Aviation group Cobham up in the air as parent company changes hands
The future of the third biggest force in Australian aviation, Cobham Aviation Services, will be determined in the coming weeks after a takeover of its British parent company is finalised.
The UK government on waved through American private equity firm Advent International’s $US5 billion ($7 billion) take-over of the global defence and aviation group Cobham December 20, after delaying the deal on national security grounds.
The London Stock Exchange-listed Cobham put its Australian operations up for sale when Advent’s take-over landed in July, with a strategic review to decide how best to “optimise value” for its investors.
Cobham is Australia’s largest industry player behind Qantas and Virgin Australia, with more than 1300 employees and over 50 aircraft operating charter, fly-in fly-out and freight flights as well as government surveillance and search and rescue work.
Cobham flies 20 Boeing 717s on behalf of Qantas regional services under the QantasLink banner, and also has a Qantas Freight contract which was extended for six years in September.
The Advent takeover of Cobham is set to be finalised in late January, with local chief executive Ryan Both expected to travel to London shortly after to discuss the future of the Australian business with its new owners.
That will include whether Advent will hold onto the Australian operations or move forward with a sale, sources said.
Announcing the review in July, Mr Both said the local operation needed more capital to “drive our growth so we can realise our full potential”.
Aviation analyst Neil Hansford said there were no obvious Australia buyers for the business and it was likely to be snapped up by an off-shore financial outfit.
“Qantas would be looming there to protect the operation of those 20 aircraft but that’s still going to give them some problems with the regulator,” he said.
The Australian Competition and Consumer Commission has raised concerned about Qantas’ purchase in February of a 20 per cent stake in charter operator Alliance Airlines.
Mr Hansford said a Cobham tie-up with Alliance or regional operator Rex Airlines was possible, but those two ASX-listed groups would need fresh capital to fund any such deal.
Cobham conducts aerial surveillance for Australian Border Force with a fleet of 10 Dash-8 aircraft, and carries out search and rescue operations for the Australian Maritime Safety Authority out of bases in Perth, Melbourne and Cairns.
The Australian business generated revenue of $386 million in 2018, and accounts for about 10 per cent of Cobham’s global turnover.
Cobham’s business in the UK, EU and USA mostly comes from defence products such as air-to-air refuelling and weapons systems, and military aircraft communications systems.
Cobham said on December 20 that Australian regulators had also approved the Advent takeover.
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