Site Visit and Strategic Update

Site Visit and Strategic Update
19th November 2013
Agenda
09.00
Welcome
09.10
London Luton – Peter Bouwer, Director of Operations EMEA, Signature Flight Support
09.30
Tour of Signature – London Luton
10.00
Jets depart
By 12.00
Arrive at Signature – Paris Le Bourget
12.30
Lunch
13.30
BBA Aviation – Strategic Update
17.00
Tour of Signature – Paris Le Bourget
18.00
Jets depart
By 18.00
Arrive back at Signature Flight Support – London Luton
1
London Luton and Signature Redevelopment
London Luton
 #4 busiest B&GA Airport in Europe
 13,400 movements p.a.
 3 FBOs on the field
Signature LTN customer mix
40%
17%
8%
35%
Tenants
Fractional
Charter
Transient
 Signature share 51%
Redevelopment plans
Redevelopment
 45 year lease extension
 $32m redevelopment project
 New FBO 15% larger with 50% more parking
 Increased hangarage of 190 sq m
 Expected completion 2015
2
Strategic Update
Simon Pryce
19th November 2013
BBA Aviation today…
…a dynamic, world class supplier to the global aerospace industry, continuously
delivering exceptional performance in a group…
Well
resourced
 Significant investment
capacity
 Experienced, proven,
growing management
talent
Clear strategic
direction and
operational focus
 Sustainable value creation
 Increased cross business
co-operation, transfer of best
practice
Delivering
through enhanced
processes
Utilising unique
Industry knowledge
and relationships
 Process driven, continuous
improvement focus
 Leveraging capabilities,
improved business capture
 Investment analysis / value
creation discipline
 Accelerating consolidation /
outsourcing
…with resource, focus, process, access
1
All the Group businesses …
Benefit from active management
 Have or can create competitive advantage
 Focus
Have strong financial characteristics
 Low operational gearing, high capital gearing
 Good profit and cash conversion
Operate in growth markets
 Cyclical recovery
 Structural
Are or can be leaders in fragmented spaces
 Value creative consolidation
… potential for superior through-cycle returns
2
From 1/01/2013 operating in two divisions
FLIGHT SUPPORT
Michael Scheeringa
Peg Billson
President & CEO
Flight Support
President & CEO
Aftermarket Services
Signature Flight Support
Maria Sastre
President &
COO,
Signature Flight
Support
AFTERMARKET SERVICES
Pat Pearse
MD,
Flight Support,
EMEA
ASIG
Tony
Lefebvre
President &
COO, ASIG
Engine Repair & Overhaul
Legacy Support
APPH
Mark
Johnstone
Doug Meador
Mark Taylor,
Gareth Hall
President,
Dallas Airmotive
MD,
H+S Aviation
President & MD,
Ontic
MD,
APPH
…to optimise effectiveness
3
With a common, goal driven focus…
… delivering through-cycle growth and ROIC >12%
4
BUSINESS AVIATION
OUTLOOK
Prepared for:
19 November 2013
icfi.com/aviation |
Revised: 18 Nov0 pm
ICF SH&E is one of the most experienced global aviation
and aerospace consultancies
 50 years in business (founded 1963)
 100+ professional staff
− Dedicated exclusively to aviation and aerospace
− Recruited from the industry
 Address financial issues for Airlines, Aviation Assets, MRO and Airports
 Specialized, focused expertise and industry‐recognized tools
 More than 8,000 private sector and public sector assignments
 Backed by parent company ICF International ($937M revenue)
 Global presence –– US • Europe • Asia
icfi.com/aviation |
1
Agenda
North American Business
& General Aviation
Market Structure
Market Trends
Cyclical vs.
Structural Factors
Outlook for Recovery
Independent Forecast
icfi.com/aviation |
2
Highlights
1
Revenue focus on North America
2
Trends were skewed by the fractional bubble
3
Performance is a tale of two markets
4
Fundamentals remain fundamental
5
6
icfi.com/aviation |
Business investment is a key driver
The forecast is for recovery
3
MARKET OVERVIEW
icfi.com/aviation |
4
North America drives worldwide FBO revenue
North America Business Aviation
 63% of global fleet
 4 million movements per year
Jet A Retail Prices
Fuel model
generates FBO
revenue
$7.26
$6.90
$6.05
FBO
Premium
+Costs
$2.93
1 FBO
2 FBOs
3+ FBOs
1 FBOPrices at Airports
2 FBOs With…3+ FBOs
Spot Price
Source: ACAS, FAA, AirNav, ICF SH&E Analysis, EIA – November 2012
icfi.com/aviation |
5
Large aircraft drive the fuel revenue
Share of N.
