will address some of
the key focus areas for managing aviation
infrastructure assets in volatile times.
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The first area to be addressed is to reduce the
variable and fixed cost structure to match
activity and revenue levels. For an on-airport
service provider, this usually requires the
difficult step of reducing personnel. There are
varying strategies for how to accomplish these
types of employee actions, but two of the least
objectionable are not backfilling voluntary
attrition and the reduction of hours across the
workforce.
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Other fixed cost areas must be examined as well,
and all non-essential funding should be
suspended. All capital improvements, whether
maintenance or growth related, should be analyzed
and all but previously committed and the most
critical should be postponed.
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Restructuring aviation businesses has special
considerations. First, since most aviation
businesses take place on-airports under either
short or long term leases, lease modifications
are an important matter for evaluation.
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Rent deferral or forgiveness for a certain period
of time may afford an airport based aviation
services company the time it needs to restructure
its workforce and other aspects of its expense
base. These types of endeavors, however, have
additional parties beyond vendors and suppliers
which may be required to give their consent, such
as airports, regulators and more.
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• Examples of aviation restructuring management
  services offered
• Strategic Aviation Restructuring Plans
• Restructuring Management
• Operational, Competitive and Financial Analysis

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• Business Valuations Appraisals
• Merger Acquisition Advice
• Business Planning
• Capital Structuring and Capital Sourcing
• Turnaround Management
•  

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While many firms may offer Aviation Restructuring
Services, different organizations should
carefully consider their own unique requirements
and select a management and consulting company
which has the specific aviation experience which
will meet their needs.
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A key area to review is to ask for customer
references on projects similar to the one being
contemplated. Another critical area in which an
independent third-party restructuring manager can
deliver value is the relationships they bring to
the client. These relationships can take many
business formsrelationships with customers and
suppliers are among the most critical and usually
a primary focus.
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Professional aviation restructuring managers can
also refer additional professionals in different
disciplines who have a deep track record of
aviation experience. This can be very valuable
to the client in the areas of attorneys,
accountants, insurance and banking relationships
and more.
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For example, an aviation restructuring manager
who can bring in a team of professionals with
aviation experience for due diligence will
shorten the time and expense of the engagements
because the professionals will not begin at the
bottom of the aviation learning curve and should
be able to understand the competitive dynamics
and business model immediately.
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Make sure that you are diligent on the
aforementioned aspects that have been reviewed
here. To know more about Aviation Infrastructure
Development as well as Direct Infrastructure
Investment in aviation, please continue to follow
our posts and blogs.
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