'Logical and accretive' is how Liberum analyst Gerald Khoo characterises Air Partner's (AIR) latest deal and it would appear that the markets agree with shares in the Gatwick-based business up 2.9% at 450p.
Aviation safety consultancy Baines Simmons is being bought for up to £6 million and the deal represents Air Partner’s entry into high value-added aviation services.
Founded in 2001, Baines Simmons is an aviation safety consultant and advisor to more than 750 aviation organisations and more than 40 aviation authorities specialising in aviation regulation, compliance and safety management. The group advises across both civil and military markets and its client list includes industry heavyweights such as KLM, Thomas Cook, British Airways, Virgin Atlantic as well as the Isle of Man Government, Royal Air Force, Royal Navy, Airbus, the European Aviation Safety Agency (EASA) and UK Military Aviation Authority (MAA).
With the acquisition expected to be earnings enhancing in its first full year of ownership, the Baines deal also offers Air Partner a more stable and predictable income stream to the group, with a double-digit revenue growth record and higher margins than air charter broking.
Liberum sees the deal as as 7% earnings-enhancing in the first full year, even without assuming
synergies. They reiterate their BUY recommendation, raising their target price to 505p from 480p.