With its acquisition of Eirtech Aviation in June for an undisclosed sum, private equity firm Vance Street Capital is staking out a global presence in the commercial airliner exterior paint and interior refurbishment market. Eirtech is headquartered in Shannon, Ireland, and has paint facilities in Shannon, Dublin, Rome, and Ostrava in the Czech Republic.
The acquisition is the latest development in Vance Street Capital’s ongoing focus on the aircraft painting business, which, within the past two and a half years, included the rollup of Costa Mesa, California-based Leading Edge Aviation Services and Associated Painters, headquartered in Spokane, Washington. The three companies will operate as components of International Aerospace Coatings Holdings, but retain their brand names and management, according to Brian Martin, a Vance Street Capital principal.
“Eirtech has a great management team that has done extremely well in Europe,” explains Martin. “It is an extremely process-driven company with a reputation for high-quality paint and interior refurbishment work, which we believe will be a nice growth area for the company.”
As Martin points out, Vance Street Capital also liked the fact that Eirtech was “targeting other parts of the world” for possible expansion, which he says “broadens the global footprint” of the three companies.
“Working together, Eirtech, Leading Edge and Associated Painters will provide a consistently superior product, and a global management platform to share their resources, best practices and processes,” he remarks.
Eirtech’s current four European centers, Martin notes, give customers the advantage of multiple locations in closer proximity to their aircraft, which reduces ferrying costs and ultimately turn times. The customer base, which includes commercial airlines, military and VVIP/head of state transport work, is expected to grow, and include both OEM and aftermarket opportunities.
“We are doing a growing volume of OEM work, specifically on Boeing 787s, 767s, 777s and 737s,” Martin says. “In fact, I believe there is a great opportunity to get into more OEM work.”
Asked if there are any additional acquisitions in aircraft painting and refurbishing being considered, Martin reports that Vance Street Capital is always looking at deals that make strategic sense. “We got into this industry because we like the business models and growth processes of the companies, and we believe we can facilitate their growth, and expand globally.”
Niall Cunningham, Eirtech Aviation’s CEO, agrees. “We wanted to provide a global service, but concluded that we would get there faster if we aligned Eirtech with the aircraft painting companies that were under the Vance Street Capital umbrella,” he says.
Eirtech Aviation is evaluating on-airport locations in the Middle East and Asia. “Based on our experience in Europe, there is growing demand for a consistently high-quality product, along with reliable turn times, which we could leverage in new facilities as they grow,” says Cunningham. “That is what has encouraged us to look into the Middle East and Asian regions—and establish a footprint in the U.S.”
Eirtech also expects to grow its aircraft interior design and installation business, says Cunningham, who notes that interior modification services will be introduced not only at new facilities but at those in the U.S. “All of that will happen in tandem with what we are doing at our European facilities.”
While most Eirtech customers are commercial airline operators, Cunningham confirms that airframe OEMs, and major MROs, will become increasingly important. Along with that, he notes a trend toward consolidation among aircraft painters. “Today, airlines want to deal with companies which can provide the capacity for fleet-wide painting, and at the same time they want to work with a single supplier.”
The International Aerospace Coatings Holdings companies, he points out, now have 16 hangars at eight locations, which include four in the U.S. and four in Europe. “That gives those three companies the combined capacity to paint 33 aircraft at any given time, and as many as 1,000 per year,” Cunningham explains.
Consolidation is coming about, as demand for aircraft painting remains strong, according to Rogier van der Velde, senior service manager, engineering for SGI Aviation in Amsterdam. “There will always be healthy demand for aircraft painting slots, with much of it driven by the leasing companies.”
In fact, with the growth of operating leases, typically with 6-12-year terms, van der Velde says that aircraft are being transitioned from one operator to another at younger ages, thus requiring frequent repainting because of airline livery changes. “On the other side,” he cautions, airlines themselves are saving money on the frequencies of paint jobs and at the same time, new techniques allow paint to stay on an aircraft longer.”
A version of this article appears in the November 3/10 issue of Aviation Week & Space Technology.