Gama Aviation has agreed to purchase the business of UK helicopter special mission company Specialist Aviation Services as part of a pre-pack acquisition from its appointed administrators.

The deal adds further scale and strength to Gama’s special mission strategic business unit (SBU) with some $34 million of annual revenue, three significant UK air ambulance charity contracts, six managed Leonardo AW169s and two further national security contracts in the Middle East. The additional capability is complementary to the special mission SBU adding a Leonardo service centre in Staverton, Gloucestershire.

Group CEO Marwan Khalek says: “This acquisition accelerates our growth in our special mission SBU, adding scale in the UK, building on our recent contract wins with, amongst others, the Welsh Air Ambulance, and opening international operations in the Middle East to complement our established fixed wing aircraft management and MRO capability in the region.

“We believe that there is considerable potential within the trade and assets of this business, that over the medium term will enhance the prospects of the special mission SBU. However, given the nature of the acquisition, our immediate priority is to ensure continuity of service for the UK air ambulance charities such that they are able to maintain their life-saving operations.”

Gama Aviation’s special mission SBU was conceived following a strategic review in 2020, when several potential acquisition targets were identified that would be complementary to the SBU’s growth. Specialist Aviation Services was identified as one of those businesses. It has a long history of operating helicopters in the UK, with a focus on special mission customers. In recent years, it has expanded its capabilities in maintenance and grew internationally, including winning contracts in the Middle East.

From 2021, the business has been through operational and financial restructuring exercises and as part of these it has sold aircraft to pursue an ‘asset light’ business model. While these actions had improved its underlying prospects, the company determined that its capital structure was unsustainable and the underlying business outlook would be improved through being part of a larger group with balance sheet strength.

In the 12 months to 31 December 2022, Specialist Aviation Services reported turnover of around $30.7 million ($31.2 million in 2021) and a pre-tax profit of $3.4 million (loss of $7.7 million), including exceptional accounting profits from financial restructuring. While the results for 2023 have not been published, the business would have reported an underlying loss. In December 2023 its advisors determined that it was in the interests of the company to seek an accelerated acquisition process via pre-pack administration.

Gama acquired the trade and assets of Specialist Aviation Services from appointed administrator FRP for a consideration of $353,500.

As part of the transaction discussions, key customers and suppliers have agreed to amend, extend and novate their contracts to the company.

While Specialist Aviation Services has been loss-making historically, because of agreed changes to customer contracts and certain identified cost savings in combination with the group, its business under Gama is expected to deliver underlying additional revenues of around $34.1 million per annum and be breakeven at the profit before tax level in H1 2024. The group believes that further cost savings can be delivered over time as the businesses are integrated, as well as the strategic benefits to the special mission SBU.

The UK Civil Aviation Authority has assigned all of Specialist Aviation Services’s regulatory approvals to Gama Aviation such that an orderly and safe management of change process may take place.