America
Movements vs. Fuel
100%
20%
Small Jet
83,000 gallons/year
39%
Midsize
125,000 gallons/year
Large Cabin
200,000 gallons/year
54%
28%
41%
18%
0%
Operations
Fuel
Notes: Large Cabin shown as G550 (2.52FH/FC); Midsize shown as Challenger 300 (1.61FH/FC); Small jet shown as Citation II (1.27FH/FC)
Source: ACAS, Conklin Aircraft Cost Evaluator, ICF SH&E Analysis
icfi.com/aviation |
6
History: business aviation parallels GDP
US GDP
(Trillion)
Business Jet Deliveries and GDP
Deliveries
1,000
$25
750
$20
$15
500
US GDP
right scale
Small Jet
250
$10
Midsize
$5
Large Cabin
$0
0
1990
1995
2000
2005
2010
Source: ACAS, IMF WEO, ICF SH&E Analysis, Aircraft Bluebook
icfi.com/aviation |
7
…with 2 recent bubbles
US GDP
(Trillion)
Business Jet Deliveries and GDP
Deliveries
1,000
$25
Financing
Bubble
750
Fractional
Bubble
$20
$15
500
US GDP
right scale
Small Jet
250
$10
Midsize
$5
Large Cabin
$0
0
1990
1995
2000
2005
2010
Source: ACAS, IMF WEO, ICF SH&E Analysis, Aircraft Bluebook
icfi.com/aviation |
8
Fractional especially grew the number of smaller jets
Fractional
Fleet
Total
Fleet
US Business Jet Fleet of Fractional Operators
1,000
12,000
10,000
750
Small Jet
500
8,000
Total US Business
Jet Fleet
6,000
Midsize
4,000
250
2,000
Large Cabin
0
0
1990
1995
2000
2005
2010
Source: ACAS, JetNet, ICF SH&E Analysis
icfi.com/aviation |
9
The bubbles represent over 1,000 aircraft
Fractional
Bubble:
~472 Aircraft
icfi.com/aviation |
Financing
Bubble:
~530 Aircraft
10
The fractional model is evolving
 Fractional disruption as OEMs question value and
independents struggle
• Bombardier Flexjet sold to owner of Flight Options
• Cessna (CitationShares) exits
• Avantair exits
 Underlying demand moves into other branded charter
• Operated by the traditional fractionals
• Or new ventures, such as VistaJet, XOJet
Weaker fractionals reduces operator concentration
and reduces their pricing power
icfi.com/aviation |
11
Fractional activity transitions to other charter…
Other Charter
Movements
820,000
800,000
796,758
794,971
+6.7%
…while “owned” aircraft
continue to make up the
other two thirds of the market
780,538
780,000
760,000
746,877
740,000
720,000
2009
2010
2011
2012
Notes: Other Charter represents Part 135
Source: TRAQPak
icfi.com/aviation |
12
TRENDS
icfi.com/aviation |
13
Flight movements have recently started to turn up
Percent
Change y/y
Monthly Business Jet Movements
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Source: FAA
icfi.com/aviation |
14
Large cabin movements dipped less and recovered faster
Index:
2008 = 100
Annual Business Jet Movements
110
Large Cabin
100
Small Jet
Midsize
90
80
70
2008
2009
2010
2011
2012
2013
Notes: 2013 Business Jet movements are ICF SH&E estimates
Source: FAA, ICF SH&E Analysis
icfi.com/aviation |
15
New deliveries down while value goes up = bigger planes
Units
Delivered
Global Business
Jets Deliveries
1,400
Delivery value
increasing
8.4% per year
Average
Aircraft Value
(Million)
1,200
$30
$25
1,000
$20
800
$15
600
Delivery
volume down
10% per year
400
200
0
1994
$10
$5
$0
1998
2002
2006
2010
5-Year CAGR
Source: GAMA, ICF SH&E Analysis
icfi.com/aviation |
16
OUTLOOK
icfi.com/aviation |
17
Business Aviation has a meaningful value to the user
Even when the flight times are the same…
Hour
Check-In
Home to
Planeside
Security
Theatre
Flight
Boarding
Zoo
Meeting
Flight
Meeting
Wait for
Flight
Home

…the experience isn’t
icfi.com/aviation |
18
Airline consolidation cuts service to smaller airports
ACQI Index
2007 = 100
Declining Airport Connectivity
120
100
-4%
-11%
80
-16%
60
40
20
0
Large Airport
Medium Airport
Small Airport
Notes: ACQI Score for Large , Medium and Small Airports (Indexed to 2007).
Source: MIT Small Community Air Service White Paper
icfi.com/aviation |
19
Private aviation, like other travel, correlates to GDP
Business Jet Fleet and GDP
North America
Aircraft
GDP
Trillion
15,000
$20
GDP
$15
10,000
Correlation: 98.2%
$10
Aircraft
5,000
$5
Elasticity: 1.76
0
1994
Elasticity: 2.28
Elasticity: 1.27
$0
1998
2002
2006
2010
Source: ACAS, IMF WEO, ICF SH&E Analysis
Note: Does not include Russian-manufactured aircraft
icfi.com/aviation |
20
Total wealth and wealthy individuals also correlate
HNWIs &
Their Wealth
($Billion)
Business Jets, Wealth and Wealthy Individuals
Aircraft
20,000
14,000
12,000
15,000
Correlation: 77%
Wealth
10,000
8,000
10,000
Correlation: 83%
Business Jet
Fleet Size
6,000
4,000
5,000
2,000
No. of HNWIs
0
2000
2002
2004
2006
Source: ACAS, Capgemini World Wealth Report(s), ICF SH&E Analysis
icfi.com/aviation |
2008
2010
2012
0
2014
Notes:
1) High net worth individuals (HNWIs) are defined as those with US$1 million or more
of investable wealth (i.e. does not include the value of personal assets and property
such as primary residences, collectibles, consumables and consumer durables)
2) 2013 wealth data are ICF SH&E’s estimates
21
The ratio of business jets to wealthy people is higher in
the US and Brazil, reflecting distances as well as regulation
Ratio of Business Jets to 1,000 Wealthy Individuals
Brazil
4.6
US
3.2
Canada
1.6
India
1.5
Russia
1.2
Australia
0.9
UK
0.8
Germany
0.4
China
0.3
0
1
Source: ACAS, Capgemini World Wealth Report(s), ICF SH&E Analysis
icfi.com/aviation |
2
3
4
5
Note: 2012
1) 2011 wealth data have been used for India and Russia as 2012 data are unavailable
2) High net worth individuals (HNWIs) are defined as those with US$1 million or more of
