BBA Aviation plc

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BBA Aviation plc

20 Balderton Street
London, W1K 6TL
United Kingdom
Telephone: (44 207) 514 3999
Fax: (44 207) 408 2318
Web site: http://www.bbaaviation.com

Public Company
Founded: 1879
Employees: 10,757
Sales: £950.1 million ($1.86 billion) (2006)
Stock Exchanges: London
Ticker Symbol: BBA
NAIC: 488119 Other Airport Operations; 488190 Other Support Activities for Air Transportation

BBA Aviation plc is a world leader in aviation services. Based in London, England, the company consists of two divisions: a Flight Support division and an Aftermarket Services & Systems division. Flight Support maintains the world's largest network of fixed base operations and provides services such as fueling, hangar and office rentals, ground handling, and passenger processing at airports. Its primary customers are private and corporate aircraft. Signature Flight Support Corporation, a subsidiary within the Flight Support division, is represented in 34 of the top 50 metropolitan areas in the United States as well as another 34 sites outside North America. Another part of flight support, BBA's Aircraft Service International Group (ASIG), provides a wide range of airport services, including fueling, ground handling, de-icing, cargo, and related services. ASIG is the leading refueler in the United States with 66 locations. BBA's Aftermarket Services & Systems provides engine repair and overhaul services, especially for business and regional jets.

CHANCE MEETING RESULTS IN NEW COMPANY

BBA Aviation's founding resulted from a chance encounter in Sweden in the middle of the 19th century. Walter Corbett, a seller of industrial goods, was on vacation when he met William Fenton. The Scotsman was a weaving manager at a Swedish textile mill and an inventor who had developed a solid twill woven belt for driving machinery. At the time woven beltings were beginning to replace leather and canvas belts on machines, and Fenton's design was an improvement on plain woven beltings that were then beginning to be introduced. Corbett was intrigued. With a simple handshake the two men formed a partnership. Corbett would be responsible for selling and marketing the belt. Fenton would be in charge of the business and take sole responsibility for the manufacturing side.

In 1879 Fenton moved his family from Sweden to Dundee, Scotland, where he established himself as a "woven belt and hosepipe maker." He had named his invention "Scandinavia belting," and it was sold from Corbett's offices in London. The business grew quickly. Within four years both Fenton and Corbett had to move to larger premises. In the early 1880s Fenton brought his sons into his business Wm. Fenton & Co. In 1888 two of them set up their own belting company, albeit only after making an agreement with their father that their new firm would work with him rather than competing against him.

The two Fenton brothers established a joint stock company with Corbett in 1897. The elder Fenton would have become an owner as well, but he passed away in 1898 before the organization of the new firm could be completed. The December after Fenton's death, the holdings of Wm. Fenton & Co. were merged into the new firm, W. Wilson Corbett Ltd. Three years later the company moved both its sales and production to mills in Cleckheaton in Yorkshire, England. They were renamed Scandinavia Mills, in honor of the company's Swedish birth, and in 1911 the firm's own name was changed to Scandinavia Belting Ltd.

In the 19th century, Corbett was actively extending the company's activities into foreign nations. By the end of the 19th century he had company representatives in France, Germany, Spain, Holland, Sweden, and Russia, and as far away as Australia, India, Brazil, Trinidad, and the Sudan. Large-scale business with the United States began in 1908 when Henry Ford made large orders for belting for the gearbox of his Model T, which was just going into production. As demand for the new car boomed, so did demand for Scandinavia belting. By 1914 the firm was making some 40,000 feet of transmission lining per week for Ford. It was the beginning of the firm's involvement with automobile companies that eventually included Rolls-Royce, Bugatti, and Renault, an involvement that would last until the 21st century. In 1923 the firm set up a belting factory in Paterson, New Jersey, in the United States.

SUCCESS DURING THE TWO WORLD WARS

Demand for the company's products increased considerably with the start of World War I, when Scandinavia Belting Ltd. became essentially a government contractor, producing puttee tape, brace webbing and, in particular, khaki webbing for the British military. In addition, it provided more than 100,000 feet of belting for a French rifle manufacturer. The company was concerned about having access to an uninterrupted supply of raw materials for production. Its solution in 1920 was to acquire a competitor and unite the production facilities with its own in Cleckheaton. In 1925 the two companies formally merged and took the name B.B.&A. Ltd.

