BBA still facing headwinds

BBA Aviation, the aviation support services provider, saw no pick-up in its major markets in the third quarter, with the only glimmer of hope being the fact that the rate of decline slowed some.

Group revenue was down 3% in the third quarter from a year earlier.

North American Business and General Aviation (B&GA) movements were down 1% year-on-year in the third quarter, which was a slight improvement on the rate of decline seen in the first half of 2011. In Europe B&GA movements were down 4%.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Commercial movements in North America declined by 2% in the third quarter, again lower than the decline seen in the first half.

Revenue in Flight Support was more or less flat, year-on-year, but declined 2% on an underlying basis after excluding the impact of exchange rates, fuel prices and acquisitions & disposals. BBA's Signature division outperformed its markets and the ASIG unit continues to pull in the contracts, but ASIG also suffered during the reporting period from the timing of previously announced contract losses.

Revenue in Aftermarket Services and Systems declined by 7%, reducing the year-to-date gain to 6%, or 3% on an organic basis. The third quarter reduction reflected the timing of product delivery in Legacy and Engine Repair and Overhaul together with the lag effect of the softening in B&GA markets since mid-2011. The impact of revenue reduction in Aftermarket Services and Systems was broadly offset by margin progression, the group said.

As if things were not tough enough, the group's Flight Support businesses in the north-east of the US have been affected by disruption caused by Hurricane Sandy. Luckily, the group's facilities were broadly untouched and the disruption is expected to have only a limited impact on full year performance.

"In soft and somewhat volatile markets, BBA Aviation continues to perform well, benefiting from its inherently flexible cost base and our focus on driving operational improvement. Notwithstanding the challenging near-term environment, the medium and long term growth prospects remain exciting, and we continue to expect to make progress in the second half of the year and beyond," said Simon Pryce, Chief Executive of BBA Aviation.

JH