investable wealth (i.e. does not include the value of personal assets and property such
as primary residences, collectibles, consumables and consumer durables)
22
Business aviation tracked corporate profit… until now
Index:
2008 = 100
US Corporate Profits and Business Jet Movements
200
Recent
Divergence
150
100
Corporate
Profits
50
Deliveries /
Movements
0
1990
1994
1998
2002
2006
2010
* Shows business jet deliveries (excluding Russian-manufactured aircraft)
from 1990 – 1999 due to lack of business movements data
Source: US BEA, FAA, ACAS, ICF SH&E Analysis
icfi.com/aviation |
23
The more important measure is corporate investment
Index:
2008 = 100
Business Investment and Business Jet Movements
150
Correlates during
recovery with
1-year lag
100
Correlation: 74%
US Net Non-Residential
Fixed Investments
50
Total Business Jet
Deliveries / Movements*
0
1990
1994
Note: US Net Non-Residential Fixed Investments (NNRFI)
Source: US BEA, ACAS, FAA, ICF SH&E Analysis
icfi.com/aviation |
1998
2002
2006
2010
* Shows business jet deliveries (excluding Russian-manufactured aircraft) from 1990
– 1999 due to lack of business movements data
24
Even more true for the large-cabin aircraft
Index:
2008 = 100
Business Investment and Business Jet Movements
150
Correlates during
recovery with
1-year lag
100
US Net Non-Residential
Fixed Investments
50
Large Cabin
Deliveries /
Movements
0
1990
1994
Note: US Net Non-Residential Fixed Investments (NNRFI)
Source: US BEA, ACAS, FAA, ICF SH&E Analysis
icfi.com/aviation |
1998
2002
2006
2010
* Shows business jet deliveries (excluding Russian-manufactured aircraft) from
1990 – 1999 due to lack of business movements data
25
Corporations have hoarded cash rather than investing
Source: Compustat and Golman Sachs Global ECS Research
icfi.com/aviation |
26
US industry is becoming less capital-intensive
Capital Intensity of US Corporate Profits
Trend
continues
but
slowing
 Services require
less capital than
manufacturing
 But offshore
manufacturing will
slow as transport and
foreign labor costs
rise while US energy
prices fall
Source: Haver/OEF/UBS estimates, Zerohedge
icfi.com/aviation |
27
But corporate cash-hoarding also reflects uncertainty
Capital
Goods Index
Business Investment
and Capital Orders
130
120
110
100
Outlook may be improving:
 Modest improvement in
Europe post euro crisis
 Modest improvement in US
post debt ceiling crisis
90
80
Uncertainty
Index
(inverse)
Source: OEF estimates, Haver/UBS calculations, Zerohedge
icfi.com/aviation |
28
FORECAST
icfi.com/aviation |
29
The forecast is based on key drivers of business aviation
GDP Growth
• Near term (2012 – 2018)
2.8% - Oxford (EIU same; IMF 2.9%)
• Longer term (2018 – 2023)
2.7% - Oxford
High Net Worth Individuals:
4.5% growth is the trend based on
relationships to GDP from 2001 to 2012
Corporate Profits:
9.1% growth is average of past 3
economic cycles
Business Investment:
2.1% of GDP is current level;
3% of GDP is past 3 recovery cycles
icfi.com/aviation |
30
The base case assumes continuation of current trends
Scenario
Base
icfi.com/aviation |
GDP
HNWI
Corp Profits
Corp
Investment
2012-2018
2018-2023
2012-2023
2012-2023
2013-2023
2.8%
2.7%
4.5%
9.1%
2.1%
of GDP
31
Factor weighting reflects importance of investment
Scenario
GDP
HNWI
Corp Profits
Corp
Investment
Weighting
25%
25%
10%
40%
Base
icfi.com/aviation |
2012-2018
2018-2023
2012-2023
2012-2023
2013-2023
2.8%
2.7%
4.5%
9.1%
2.1%
of GDP
32
Base Case: 4.2% growth
Forecast of Business Jet Movements
Million
Movements
7
Forecast
6
2018:
Base
2012 – 2023
Growth: 4.2%
5.2 million movements
5
4
3
2012
2013E
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
2022F
2023F
Source: Oxford Economics, FAA, ACAS, Capgemini, BEA, ICF SH&E Analysis
icfi.com/aviation |
33
Upside case assumes higher investment
GDP
HNWI
Corp Profits
Corp
Investment
2012-2018 2018-2023
2012-2023
2012-2023
2013-2023
5.6%
16.0%
3.0%
per
CapGemini
as in Current
Cycle
as in Prior
Cycles
9.1%
2.1%
of GDP
Scenario
Upside
Base
icfi.com/aviation |
2.8%
2.8%
2.7%
2.7%
4.5%
34
Upside cases increases forecast to 4.8%
Million
Movements
Forecast of Business Jet Movements
8
Forecast
Upside
2012 – 2023
Growth: 4.8%
7
2018:
5.5 million movements
6
Base
2012 – 2023
Growth: 4.2%
5
4
3
2012
2013E
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
2022F
2023F
Source: Oxford Economics, FAA, ACAS, Capgemini, BEA, ICF SH&E Analysis
icfi.com/aviation |
35
Downside case assumes economic stagnation
Scenario
GDP
HNWI
Corp Profits
Corp
Investment
2012-2018
2018-2023
2012-2023
2012-2023
2013-2023
Base
2.8%
2.7%
4.5%
9.1%
2.1%
of GDP
Stagnation
1.4%
Half
1.4%
Half
2.1%
Half
6.9%
Long-term
since 1969
1.3%
Half longterm average
icfi.com/aviation |
36
Stagnation Case: 2.1% growth
Million
Movements
Forecast of Business Jet Movements
8
Forecast
7
Base
2012 – 2023
Growth: 4.2%
2018:
6
4.6 million movements
5
Stagnation
2012 – 2023
Growth: 2.1%
4
3
2012
2013E
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
2022F
2023F
Source: Oxford Economics, FAA, ACAS, Capgemini, BEA, ICF SH&E Analysis
icfi.com/aviation |
37
Sensitivity
Scenario
Assumptions
GDP, # of HNWI and Corporate Profits
have to drop to 0.1% growth rate
No growth
and
Corporate Investment
has to drop to 0.1% of GDP
icfi.com/aviation |
38
Sensitivity
Scenario
Assumptions
GDP, # of HNWI and Corporate Profits
have to drop to 0.1% growth rate
