Recovery – Refinancing – Restructuring
MRO Restructuring & Recovery
When an MRO (EASA 145 or FAA) is in financial difficulty or is not reaching its potential then an independent analysis is the way forward before committing significant resources to restructure the MRO.
IAG has teamed up with a Global Accountancy Practice in London to provide quick and referenced reviews using IAG’s experienced team who have an intimate knowledge of MRO and support operations and restructuring, combined with a global accountants input.
This MRO restructure/recovery review is similar to a feasibility study, with the addition of a review of the compliance management system to provide the board/investors with a range of qualified, and referenced options upon which to make decisions on the operational aspects of the MRO along with the financial (possible debt and refinancing) status. Compliance management is often only paid lip-service during corporate re-structuring, it is often seen as a hindrance to the business, where in fact it is keeping the business alive.
Whenever an organisation is considering restructuring or administration, we would strongly recommend that they establish a comprehensive communications plan, addressing both internal and external stakeholders. The message is the same for both groups, the means of delivery and emphasis will vary. Restructuring and uncertainty require the management team to be visible and open.
We propose a three stage cost effective process:
Step 1 – A short professional review to provide options for the board to consider – 4 to 6 weeks duration.
Step 2 – A full top to bottom MRO restructure review (similar to a fresh feasibility study) – 10 to 12 weeks duration.
Step 3 – After board/investors approval, full implementation follows which is project managed by IAG
Decisions should be neither too low nor too high, both ambitious and demonstrably achievable – our MRO recovery programme will include the following:
- Start with a top-down/bottom -up complete assessment to set a challenge for what can be achieved, without focusing too early on exactly how it will be achieved, but with pragmatic recovery and restructuring targets.
- Base the assessment on all areas and drill down within each part of the operation. For example, review all:
- Airline contract
- Scope of Work – does the aircraft/ component mix on the approval work, simplify and reduce the types or part numbers, focus on the value, not volume
- Support Contracts – how is your work contracted, forward commitments or individual P.O.’s only
- Staff contracts – wrongly paying approval pay for those aircraft types not on the Part 145 Approval
- Boldly evaluate the business model:
- MRO’s could choose to consolidate and cherry pick a limited portfolio of purely high value work and contracts. Decisions here will, in turn, guide the more detailed assessment.
- Sell the operation to a larger competitor or investment group.
- Procure other distressed MRO operators
- Assume the mind-set of an activist investor or private-equity acquirer: be ambitious, disruptive and unconcerned about maintaining the status quo – our team will ruthlessly and without emotion or other outside influences review and report.
The main departments covered in any review with respect an MRO restructure or recovery will be: Operations, Commercial, Maintenance, Repair & Overhaul (MRO), Human Resources, Finance, Support Services and Transformation. Regulatory compliance, which is not discretionary, does in many cases distort the “traditional” administrators’ image of a business, what might be seen as an indirect employee, may be a post required by Regulation.
We can provide immediate Crisis Management, Cash Flow Improvement, a Restructuring Blueprint also Interim MRO Management (post holders) – the most important element is to act fast and not try and trade out of a situation – unfortunately sometimes harsh and painful decisions need to be taken.
IAG MRO Recovery Team
The IAG MRO recovery team have all either operated MROs or have been senior management for service providers – so “poachers turned gamekeepers”! In addition to their diverse senior management roles, the Team have been involved with special projects and the establishment of EASA approved operations across the globe.
Our MRO Specialist team is actively involved with a distressed aircraft component overhaul company and is overseeing the restructuring of the business to meet the new airline environment.
Our guidance is independent.