With more institutional equity investors using Direct Infrastructure Investment as a method of returning long-term secular growth, it is time to look at strategies for managing these investments in turbulent times. Aviation infrastructure has received a lot of attention recently, and the COVID-19 disruption is having a significant impact across virtually all aviation segments. We will address some of the key focus areas for managing aviation infrastructure assets in volatile times.


Immediate Action

The first area to be addressed is to reduce the variable and fixed cost structure to match activity and revenue levels. For an on-airport service provider, this usually requires the difficult step of reducing personnel. There are varying strategies for how to accomplish these types of employee actions, but two of the least objectionable are not backfilling voluntary attrition and the reduction of hours across the workforce. Other fixed cost areas must be examined as well, and all non-essential funding should be suspended. All capital improvements, whether maintenance or growth related, should be analyzed and all but previously committed and the most critical should be postponed.


Aviation Restructuring

Restructuring aviation businesses has special considerations. First, since most aviation businesses take place on-airports under either short or long term leases, lease modifications are an important matter for evaluation. Rent deferral or forgiveness for a certain period of time may afford an airport based aviation services company the time it needs to restructure its workforce and other aspects of its expense base. These types of endeavors, however, have additional parties beyond vendors and suppliers which may be required to give their consent, such as airports, regulators and more.


Diligence Considerations for Restructuring Advisors and Managers


Examples of aviation restructuring management services offered:
• Strategic Aviation Restructuring Plans
• Restructuring Management
• Operational, Competitive and Financial Analysis
• Business Valuations & Appraisals
• Merger & Acquisition Advice
• Business Planning
• Capital Structuring and Capital Sourcing
• Turnaround Management

While many firms may offer Aviation Restructuring Services, different organizations should carefully consider their own unique requirements and select a management and consulting company which has the specific aviation experience which will meet their needs. A key area to review is to ask for customer references on projects similar to the one being contemplated. Another critical area in which an independent third-party restructuring manager can deliver value is the relationships they bring to the client. These relationships can take many business forms—relationships with customers and suppliers are among the most critical and usually a primary focus. Professional aviation restructuring managers can also refer additional professionals in different disciplines who have a deep track record of aviation experience. This can be very valuable to the client in the areas of attorneys, accountants, insurance and banking relationships and more. For example, an aviation restructuring manager who can bring in a team of professionals with aviation experience for due diligence will shorten the time and expense of the engagements because the professionals will not begin at the bottom of the aviation learning curve and should be able to understand the competitive dynamics and business model immediately.

Make sure that you are diligent on the aforementioned aspects that have been reviewed here. To know more about Aviation Infrastructure Development as well as Direct Infrastructure Investment in aviation, please continue to follow our posts and blogs or visit https://www.aviationinfrastructure.com/