No growth
and
Corporate Investment
has to drop to 0.1% of GDP
Growth rate of
early 2000s:
5.3%
icfi.com/aviation |
# of HNWI, Corporate Profits and
Corporate Investment all at “Upside” levels
and
GDP growth of 3.6%
39
Recap
1
Revenue focus on North America
2
Trends were skewed by the fractional bubble
3
Performance is a tale of two markets
4
Fundamentals remain fundamental
5
6
icfi.com/aviation |
Business investment is a key driver
The forecast is for recovery
40
icfi.com/aviation |
41
Flight Support
Michael Scheeringa
19 November 2013
Flight Support agenda
Flight Support overview
Industry leading businesses
Delivering strong performances
Exciting growth opportunities
Conclusion
1
Flight Support Overview
2
Flight Support - strategy
Flight Support
 Best in class business intelligence, people and safety
 Strategic exploration and innovation
 Structural process and continuous improvement
Signature
 Target leading FBO network relevance on each continent
 Customer centricity as key market differentiator
 Premium service with compensatory pricing
 Leverage fuel expertise on global basis
ASIG
 Migrate business to higher margin, sustainable markets
 Gain modest market “premium” for service differentiation
33
Flight Support…
Material progress since 2010
Revenue split by end market / geography (2012)
 Footprint/geographic expansion
 Technology advancement
B&GA
28%
Commercial
Aviation
72%
 Customer satisfaction
NA
19%
ROW
81%
 Employee productivity and engagement
 B&GA: Signature Flight Support
 Commercial: ASIG
 Integrated functional management
Synergies across the division increasing
 Common sites and relationships
 Technology and process sharing
Divisional operating profit
US$ Millions
Division with branded business units
200
150
100
50
2007
2008
2009
2010
2011
2012
Divisional ROIC and operating margin performance
15.0%
OP %
(fuel adjusted)
10.0%
 Team member development
5.0%
 Procurement
0.0%
ROIC
2007
2008
2009
2010
2011
2012
…is a growing division that leverages market leading positions for market leading results
4
Industry leading businesses
5
Industry leading businesses…
Signature Flight Support
 Largest and only international FBO network
 Most relevant locations and long
lease terms
 Diversified and loyal customer base
 World class service and safety record
ASIG
 Largest fuel farm manager and into-plane
provider in North America and UK
 Leverage base for ground handling and
technical opportunities
 Strong customer relationships
 Highly productive workforce
…that are the most relevant and differentiated to the customer
6
Signature Flight Support – unique network quality…
117 locations globally
Highest number of FBOs in largest market
Best concentration of FBOs in high value locations
Average remaining lease term of 17+ years
Signature share up more than 3pts across industry over last 5 years
Representation at top U.S. airports
Number of U.S.
FBOs
Percent of Total
U.S. Airport
Departures 30%
70
60
25%
50
20%
40
15%
30
10%
Million Air
Tac Air
Sheltair
Galaxy
Ross
Cutter
% Total Ops
Ross
Cutter
Jet Aviation
Galaxy
Landmark
Sheltair
Atlantic
Tac Air
Signature
0%
Million Air
Top 50
Jet Aviation
Top 20
10
Landmark
Top 10
20
5%
Atlantic
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Network relevance
SFS





Number of U.S. FBOs
… materially more relevant to customers than any competitor in the US
7
Signature’s customer and business mix…
 All customer types attracted by service
standards, scale and relevance of network
EBITDA Contribution
by Region
EMEA
20%
 Successful customer loyalty programs
─ Signature TailWins
─ Signature Status
─ Revenue Management of Individual
Customer relationship
 Declining fractional model has been more
than offset with new and higher margin
customers
 2014 NetJets expiration expected to be
positive
US
80%
Contribution Margin
by Segment
Deicing
1%
Others
8%
Tenant
18%
Fractional
30%
Ground
Handling
18%
Property
Management
19%
2012
Gallons Mix
by Segment
Fuel net
margin
54%
% total
2009
contribution
Transient
52%
% total
contribution
NetJets
7.4%
NetJets
8.7%
Bombardier FlexJet
1.7%
Bombardier FlexJet
2.0%
US Government DESC
1.0%
US Government DESC
1.2%
Flight Options
1.0%
Sentient
1.2%
GAMA
0.9%
Universal Aviation U.K
0.9%
World Fuel Services
0.8%
CitationAir by Cessna
0.8%
UVAIR
0.8%
Flight Options
0.7%
0.7%
Travel Management
0.8%
GAMA
Rockwell Collins
0.7%
Rockwell Collins
0.7%
General Dynamics
0.6%
General Dynamics
0.5%
Total
15.7%
17.4%
…touches 70% of world’s business jet fleet and has increased its diversity
8
ASIG business footprint…
… comprehensive North America/UK network with limited entry to Latin America & Asia
9
ASIG’s customer and business mix…
 Revenue basis includes a mix of fixed price
per event, cost reimbursement and
management fee (e.g. fuel farms)
 Clear market leadership in fueling technical
knowledge, fuel farm management and intoplane operations
 Limited exposure to financial instability of
airlines due to ASIG services being
operationally critical
 Carrier buying decision largely based on a
combination of price, service, relationships,
safety and network size
Revenue by region (2012)
ROW
23%
North America
77%
2012
North America
ROW
Tech Svc
12%
GH
35%
Fuel
53%
Tech Sev
2%
Fuel
42%
GH
56%
% total
Services / Location
Delta Airlines
8.5%
Fuel + GH + Tech (33)
Terminal One Group
7.2%
GH (1)
Shell
6.0%
Fuel + Tech (13)
US Airways, Inc.
