Hong Kong aircraft maintenance giant Haeco buys US firm Timco for $389 million to expand global reach

October 25, 2013 Leave a comment

Hong Kong’s Haeco buys US firm Timco to expand global reach

Friday, 25 October, 2013, 3:23am

Charlotte So charlotte.so@scmp.com

Hong Kong aircraft maintenance giant boosts services and product range with purchase of Timco for HK$3 billion

Hong Kong Aircraft Engineering Co (Haeco) has expanded into the United States by acquiring Timco Aviation Services for HK$3 billion, bringing it one step closer to its ambition to be a global player in aircraft maintenance. The acquisition also enables Haeco to strengthen its capabilities in cabin modification, design engineering, testing and certification services. It also could expand its product range to some smaller domestic jets.Analysts said the acquisition could help to mitigate the negative impacts of a shortage of labour in its Hong Kong operations, which has capped its heavy maintenance business in the city.

Haeco ranks second globally but is dwarfed by Lufthansa Technik, which employs about 20,000 people in 32 operations around the world.

The German maintenance giant posted €2 billion (HK$21.4 billion) in revenue in the first half.

Haeco, which has 14,067 staff in Hong Kong, mainland China and Singapore, reported HK$3.2 billion in revenue in the first half.

Haeco’s airframe maintenance and component overhaul services were adversely affected by shortages of skilled and semi-skilled labour in Hong Kong, which resulted in a significant reduction in capacity during the first half of the year.

The profit from its Hong Kong operation dropped 75 per cent year on year to HK$44 million in the period.

Timco has 2,718 staff in its 20 operations across the US. It posted HK$2.76 billion in revenue last year, an increase of 22 per cent from 2011. It turned around from a HK$96 million loss in 2011 and earned HK$43 million last year. In the 12 months to June this year, Timco’s income further strengthened to HK$122 million.

“The acquisition of Timco will expand Haeco’s operations and broaden its sources of revenue,” Haeco chairman Christopher Pratt said.

The acquisition is expected to be completed by the first quarter of next year.

Timco has operations ranging from airframe maintenance, line maintenance and engine overhaul to design engineering, testing and certification, manufacturing of cabin interior products and structural modification kits.

Its airframe maintenance covers a wide range of aircraft types produced by Bombardier and Embraer, including the ERJ145, C170/190, CRJ200 and the CRJ700/900, which are not served by Haeco at present.

Shares in Haeco rose as much as 2.05 per cent to HK$104.70 in morning trading yesterday but closed the day 0.78 per cent lower at HK$101.80.

JPMorgan was the financial adviser to Haeco, while Jefferies advised Timco.

Haeco Buys Timco for $389 Million to Expand Maintenance

By Jasmine Wang – Oct 23, 2013

Hong Kong Aircraft Engineering Co. (44), the city-based airplane-maintenance provider, agreed to pay $388.8 million to buy Timco Aviation Services Inc. to expand the business.

The two companies will be able to offer more customers a wider range of services, including airframe maintenance and cabin modification, Hong Kong Aircraft, also known as Haeco, said in a regulatory statement today.

Timco, based in Greensboro, North Carolina, provides aircraft technical services including airframe, line and engine maintenance, cabin modification and interior products manufacturing. It had a net income of $6 million in 2012 after posting a net loss of $12 million a year earlier, according to the statement.

Haeco, controlled by Swire Pacific Ltd. (19), rose 0.9 percent to HK$103.50 as of 9:52 a.m. in Hong Kong trading.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

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