Greenwich Air Services is poised to make its biggest acquisition to date with agreement to take over UNC. The combined group will become the world's largest independent engine-services operation, with annual sales of around $1.8 billion and more than 10,000 employees.
Greenwich chairman Eugene Conese says that the deal will give the new group the capability to service more than 100 different engine types, and will offer "significant" opportunities for growth and cost savings.
UNC shareholders, who have yet to approve the merger, will be offered Greenwich stock or a partial cash alternative if the deal does go ahead.
The merger offers a good fit between Greenwich's largely commercial-engine repair and overhaul services and UNC's strengths in corporate-aviation services, government contracts and manufacturing. Both groups have led consolidation in the engine-overhaul market. Over the past five years, Maryland-based UNC has transformed itself through a series of disposals and acquisitions, from a struggling industrial group into a focused aviation-services operation, with sales of $832 million in 1996 and 7,000 employees.
UNC's largest business, with sales of nearly $600 million, is in corporate-aviation services, following the $150 million acquisition of Garret Aviation Services, which was completed in May 1996. At the time, the group said that it was aiming for a "critical mass" of $1 billion.
Greenwich also grew rapidly in 1996, through the $230 million cash acquisition of Aviall's engine-repair-and-overhaul operations, which has helped put the group on course to double its size to annual sales of more than $750 million. The Florida-based group has a workforce of 3,300.
The merger of the two groups is likely to signal a further round of consolidation in what is a potentially lucrative, but overcrowded, market for engine services.
Engine manufacturers have already begun a rush to capture more repair and overhaul work to supplement weaker profits on new engine and spares sales. General Electric has led the charge with its fast-growing GE Engine Services unit, which turned in sales of $2.6 billion in 1996, also winning more than $4 billion in new business and recording operating-profit margins of better than 30%.
The unit is already the largest contributor to profits within the GE Aircraft Engines division, and is expected to have sales approaching $4 billion by the end of the century, accounting for half of the group's engine business.
Source: Flight International