5.3%
Fuel + GH + Tech (36)
United Airlines
5.1%
Fuel + GH + Tech (33)
Southwest Airlines
3.8%
Fuel + Tech (21)
SAS
3.7%
Fuel + GH + Tech (2)
British Airways
3.6%
Fuel + Tech (2)
Walt Disney World
3.4%
GH (1)
American Airlines
3.0%
Fuel + GH + Tech (31)
Total
49.6%
…with a diverse spread of airlines, airports and oil companies
10
Delivering Strong
Performances
11
Delivering strong performances…
Signature Flight Support
 Market share outperformance / increased
contribution per operation
 Expansion of network relevancy
ASIG
 Efficient utilisation of assets and labour
 Upgrade of management team
 Operational improvements
 Record revenue/operation
 Customer satisfaction
 Success of “bolt on” acquisitions
 Safety performance
… throughout the cycle allowed earnings to hit prior peak despite a smaller market
12
Signature Flight Support – protecting the network…
15 major lease extensions, including:
Airport Average Lease Years Remaining
For FBO operating rights leases only
 Luton – 45 yrs
 St Louis/Orlando/White Plains – 20 yrs
20
 Dallas/Newark/Chicago/Minneapolis – 10 yrs
85% of OP protected through 2022
Average Years Remaining
98% of OP protected through 2017
19
18
17.4
17
1.0
16
15
14
17.3
16.9
Dec 2011
Dec 2012
13
12
16.4
14.6
11
10
Dec 2010
Oct 2013
…average remaining lease term increased to 17+ years
13
Signature expansion…
Bozeman – acquired 2011
 Acquisitions increase profits through reduced
overhead, increase to local market share and
increase use of Signature network due to
increased relevance
 Licensing, Signature
provide a
modest fee income and increased network
use due to relevancy
Network Relevancy Index
103
102
101
99
100
98
Acquisition date
SelectTM,
 Since 2010, six new locations added through
Acquisition and seven through licensing
agreement
102.1
100
Now
OH to Revenue
50%
40%
30%
20%
42%
10%
33%
0%
Acquisition date
Now
Local Market Share
78%
76%
74%
72%
70%
68%
76%
71%
Acquisition date
Now
…consolidating the fragmented market
14
Signature Flight Support - market share and
revenue management…
US market vs prior year
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
30%
20%
10%
0%
-10%
-20%
-30%
-40%
Jan-07
Signature U.S. Gallons vs. FAA Market
SFS US gallons vs prior year
US market vs 2007
US Net Contribution Per Operation
Organic vs. 2007
115%
13% growth from 2007
20% growth from 2009
110%
105%
100%
95%
90%
FY07
FY08
FY09
FY10
FY11
FY12
FY13
…outperformed the US market in 52 of the last 60 months
15
Signature Flight Support - operational excellence…
 The implementation of
Labor Efficiency
demand based staffing in
14% improvement
2009 led to improved
productivity in addition to
improved service to our
2008
2012
customers
Daily Ops / FTE
…team members are more productive than at peak
16
Signature Flight Support - customer experience…
Customer experience score
100%
World-class
loyalty
80%
Three top box questions
60%
 Completely satisfied
40%
 No changes you would make
68%
73%
80%
84%
2009
2010
2011
2012
20%
0%
 Will you recommend
12 month rolling recordable incident rate
4.00
3.00
2.00
 Greater than 50% reduction in safety
incidents
3.80
3.22
1.00
2.27
1.84
2011
2012
0.00
2009
2010
…world-class customer experience through investing in people
17
ASIG – labour and asset utilisation…
 Creation of operations planning group to
transform our approach to labour planning
─ Industry leading labour planning and
scheduling software
─ Optimisation of schedule to ensure
consistent service delivery and
adherence to SLAs
─ Establishment of standard labour KPIs
 GSE capability
─ c.10K pieces of equipment across the
network
─ Restructuring GSE group under function
─ Robust GSE tracking tools and software
─ Fleet rotation
─ GSE centres of excellence in key
markets
… investing in people and technology to deliver superior service and efficiency
18
ASIG expansion…
Acquisition
Ground Handling at London Heathrow
3

Critical mass
2

Market Consolidation
Payback Years
1
1.59
0
Acquisition
Fueling and Ground Handling across Canada

New geography

OH synergies with USA HQ

Customer relationship expansion
Now
Revenue Growth
20%
10%
11%
RFP/Minority Joint Venture
License and Management Agreement

New geography

Fueling expertise sought

Halo across region
0%
Now
Fuel Farm T houghput Growth
50%
40%
30%
20%
43%
10%
0%
Now
… highly successful and targeted
19
Exciting growth opportunities
20
Exciting growth opportunities…
Signature Flight Support
ASIG
 Commercial initiatives and increasing
customer loyalty
 75% of services ASIG targets are done in
house by airlines
 200 FBOs at c.100 airports fit with
Signature’s acquisition criteria and low
capital licensing model for other locations
 Fragmented supply base
 Inherent market growth driving strong
revenue and profit enhancements
 Growing management and licensing in
emerging markets
 Select bolt-on opportunities
…with significant potential upside
21
Signature - poised for growth…
Efficiency & effectiveness - organic
Acquisition/RFP/Mgt - inorganic
 Further increase in share and loyalty
 Individual and network acquisitions
 Brand extension (Share of Wallet)
 RFPs
 ASIG and Aftermarket synergies
