Direct Infrastructure Investment: Restructuring Aviation Businesses During Challenging Times
by Jasmine Smith SEOWith more
institutional equity investors using Direct Infrastructure Investment as a
method of returning long-term secular growth, it is time to look at strategies
for managing these investments in turbulent times. Aviation infrastructure has
received a lot of attention recently, and the COVID-19 disruption is having a
significant impact across virtually all aviation segments. We will address some
of the key focus areas for managing aviation infrastructure assets in volatile
times.
Immediate Action
The first area to be
addressed is to reduce the variable and fixed cost structure to match activity
and revenue levels. For an on-airport service provider, this usually requires
the difficult step of reducing personnel. There are varying strategies for how
to accomplish these types of employee actions, but two of the least
objectionable are not backfilling voluntary attrition and the reduction of
hours across the workforce. Other fixed
cost areas must be examined as well, and all non-essential funding should be
suspended. All capital improvements,
whether maintenance or growth related, should be analyzed and all but
previously committed and the most critical should be postponed.
Aviation Restructuring
Restructuring
aviation businesses has special considerations. First, since most aviation
businesses take place on-airports under either short or long term leases, lease
modifications are an important matter for evaluation. Rent deferral or
forgiveness for a certain period of time may afford an airport based aviation
services company the time it needs to restructure its workforce and other
aspects of its expense base. These types of endeavors, however, have additional
parties beyond vendors and suppliers which may be required to give their
consent, such as airports, regulators and more.
Diligence Considerations for Restructuring Advisors and
Managers
Examples of aviation restructuring
management services offered:
·
Strategic Aviation Restructuring Plans
·
Restructuring Management
·
Operational, Competitive and Financial Analysis
·
Business Valuations & Appraisals
·
Merger & Acquisition Advice
·
Business Planning
·
Capital Structuring and Capital Sourcing
·
Turnaround Management
While many firms may offer Aviation
Restructuring Services, different
organizations should carefully consider their own unique requirements and
select a management and consulting company which has the specific aviation
experience which will meet their needs. A key area to review is to ask for customer
references on projects similar to the one being contemplated. Another critical
area in which an independent third-party restructuring manager can deliver
value is the relationships they bring to the client. These relationships can take many business
forms—relationships with customers and suppliers are among the most critical
and usually a primary focus.
Professional aviation restructuring managers can also refer additional
professionals in different disciplines who have a deep track record of aviation
experience. This can be very valuable to the client in the areas of attorneys,
accountants, insurance and banking relationships and more. For example, an aviation restructuring
manager who can bring in a team of professionals with aviation experience for
due diligence will shorten the time and expense of the engagements because the
professionals will not begin at the bottom of the aviation learning curve and
should be able to understand the competitive dynamics and business model
immediately.
Make sure that you
are diligent on the aforementioned aspects that have been reviewed here. To know
more about Aviation Infrastructure Development as well as Direct Infrastructure
Investment in aviation, please continue to follow our posts and blogs or visit https://www.aviationinfrastructure.com/
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Created on Jun 3rd 2020 22:30. Viewed 343 times.