NZX beckons after Airwork handover
Aviation services company Airwork Holdings is once again considering a possible NZX listing as majority shareholder and executive chairman Hugh Jones steps back from day-to-day management.
Last week Jones handed over the controls of the $100 million-plus company to Chris Hart, who stepped up to the chief executive's role after eight years with the company, most recently as chief operating officer.
"It is fair to say we are looking at capital structures and it's about getting the right mix," Hart said.
In 1997 private equity company Direct Capital Partners acquired a minority stake in the company.
When Direct Capital was taken over Jones arranged for various friends and family members to buy out Direct Capital's stake.
Another plan to merge Airwork with an Australian air services company and float the merged entity on the ASX in 2010 did not proceed.
At the time, Airwork was valued at $130m but could be worth substantially more now.
It has been on a sustained growth curve and, according to Hart, has very strong cash flows.
"It's a fabulous business to be in but I'm not getting any younger," Jones said.
When asked if the company was considering an NZX listing, he replied: "Certainly that's a possibility. All that sort of stuff is on the cards."
Both Hart and Jones say they are committed to ensuring the business remains based in this country, where it employs more than 400 people.
The heart of the business is its engineering facility at Ardmore airport in Auckland, which specialises in the overhaul of helicopter engines and parts.
Hart said more than 65 per cent of the company's revenue comes from overseas. The engines are shipped to Auckland from clients all around the world.
The company also owns nine Boeing 737 aircraft, six of which carry express freight in Australia and New Zealand for courier companies. The other three are passenger planes used for charter work.
Airwork owns 29 helicopters and has helicopter maintenance contracts for a number of organisations including the Westpac rescue helicopters in Auckland and Wellington. It also operates the heliport at Mechanics Bay next to the Auckland container terminal.
Jones' family were farmers in Manawatu and he got his first job at 17 years old working for a helicopter company in Whanganui.
"I think in those days there were probably only 15 or 20 helicopters in New Zealand. It was involved in lifting fence posts and power poles and those sorts of things but it was an exciting industry to be involved in as a young fellow," he said.
"I entered the aviation industry to be a pilot but saw opportunities in sales and management." . That saw him transferred to the company's Auckland office.
He then founded his own small business importing helicopter parts, which prospered on the back of the helicopter deer-culling industry, which received hefty government subsidies.
But Jones could read the writing on the wall for agricultural subsidies, so began looking for something else and spotted Airwork.
The company was formed in 1936 and its first major aviation contract was assembling Tiger Moth biplanes. As the industry developed, Airwork moved into the engine overhaul business and in the 1970s became a listed company in which Brierley Investments built up a substantial shareholding.
By 1984 the company wasn't performing well and Jones formed a 50/50 joint venture with the late Timaru businessman Allan Hubbard to buy the company. Four years later Jones bought Hubbard out, taking 100 per cent of the company.
When he bought into it, Airwork was mainly servicing small, fixed-wing aircraft but he quickly set up a helicopter maintenance and engine overhaul operation.
Its air operating arm started with a contract to operate and maintain a small plane owned by NZ Forest Products which provided twice-daily flights between Ardmore and the company's Kinleith mill.
Some casual work for NZ Post to shift a backlog of Christmas mail turned into a more permanent arrangement and the company's express freight business grew from there.
Jones said those early years were difficult, mainly because the banks weren't helpful.
"They only wanted to focus on the sharemarket or property."
So the company had to fund its own growth. While its bankers are far more accommodating these days, the company has continued to plough profits back into the business.
Hart said the company's engineering arm now provides most of the growth and Airwork has just been certified to overhaul helicopter engines in Europe.
Its first customer on the continent is a large German rescue helicopter service. Although the company will be sending two staff to Europe to manage the contract, the engineering work will still be done at Ardmore. Hart doesn't see any need to change that. Helicopter engines are surprisingly compact so can be easily air-freighted.
In spite of Airwork's success, Jones has kept it out of the spotlight and the company has received only rare mentions in business media.
He shuns personal publicity and refused to be photographed for this article, although Hart was at ease in front of the camera, perhaps having observed how his famous father, former All Blacks coach John Hart, dealt with life in the public eye.
- Sunday Star Times