 Signature SelectTM
 Geographic expansion
─ Europe
─ Asia
─ Latin America
 Potential technology that enhances Flight
Support and Aftermarket Services
…increasing relevancy to customer through share of wallet and network expansion
22
ASIG – managing our growth…
Efficiency & effectiveness - organic
Acquisition/RFP/Mgt - inorganic
 Demand based staffing
 Consolidation by line of business by market
 Overhead reduction
 Bolt-on acquisitions/RFPs
 Customer centric premium
 Management and licensing
 Field penetration/share by line of business
 Geographic expansion
─ Asia
─ Latin America
 Ground support equipment fleet upgrade
 Airport permitting/minimum standards
 Signature synergies
…stepped operational efficiencies and targeted expansion by line of business
23
Conclusion
24
BBA Aviation Flight Support division…
Industry leading businesses
 Unique and relevant
 Customer centric
 Distinct data driven strategy
Strong performance
 Continuous better than market results
 Continuous improvement and investment
 Balanced and sustainable
Material growth opportunities
…opportunity for exciting above market growth
25
Q&A
26
Aftermarket Services
Peg Billson
19 November 2013
Aftermarket Services agenda
Aftermarket Services overview
Industry leading businesses
Delivering strong performances
Exciting growth opportunities
Conclusion
1
Aftermarket Services Overview
2
Aftermarket Services…
Major changes since 2010:
Revenue balanced by end market / geography
 Expansion of engine field services by 40%
15%
6%
B&GA
59%
20%
N. America
Europe
 Repair & Overhaul facility established
in Singapore
AsiaPac
67%
S.America
Rotor
ROW
120
100
80
60
40
20
2007
Combined Engine Repair & Overhaul and
Legacy Support into one division enables:
20%
DEF
Divisional operating profit
US$ Millions
 Established electronics as major product
line
― Growth from 3% to 33% of Legacy
Support’s revenue
 Increased growth potential
4% 3%
CAT
 Greater commercial penetration
― 12.3% CAGR since 2010
 Enhanced productivity
6%
2008
2009
2010
2011
2012
Divisional ROIC and operating margin performance
15.0%
10.0%
OP %
(fuel adjusted)
5.0%
ROIC
0.0%
2007 2008 2009 2010 2011 2012
…increased operating profit since 2010 by a third
3
Industry leading businesses
4
Industry leading businesses…
Engine Repair & Overhaul
Legacy Support
 Leading independent authorised engine repair
service provider to B&GA and helicopter market
 Leading global manufacturer of IP protected mature
parts and repair and overhaul services
 Broad portfolio of OEM authorisations and
technical expertise
 Supports OEMs by assuming complete
responsibility for their non-core legacy products
 Excellence in service and global product support
 Intellectual property rights for 4,000+ parts
acquired or licensed from 14 OEM partners
 Increasingly comprehensive suite of extended life
solutions
…providing comprehensive aftermarket solutions
5
ERO – leading authorised independent ERO provider…
 OEM authorisations supporting 80%
of the B&GA fleet – nearly 2x our
closest competitor
 #1 market share on majority of
authorised engines
Geography
AsiaPac
5%
Market Segment
S.America
RoW
4%
4%
Gov/Mil
10%
Europe
14%
 Significant scale with large, global
customer base >7,000
OEM Authorisations
Misc
GE 2%
5%
Civil Rotor
5%
Roll
Royce
22%
Airline
14%
Business &
General Aviation
N.America
73%
Pratt &
Whitney
37%
Revenue split71%
Honeywell
34%
Top 10 customers
Type
HW TFE731
RR Spey
RR Tay
PW PT6A
PW 300
PW 500
PW JT15D
RR M250
GE CT7
PW 901
Mkt
pos.
2012
mkt share
2
1
1
3
2
2
1
2
1
1
25%
51%
53%
20%
6%
36%
69%
10%
50%
62%
Key independent
competitor
Standard Aero
Bizjet
Bizjet
Vector
SECA
MTU
Vector
Standard Aero
ITP
Revima
…an essential piece of OEM’s global support network
6
ERO – breadth of capabilities…
TFE731
20/40/60
Tay 611-8
T700
TFE731-5
Tay-611-8C
PT6A mid-large
PW901C
36 APU
PW300
PW500
RE220 APU
JT15D-5
CF34
PW100
CT7
PT6T
RE100 APU
HTF7000
331 APU
M250
/T63
PW901A
BR710
CFE738
ALF502
M601-H80
TFE731-2/3
PT6A small
Tay A/L
Full Overhaul Product Lines
Spey
JT15D-1
Field Service Only Product Lines
RR300*
New Authorizations since 2010
Growth
Maturity
Sunset
*Pending full overhaul authorization approval
…supporting more engines by almost twofold
7
ERO – depth of service offerings…
On Wing
Maintenance
Major Repair
Facilities
Full Overhaul
Facilities
Global
Regional
Global
Centers of
Excellence
F1RST
SUPPORT
On call –
24 hour support
Competitive pricing, rigorous cost control, continuous
improvement and flexible workforce
…there when the customer needs us
8
Legacy Support – uniquely positioned…
 Provides extended life solutions for
maturing fleets
Revenue by type
Category
Name
46%
 Proven business model & product
transition process
 Entrusted with over 100 licenses from
14 market leading aerospace OEMs
R&O
20%
Category
Name
34%
Electronic
33%
Structures
Environmental
12%
7%
Engine C&A
14%
Elec/Mech
34%
B&GA
23%
Military
37%
Commercial
40%
 4,000+ parts in product portfolio
 High-mix, low volume manufacturing
 Serving a diverse customer base
Top 10 Customers
Customer
Boeing
DLA (US Gov.)
Airbus
Aviall
Itochu
US Army Missile
Revima
BAE
DSC (U.S. Gov.)
