MONTREAL – After failing to attract any buyers for its airframe business, insolvent aircraft maintenance firm Aveos Fleet Performance is seeking court approval Thursday to break up and sell the unit’s assets to several buyers for $10.8 million, the monitor overseeing the dismantling of the company says.
The prospective buyers include three Canadian firms, two U.S.-based companies and one liquidator.
The purchase prices paid by the companies weren’t disclosed in case Aveos has to return to the market if the transactions don’t close.
No single buyer was found to restart the airframe unit’s operations because its business model in Canada “has a limited role in a global context” and is not globally competitive, the monitor’s report said.
The buyers include Avianor Inc. based in Mirabel, Que., Avmax Aviation Services Inc. of Calgary and Discovery Air Technical, a subsidiary of Yellowknife-based Discovery Air (TSX:DA.A).
Premier Aviation Overhaul Center of New York, which has an operation in Trois-Rivieres, Que., and Illinois-based Aircraft Services Inc. will also acquire parts of the business.
Liquidator Maynards Industries Ltd. will buy several lots of equipment that it will sell by private sale or at public auction in September before Aveos plans to vacate Air Canada hangars in Montreal, Winnipeg and Vancouver.
Work on repairing and overhauling airframes has increasingly gone to low-cost operations in Asia, Latin America and elsewhere.
Consequently, the assets were offered in smaller “digestible” lots so that Canadian maintenance, repair and overhaul (MRO) operators could have an opportunity equal to that of a global buyer to acquire parts of the business.
“The result is that most of the strategic asset buyers under the transactions which are being recommended for approval are MROs operating in Canada who intend to expand their current service offerings or develop new lines of service in Canada, utilizing these specific assets,” Jonathan Solursh, chief restructuring officer at Aveos.
The airframe unit received 22 bids for its various parts, including 17 from strategic purchasers and five liquidators, but none that wanted to keep the business together.
The Aveos airframe business employed about 1,500 of the company’s 2,600 workers before it closed its operations in March and obtained court protection from creditors under the Companies’ Creditors Arrangement Act.
Monitor FTI Consulting said the sales process for the engine business has been extended until a July 26 court hearing. The delay will give prospective buyers additional time to “address and resolve various issues, including exhausting all options to determine is there is the possibility of a going concern or modified going concern solution.”
Air Canada (TSX:AC.B) and Aveos have signed a new exclusive engine repair contract through 2017, provided the purchaser of the business is one of five deemed acceptable by the airline in terms of operational requirements.
Canada’s largest carrier also agreed to conduct a request for proposals for work on about 1,000 component parts serviced by Aveos. Work on the five- to 10-year contract must be done at Aveos’s facility.
The sale of the landing gear assets have also been deferred.
“There are multiple suitors for the Component Maintenance business who are engaged in meaningful discussions with the company, the union and other stakeholders,” the monitor said.