The British military's need for woven materials resulted in another period of increased activity when World War II broke out and B.B.&A. Ltd. was quickly able to put itself on wartime footing. The war started at the beginning of September 1939; by December all of its factories were running round the clock seven days a week. It was a remarkable achievement considering that just months earlier the company had started moving most of its London sales offices to Cleckheaton, a move which was not completed until November 1939. The company grew at the same time naturally, its workforce jumping from 403 to 1,400.

BBA's products played an important role in Britain's defense in the early years of the war and the defeat of the Axis powers later. Mintex, a strong woven textile consisting partly of minerals, had been developed for brake linings. Mintex was a key component in most British warplanes as well as in British tanks, whose steering depended on their brakes. BBA also produced large quantities of webbing, parachute harnesses, gas mask linings and fire hose for the British war effort.

COMPANY PERSPECTIVES

BBA Aviation's strategy is to maintain a balanced portfolio of aviation services and aftermarket businesses, which have clear barriers to entry, a focus on the business and general aviation sector, producing above average growth rates and attractive financial returns. Specifically, BBA's strategy will be to: develop and expand flight support locations and service globally; secure new aftermarket licenses from OEMs (original equipment manufacturers); expand component and repair capacity to support ER&O (engine repair and overhaul), landing gear and licensing opportunities; fully exploit the synergies across its business; continuously improve operational performance and productivity.

EXPANSION AND REORGANIZATION IN THE DECADES AFTER WORLD WAR TWO

Practically from its outset the firm had produced woven products for conveyor belts, in particular belts that were used in British coal mines. Immediately after the World War II the firm began experimenting with the use of polyvinyl chloride (PVC) in conveyor belts as a fire retardant. Research was hastened in 1950 by a catastrophic blaze in an English coal mine, after which the British government directed that all belts used in coal mines be fireproof. BBA belts were the first to be officially recognized for future use in British mines.

Mintex continued to be a component in innovative braking systems in the 1950s. It was used in the first disc brake systems developed by Jaguar for its motor racing autos in 1952 and in its passenger cars for the first time in 1959. Until the end of the twentieth century, while its disc brake pads were still in production, the company's pads were provided as original equipment in automobiles more often than any other firm's in the world.

By the 1960s BBA had subsidiaries in many parts of the world. These included friction materials producers such as Mintex Canada, Mintex S.A. Pty in South Africa, Frenosa in Spain, and Textar in Germany, and distribution companies such as Cantex Corporation in the United States and Bendix Mintex Pty. in Australia. In 1967 the firm was completely reorganized and a holding company called the BBA Group established to oversee all the firm's businesses in the United Kingdom and abroad. Meanwhile two new wholly owned subsidiaries were founded to take over the old production and sales business. Mintex Ltd. was set up to take over the friction materials side; Scandura Ltd. assumed responsibility for the firm's conveyor belt activities. A few years later BBA Automotive Ltd. was created as a go-between organization for the friction and antifriction material sides of BBA holdings.

The 1970s also witnessed the launching of the Regina line. Regina produced glass fiber tissue for the reinforcement of roofing materials, pipewrap, bitumen, asphalt, and other products used by the construction industry. Regina also manufactured yarn that was integrated into its glass cloths. Late in the 1970s BBA formed a joint venture with the Fiberglas company called Regina-Fiberglas. The new firm opened an innovative wet process factory that made possible the production of matrix for floor coverings, insulation facings, battery retainer mats, and the encapsulation of printed circuits.

When BBA celebrated its 100th anniversary in 1979, its manufacturing complex Cleckheaton had grown to approximately 30 acres, which included the Mintex and Scandura factories as well the group's research and development department. BBA had some 3,000 employees in Britain at the time; an additional 2,500 workers were employed in overseas production facilities in Australia, Canada, South Africa, Spain, the United States, and West Germany. After it was reorganized as BBA Group plc at the beginning of the decade, the company undertook a wave of acquisitions in the 1980s. It purchased the friction materials divisions of the British firm Cape Industries, which included SBF in Sweden, Frenosa in Spain, Don France, and Don Int. of Belgium. They were all subsequently united in a newly created BBA subsidiary, Mintex Don Ltd. In 1989 a Friction Materials Division was created as a home to all of BBA's friction businesses. Another important acquisition in 1986 was the automotive firm APPH, which was integrated into BBA's Automotive Products division.

