Jet Aviation, a wholly owned subsidiary of General Dynamics Corporation (GD), has acquired the Enterprise Jet Center fixed-base operator (“FBO”) at Hobby Airport in Houston, Texas for an undisclosed amount. The Center provides fuel, catering, aircraft cleaning and maintenance, repair and overhaul (“MRO”) services to private aircraft.
Enterprise Jet Center is one of the largest and most modern FBOs at Houston Hobby Airport. The only facility that is open 24×7 includes a 10,000-square foot drive-through canopy for aircraft, an 85,000-square foot clear-span hangar, 30,000-square foot maintenance and a 28,500-square foot terminal/office building.
The Center is certified by Federal Aviation Administration and has onsite technicians that specialize in Falcons, Citations, King Airs, Hawkers, Learjets and Beechjets. These technicians are well experienced in all aspects of aircraft maintenance and perform routine aircraft servicing and major inspections and repairs.
At its earnings call, in January this year, the company estimated that revenues at jets aircraft service facilities around the world were up double digits in fiscal 2011. It stated that this business is well positioned with an established global footprint particularly with business jet demand taking hold in the emerging markets.
Also, the company is taking necessary measures to improve Jet Aviation which mainly includes restructuring operations to lower overhead and headcount, improving the coordination between engineering and operations, and strengthening supply chain management controls.
Jet Aviation’s 14th FBO will strengthen the global network of premium aircraft service and support facilities. The acquisition will expand the aircraft-service offerings to customers in the U.S. Overall, Enterprise Jet Center’s high-tech facilities, high-end customer amenities and service-oriented attitude make it best suitable for the Jet Aviation unit.
General Dynamics’ revenue exposure is spread over a broad portfolio of products and services in business aviation which will keep the overall growth momentum steady. However, the company is largely tied to the U.S. defense budget, with the impending threat of budget cuts. Also, we are slightly cautious about the ongoing macro weakness.
Like its peers, The Boeing Company (BA) and Lockheed Martin Corporation (LMT), the company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
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