Triumph Air Repair
Other (3,000 +)
Market
Segment
CAT
MIL
CAT
CAT
MIL
MIL
CAT
MIL
MIL
CAT
ALL
2012
Primary Product
% of Sales
10%
9%
7%
7%
6%
4%
3%
2%
2%
2%
48%
Fuel Measurement
Landing Gear
Fuel Measurement
Fuel Measurement
JMOD Support
Patriot
APU
Fuel Measurement
Engine Controls
APU
Various
…delivering value to both OEMs and end users
9
Legacy Support – unique business model…
Optimal Legacy
Planning Point
Typical Aerospace Product Lifecycle
The Ontic Effect
12 3
Phase 1: Growth
Increasing demand
Continuous production runs
Recoup R&D costs
Phase 2: Maturity
Production levels off
Support problems increase
Resource allocation issues
Operational inefficiencies begin
Phase 3: Sustainment
Product demand declines
Support issues intensify
Hard & soft costs outweigh profits
Ontic Core
OEM Core Business
…operating in an attractive space
10
Legacy Support – adding value through acquisition…
Fuel measurement and gauging – March 2011
Step
1
Step
2
Step
3
Evaluation
Development
Adoption
• Complex product
line carve-out
• High strategic fit
• Electronics
• Commercial
• UK content
• $43m in revenue
• 6.5x EBITDA
• New,
Cheltenham
facility
• 102 new
employees
• Production &
MRO support in
3 locations
Step
4
Product
Management
• Global sales
force
• Upgrades
• 24-hour on-call
support
Step
5
Results
• Revenue and
profit growth
• Significantly
exceeding
expectations
• Exceed OE
delivery
performance
…the “Ontic Effect” consistently produces outsized results
11
Delivering strong performances
12
Delivering strong performances…
Engine Repair & Overhaul
 Regional orchestration
 Expansion of field service and overhaul
authorisations
Legacy Support
 Growth through value creative licenses and
acquisitions
 Operational excellence
 Global reach
 Global footprint
 Operational excellence
 Value pricing
 Balancing new spares & overhaul
…in challenging global economic times
13
ERO – operational initiatives…
Regional approach
 Sales/service optimisation
2012
 Introduction of F1RST SUPPORT
28%
New overhaul and field service authorisations
Overhaul Authorisations
PW535/545
Tay 611-8C
RR300
PT6T
PW901C
2011
24%
Field Service
Authorisations
RR BR710
HW RE220
Expanded international presence
 Singapore Regional Turbine Centre
+4%
 Field service locations in Australia & Mexico
Operational excellence
 Improved turn around times – lean cells
Market Share
…driving results that outperform the market
14
Legacy Support – operational initiatives…
Legacy Support Revenue
Market outperformance driven by:
Strategic focus on electronics and commercial air
fleets
 GE Fuel Measurement acquisition in 2011
 Electronic content > 30% of revenue
21%
CAGR
Effective selling driving strong organic growth
 Apache, C2, E2 military landing gear
 F-15 LANTIRN environmental control units
Geographic expansion in to the UK and Asia Pacific
 33% of sales outside of North America
Intensive supply chain management and Value
Pricing
Expanding OE base
2010
2011
2012
…delivering consistent year over year improvements
15
Exciting growth opportunities
16
Exciting growth opportunities…
Engine Repair & Overhaul
 Share growth in stable core
 New engine platform entries into service
 Expanding into new platform segments
Legacy Support
 Significant pipeline of licenses from existing and
new OEMs
 Acquisition of mature technology companies
 Longer fleet lives expanding market opportunities
…with substantial potential upside
17
ERO – growth opportunities…
Increase share in core products
Extending opportunity space
 Mature and stable customer base
─ $1bn per annum B&GA market
space through 2022
 Target broader markets for existing
service offerings
 New markets for existing products
First mover position in new engine platforms
 Extended field service enables broader
product support
─ ~8,000 forecasted engine deliveries
─ 12.5% CAGR through 2022
+6.0%
+7.8%
+6.3%
Ultra Long Range
Jets
Medium Lift
Helicopters
Commercial APUs
…~$2.5bn annually combined opportunity space
18
Legacy Support – opportunity space is…
Large, addressable market
ERJ
135/145
Commercial
A340
 ~ $4.2bn annually
B747-400
A330
B767
A320
CRJ
700/900
 48k aircraft > 20 years
B737
Classic
B777
B757
Market trends support need for
extended life solutions
CRJ
100/200
B737
NG
MD-80
Current Business
ERJ
170/190
Fleets >300 Active Aircraft
No Significant Business
* Size of circle corresponds to fleet size
Maturity
Growth
Military
F/A 18
Sunset
Legacy Military Fleets > 200 aircraft
Average Age: 25 years
Total Aircraft: 18k
BAE Hawk
F-16
C-235/295
T-45
 Commercial fleets
 Military fleet life extension
20 OEMs over $1bn
F-5
T-4
C-17
 Electronics technology
Mirage
2000
C-130
CH-47
OH-58
UH-1
PC-7/9
CH-53
UH-60
AH-64
Hundreds of systems and components
on each type of aircraft within our core
capabilities
AH-1
Current Business
No Significant Business
Growth
Maturity
* Size of circle corresponds to fleet size
Sunset
…large with significant room to grow
19
Aftermarket Services – Increasing demand for
component repair and overhaul for mature aircraft
Total Component R&O Market
$36bn
3.1%
CAGR
Market
Segment
% MRO
Market
Wheels & Brakes
25%
Avionics
14%
APU
9%
Fuel Systems
8%
Thrust Reversers
6%
Landing Gear
6%
Equipment/ Furnishings
5%
Hydraulic Power
4%
Electrical
3%
Structures/ Other
17%
$3
$4
$28bn
$2
$3
$11
Rotor
B&GA
Military
$11
CAT
$18
 Growing demand for
MRO solutions including
serviceable spares
 Increasing level of
outsourcing to
independents
 Targeting mature fleets
 Depth of repair and
overhaul expertise
 Breadth of product
knowledge
$12
Current
Sources: ICF SH&E
10-year FX
20
Conclusion
21
Aftermarket Services Strategic Direction
 Maintenance, spares, repaired & overhauled systems and
complex components
Core
Competencies
 Commercial Air Transport, Military and B&GA
 OEM collaborative
 Maturing & sunset fleets
Strengthen
 Further improve cost structure
 Enhance customer leading
sales/ service
 Winning new licenses/
authorizations
 Proactive talent management
Expand
Target
Existing business
in new regions
More business in existing markets
Geographic
Platforms
Products
 Asia Pacific
 Airlines
 Avionics
 Latin America/
South America
 Fighters
 APU
 Rotorcraft
 Structures
 Cargo
…significant potential from comprehensive aftermarket capabilities
22
Aftermarket Services…
 We have market leading businesses that
no one matches
 Delivering strong performances with
targeted investments and relentless focus
on operational improvements
 Exciting growth opportunities in all aviation
market segments
…continuing to deliver high returns
23
Q&A
24
APPH
Simon Pryce
19th November 2013
APPH
Revenue split by market/type (2012)
Industry leading business
 Design, manufacture and life of
programme support for landing gear
and specialist hydraulic systems
23%
 Strong customer base and platform
exposure
24%
Embryonic and
design & devel.