KEY DATES

1923:: Scandinavia Belting Company is established in Paterson, New Jersey.
1928:: First company pension scheme is inaugurated.
1942:: Works Council is formed.
1952:: First Mintex brake pads used in racing cars.
1967:: Company is reorganized as BBA Group.
1970s:: BBA Automotive Ltd. is formed.
1981:: Company is reorganized as BBA Group plc.
1989:: Friction Materials Division is formed.
1992:: BBA Friction founded in United States.
1995:: Automotive Products subsidiary is sold for £181 million.
1998:: All friction companies are united under name BBA Friction.
2000:: Company focuses on aviation services and materials technology businesses; BBA friction materials division is sold for £398 million.

The company underwent a dramatic change of course in the 1990s under CEO Robert Quarta. Quarta decreed that BBA would focus on businesses in which they were the technological or market leader. As a result, shortly after his appointment, the company made the decision to concentrate exclusively on three areas, aviation, industrial, and automotive. In 1994 BBA sold the Angus fire protection group as well as its U.K. plastics businesses Railko, Perplas, and Holden Hydroman. Despite that decision, with the automotive sector growing increasingly sluggish early in the 1990s, BBA had begun slowly reducing its involvement in the sector. Between just 1988 and 1990 the percentage the automotive division contributed to BBA's operating profits dropped from 63 to 49 percent. Finally, in 1995, with automotive profits failing to meet company expectations, the Automotive Products division was sold for £181 million to a management-led buyout team. Just 30 days after the divestment of that division, using funds from the sale, BBA made the largest acquisition in its history. For £239 million it purchased Holvis, a Swiss producer of nonwoven hygienic products such as surgical masks, hospital gowns, and disposable wipes and diapers. The deal was not only big, it was also whirlwind, being put together in a mere 72 hours. Although the deal was challenged by International Paper, another would-be buyer, it was eventually approved by Swiss regulators. After the acquisition, Holvis was integrated into BBA's materials technology division.

Meanwhile, BBA was strengthening its position in the commercial aviation sector, in particular aircraft refurbishment and airport ground services for business jets. BBA made a series of significant aviation acquisitions in the 1990s, including Van Deusen aviation services in 1990 and Butler/Signature, partially owned since 1992 and a fully owned subsidiary called Signature Flight Support Corporation of BBA since 1996. New aviation companies were added to BBA's ranks almost every six months in the latter half of the 1990s. Those parts of BBA were making increasingly strong showings year after year throughout the decade. By the beginning of 2000, BBA had established its presence at airports in the United Kingdom, the United States, Europe, and Latin America.

The friction materials division, an area in which BBA established itself as a young company, was the next to reach the chopping block. In 1998, it looked like BBA's friction business was going to be expanded. First, the group was united under the BBA Friction umbrella in 1998, then later the same year a friction materials subsidiary was established in the People's Republic of China. The die had been cast two years earlier, however, when BBA failed in its attempt to acquire the brake maker Lucas Industries in 1996. With automakers concentrating more and more centralizing components production within their own companies, BBA saw little future in manufacturing parts. When they were unable to take over Lucas, a maker of automotive braking systems, BBA put its friction materials businesses up for sale, and in 2000 it was sold to HSBC Private Equity for £398 million.

In 2000 the BBA Group employed a workforce of approximately 13,000 in 14 countries. BBA was concentrating on two businesses, Aviation Services led by its Signature subsidiary and the BBA Nonwovens division. The aviation side got a boost that year when BBA purchased Ranger Aerospace Corporation to acquire the Ranger subsidiary Aircraft Service International Group (ASIG). ASIG provided a full line of aviation services, that included fueling, and ground and cargo handling from 54 airports in the United States. BBA paid $152 million for the firm. It was merged with Signature, which itself operated 50 facilities, primarily in North America, creating one of the world's largest providers of commercial aviation services.

While the September 11, 2001, terrorist attacks on the United States led to a general downturn in the commercial airline industry, it had positive side effects for BBA's aviation companies. With tighter security at most airports resulting in long lines and waiting periods, more and more business flyers chose to buy or rent their own private jets, the market to which BBA provided its services. That helped boost BBA's aviation sales from £200 million in 1995 to over £900 in 2003. By that time aviation services accounted for 60 percent of the company's revenues.

The BBA materials technology division, which was renamed BBA Fiberweb in 2003, had been hurt by a rise in price of polypropylene occasioned by the Iraq war as well as flattened demand for nonwoven materials for the hygiene market. In November 2005 BBA made the decision to get rid of Fiberweb. It launched a search for potential buyers of the division valued at about £700 million, but was unwilling to find a purchaser willing to make a high enough offer. In March 2006, the decision was made to demerge Fiberweb and concentrate exclusively on BBA aviation interests.

Gerald E. Brennan