Gores Small Capitalization Partners announced an agreement to acquire Triumph Air Repair and Triumph Engines on Dec. 7 and closed the deal on Feb. 3. The companies, renamed TurbineAero, will be led by CEO Rob Higby, who discusses the acquisition.
Why did The Gores Group purchase the entities? What will happen with the former Triumph assets?
Historically, Triumph has grown into what it is today through acquisitions—and in many cases, it acquired many types of businesses and then tried to combine them. Dan Crowley, Triumph’s CEO, has been pretty vocal about wanting to get back to core business. This part of the business was not deemed to be core to some of the go-forward strategies of Triumph. So this is part of an ongoing process that Triumph is running to shed some businesses that may not fit that go-forward strategy. There was a natural process that was run on these businesses, and The Gores Group was an early participant, made it to the finalist stage, and now obviously is announcing it. [The Gores Group, which has been around since the late 1980s, specializes in corporate carve-outs and transforming them into stand-alone businesses.]
Will most of your business focus on auxiliary power units (APU), compared to components?
What we’re trying to do is ’verticalize’ the entire supply chain of all things related to APU MRO services. A successful example of this type of philosophy would be what Delta TechOps has done with the CFM56 engines—being able to purchase those engines, trade and be an MRO. Being able to do everything from most complex systems level APU overhaul or heavy repair, which is at the high end of what we do, all the way to line replaceable units (LRU), components, lease and trading, aircraft-on-ground service, field service and everything in between. Those are the capabilities we have.
Our headquarters, in Chandler, Arizona, disassembles, parts out, assembles and tests APUs and APU systems. Our Tempe (Arizona) facility is 100% components, and a large majority of all of the components that you’d find in the entire Honeywell line, the entire Pratt & Whitney Canada and big Pratt line, like the 901 APU. Additionally, this division has special processes, like e-beam welding and various coating technologies that are used not only in our component repair businessesbut also by the major OEMs in some shape or form for forward-fit, fabrication and manufacturing purposes.
The part of the market that we’re not focusing on is 110-seat or smaller aircraft. Our focus starts with the Airbus A320 and Boeing 737 and then into heaviest iron and military applications, such as the Boeing C-17 and McDonnell Douglas KC-10, which are both long-term customers, where we’re subs to traditional military primes.
What’s your split between commercial and military, and what is your customer base?
Right now, the mix at a global level is 75% commercial and 25% military. The three core facilities are the systems business in Chandler, our components business in Tempe and then the third, a hybrid of those two, in Chonburi, Thailand, which has systems MRO services and all the component repair. The idea is to have the regional focus and capabilities at an Asia-Pacific hub and then have a larger majority of the engineering, quality and component servicing in the U.S. In terms of customer mix, we’re about 65% North American-based, 30% Asia-based and 5% EMEA-based.
Where are you targeting growth?
Asia is absolutely one of the biggest targets—year over year percentage growth, with EMEA being the other bigger market. Europe is something we’ve never tapped into.
What will be the biggest changes?
What’s most exciting for me, as a guy brought up in aviation sales and services, is that this is a classic example of three highly talented engineering and services organizations that were part of a large portfolio of facilities under the Triumph umbrella. They’ve had all the great access to engineering services that you’d expect out of Triumph, but the regional and commercial focus was limited to what was in place. There hasn’t been someone who has said, ‘let’s grow the MRO systems business as a clear focus within Triumph—or grow the components business’ within Triumph. We will be hiring APU sales and services people for our APU-focused go-to-market strategy.
What should customers expect?
They should expect the standard things you expect from an independent MRO: first, stellar service; second, engineering capabilities and quality that is truly unique. We have some licenses with OEMs, but we operate independent of those on others. We have significant amounts of intellectual property that differentiates us—whether it’s fabrication processes and/or designated engineering representative repairs, some of which have gone into OEM repair manuals. The final thing you’ve got to have is a level of flexibility in pricing and packaging, which allows us to take our service levels and capabilities and customize the right service package to allow the airlines or OEMs to achieve their goals.
The combined business generated $81 million for Triumph last year. What was the value of the transaction, and what additional resources will it take to roll out the changes?
First and foremost, there are follow-on acquisitions that we plan to do. Second, there are a lot of hires to fill the gaps that you traditionally don’t need when you do a carve-out from a bigger entity. Then there are the natural things you need to do from taking three P&Ls into a centralized focus.