Aftermarket
57%
Military
Original
Equipment
Original equipment,
Spares & Overhaul
Spares & Overhaul
AW 159 Wildcat
Watch
Mustang
keeper
AW101
EC175 & Z15
Delivering strong performance
 Existing platform demand and longevity
 Improved operational performance,
more to come
Gripen NG
SALES
Embraer
KC-390
= Current business
= New/target platforms
CJS
Caravan
NH90
BAE Hawk C-27J
Super Lynx King Air
JAS-39
Hawker/HS125
SAAB 2000
 New platform wins, opportunities and
growing order book
 Specialist in attractive and growing
segment
OE
PRODUCT LIFE CYCLE FOR LANDING GEAR AND HYDRAULICS
 Balanced product portfolio
Exciting growth opportunities
43%
Commercial
53%
 IPR developed and owned
B&GA
Jetstream 41
SAAB 340
Jetstream 31/32
40+ YEARS
1
Financial Performance
Mark Hoad
19 November 2013
Agenda
Industry leading businesses
Financial characteristics
Strong performance
Recap 5 Year Margin & OP performance
Recap 5 Year Cash performance
Exciting Growth Opportunities
Investment capacity
1
Financial Characteristics
Inherently flexible cost base…
Approximate cost split
Flight Support
Comments
Fixed 25%
Variable 75%
Aftermarket Services
Fixed 25%
Variable cost content largely:
- fuel with price fluctuations passed through
- labour content in flexible labour locations
Variable cost principally:
- parts and components used in overhauls and assemblies
Variable 75%
…and cash generative nature…
Cash flow item
Comment
% of Operating Profit
Operating profit
Growth with recovery
100%
Capex – depreciation
Capex c. 0.7-1.2x depreciation
-10% to +10%
Working capital
FS neutral, AMS modest consumption
0% to -10%
Pensions
$10m p.a. next 3 years
-5%
Operating cash conversion
75% - 105%
2
Recap 5 Year Performance - Margins
OP Margins† (%)
Peak
Trough
2012
 Flight Support & Group margins peak
2007, trough 2009
14
12.5
12
11.6
11.6
10.9
10.4
10
8.0
8.5
8.3
8.9
 Later cycle Aftermarket Services peak
2008, trough 2010
 Margins protected by flexible cost base
and management actions
8
6
 Aftermarket Service margins supported
by growing importance of high margin
Legacy
4
2
0
FS
† Fuel margins at constant fuel price
and constant currency
AMS
Group
 Group margins up 60bps from trough,
impacted by de-icing in 2012
3
Recap 5 Year Performance – Operating Profit
Operating Profit 2007-2012 ($m)
211
(7)
(9)
Market decline at
standard dropthrough
(88)
195
Revenue outperformance
Pricing increases
Cost reduction actions
71
195
Performance
2012
17
2007
Fx
De-icing
Normalised 2007
Market decline*
* B&GA and Commercial market decline 2007-2012 at standard 25% drop through
** First year contribution from acquisitions
Acqs / Disposals
inc MIA**
 Strong absolute performance – profits in line with peak notwithstanding market
 Recovery of above market decline would add c. 200 bps to margin
 Recovery requires minimal capital = high capital leverage, + 400 bps to ROIC
 Expectation of continued outperformance
4
Recap 5 Year Performance - Cash
Cash Conversion 2008-2012 (%)
OPCF to OP %
Sources and Uses of Cash 2008-2012 ($m)
FCF to PAT %
240
142
200
(369)
843
160
(251)
120
100%
(23)
80
342
40
0
2008
2009
2010
2011
2012
5 year
average
 5 year average cash conversion 117%
 Conversion enhanced by balance sheet
actions
 FCF conversion similar to OPCF
conversion going forwards
FCF 08 to 12
Placing
Acquisitions
Dividends
Other
Debt reduction
 Acquisitions since 2010 delivering 14%
ROIC despite lack of volume growth
 Progressive dividend policy
 Debt reduction supporting refinancing
and acquisition capacity
5
Investment capacity
On-going de-leveraging…
Cash flow item
Operating profit
Capex – depreciation
Working capital
Pensions
100%
-10% to +10%
0% to -10%
-5%
Operating cash conversion
25-30% drop-through
% of Operating Profit
75% - 105%
75-105% conversion
0.3-0.5x leverage reduction p.a.
….and creation of investment capacity
 Exit 2013 with c. $125-150m of acquisition capacity
 Further capacity of c. $125-200m created during 2014
 Would take leverage above 2.25x for right acquisition(s) with right de-leveraging profile
 Position in target leverage range informed by point in cycle
6
Summary
 Flexible cost base & significant self-help delivered and on-going
 Good revenue potential from market growth with 25-30% drop-through
 Strong cash generation supporting execution of the strategy
 Balance sheet capacity with acquisitions delivering attractive returns
 Progressive dividend policy based on confidence in medium term growth and
strong cash generation
7
Conclusion
Simon Pryce
19th November 2013
In 2010 what did we tell you to expect from BBA Aviation…
 A focused aviation services and aftermarket business
 Actively managed by a proven team
 Continued strong relative performance
 Realising growth opportunities
─ Delivering long term, sustainable value
─ Sustained through cycle growth well in excess of GDP
─ Pre-tax through cycle return on invested capital >12%
─ Progressive dividend policy
…a unique business with an exciting future
1
What you can still expect from BBA Aviation
Industry leading businesses
Delivering strong performances
Exciting growth opportunities
…a unique business, delivering and
with an outstanding future
2