Graham Warwick/WASHINGTON DC
Troubled US maintenance and parts specialist Aviation Sales will take a charge of $72 million against yet-to-be-announced 1999 results, relating to a reduction in the value of inventory in its parts redistribution operations, plus four Airbus A300s which it is trying to sell or lease.
The Miami-based company has also formed a committee to review redistribution deals totalling $12 million in 1998 and $30 million last year, "which potentially should not have been recognised as sales".
Expected to default on credit agreements and under siege from shareholders, Aviation Sales - the largest third-party only maintenance provider in the world in 1998 - has been forced to agree to allow 14% stockholder LJH to raise its stake to 25%, in return for a five-year standstill agreement.
The company's problems come as the aftermarket sector reports mixed results. BFGoodrich (BFG), number two in the third-party only repair rankings, saw aerospace sales increase 4% last year, to $3.6 billion, but it suffered a fall in final-quarter sales and in income from maintenance and manufacturing.
BFG expects aerospace sales to remain "relatively flat" this year, and is looking for increased aftermarket business.
European third party-only heavyweight FLS Aerospace was harder hit, with "disappointing" 1999 results causing chief executive Steffan Harpoth to resign. An expected €25 million ($24 million) loss is blamed on poor performance at its Copenhagen base, but the former TEAM Aer Lingus centre in Dublin made a record profit. FLS says restructuring should improve results this year.
Aviation Sales, meanwhile, is considering selling its manufacturing operations to reduce debt. It has moved to bolster aftermarket operations by creating an engineering and manufacturing division within its TIMCO maintenance unit to offer aircraft modification kits. Another aftermarket company, Illinois-based AAR, saw third quarter revenues rise 14%.
Source: Flight International
