How this aviation company in Ireland is making its mark in the US

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Ireland-based Avia Solutions Group, the world’s largest aircraft, crew, maintenance and insurance (ACMI) provider has recently taken further steps to enter the US market, through its tie-up with Impact investments.

The latter will support Avia Solutions with financial and strategic development counsel. In turn, this is expected to go a long way in helping the group expand further into the US.

Avia Solutions already has offices in California, New York and Florida. Apart from these and Ireland, the group also has offices in Lithuania, Asia Pacific, the United Arab Emirates, South Africa and Australia. The group is also parent company to Avion Express, SmartLynx Airlines, Magma Aviation, KlasJet and AirExplore, amongst others.

Regarding this tie-up, the chairman of Avia Solutions Group, Gediminas Ziemelis said: “I believe that this partnership will provide us with invaluable experience in accessing new markets as well as establishing key industry partnerships that will significantly contribute to our ambitious growth plans worldwide.”

Mike Pompeo, former US Secretary of State and executive chairman at Impact Investments, said: “Avia Solutions Group is executing an exceptionally innovative business model in the aviation sector, with a rapidly expanding global footprint. We see great potential in the group and are looking forward to contributing actively to its further growth.”

When asked why Avia Solutions Group chose the US to expand into, Ziemelis said: “When it comes to aviation companies specifically, the United States offers opportunities to provide tailor-made solutions which include products to Airlines, integrators, e-commerce, sports clubs, government and many more.

“Leveraging our group’s long-term skills, global infrastructure, scale and international expertise, we want to be a sizeable player in the US market in the long-term.

“When it comes to financing, we acknowledge the opportunities to attract funding from US sources. In fact, we have a strategic partnership with Certares, a specialised US-based investment fund that has invested $300 million (€276.6 million) in the group.

“Several US funds have also purchased our bonds, and we are keen to increase our presence in public capital markets to attract additional funds for our international growth from the US market in the future."

Coming to the future opportunities of the US market, Ziemelis said: “Currently the US market comprises of around 6,000 commercial aircrafts (23% of global fleet), 12,000 business airplanes (60% of global fleet) and 950 cargo aircrafts (30% of global fleet).

“The US market provides a lot of opportunities, both because of the size of the market, but most importantly, because of how well-developed the aviation sector is.

“As a group, we see immense potential in the US market- one of the world’s largest and most promising markets for aviation services. Further expansion there is a part of our global strategy.”

More European companies turn to the US

Avia Solutions Group is one of the latest European companies to expand into the US, in order to take advantage of a deeper liquidity and capital pool, more investors and a wider range of opportunities.

In the last few months, several other European companies such as gambling company Flutter Entertainment, building material company CRH and packaging company Smurfit Kappa have all announced listings on US stock exchanges.

Earlier on in 2021, other companies such as Swiss sneaker brand On Holding, UK fintech firm Wise Plc and UK cryptocurrency miner Argo Blockchain all made similar moves as well.

Another very prominent company to move across the pond in the last few months has been British semiconductor manufacturing company Arm Holdings, despite several attempts by the UK government to retain it on home turf.

Companies are opting to either delist entirely from European exchanges and list solely on US ones, or go for a dual listing. Increasingly, younger European companies are also choosing to launch their initial public offerings (IPOs) solely in the US.

Other options include selling US depository receipts, or simply expanding in the US market while maintaining a European home base, to test the waters.

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Recently, speculations of online UK grocer Ocado trying its luck in the US have also emerged. This is following increased tensions with partner Marks and Spencer. A move to the US could also potentially offer new opportunities for Ocado to expand its technology arm, Ocado Solutions.

What is the outlook for the aviation sector in 2024?

Coming to the outlook for the aviation sector this year, ongoing geopolitical uncertainties, including conflicts in the middle east continue to be a concern, taking over from pandemic worries and declining travel in the last few years.

Although global recession fears have somewhat eased for now, both inflation and interest rates continue to remain uncomfortably high in several parts of the world. This could very well result in Airlines having to pass on costs to consumers, as well as cutting back on capital expenditures and Investments.

Supply chain issues are still impacting the availability of vital parts and commodities, with skilled staff also being harder to find and retain.

PwC Ireland’s 2024 Aviation Industry Review and Outlook report said: “Although airline profitability turned a corner in 2023, moving solidly back into the black, the International Air Transport Association (IATA) expects only modest financial improvement in 2024, with $49 billion in operating profit and a net profit of $25.75 billion, held back by low yield growth, a higher cost base and a higher debt service burden.

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“However, the return on invested capital for airlines is still expected to come close to 5% this year, and there is scope for the airlines to do better than forecast.

“Passenger traffic will reach or surpass 2019 levels in all regions in 2024, but recovering the four years of lost growth will take a good deal longer.”