It has turned out to be one of the biggest deals in business aviation that never was. In late January Jet Aviation announced it had rejected all purchase offers after a months-long effort to find a buyer for the charter, completions, maintenance and FBO conglomerate. Thomas Hirschmann, chairman and CEO of the Hirsch-mann Group of Companies, which owns Jet Aviation, said, “This evaluation process has ended and our shareholders have decided not to accept any of the proposals set forth by potential buyers. We believe this move is in the best interests of Jet Aviation, its management, employees and customers worldwide.”

At the time of the announcement, Hirsch-mann noted that financial results for fiscal 2002 were the best in the company’s history, eclipsing those of its previous best year, 2000. Though he did not reveal details of last year’s figures, total revenues for 2000 were $540.3 million. In 2001, profits were down some 6 percent ($35.3 million) from the previous year. The reduced numbers nevertheless represented Jet Aviation’s second-best year ever.

Over the past several months Jet Aviation has acknowledged providing some 40 copies of its sales prospectus to bidders who signed non-disclosure agreements. New York financial house Goldman Sachs handled the negotiations. The list of possible buyers generated grist for the dealmaking rumor mill. Among those mentioned were Saudi Prince Alwaleed bin Talal bin Abdulaziz al Saud, UK financial house 3i, Gulfstream (via parent company General Dynamics), Warren Buffett’s Berkshire Hathaway (to provide support capacity for NetJets, especially NetJets Europe and proposed fractional programs in the Middle East), Signature/BBA Aviation, TAG Aviation and the Carlisle Group, parent of Piedmont Hawthorne.

Of the bidders, few would openly acknowledge their interest. A spokesman for NetJets, for instance, said the company had no interest in acquiring Jet Aviation. But David Hurley, vice chairman of PrivatAir, wasn’t shy about admitting his interest in Jet Aviation. He told AIN last year, “We may join forces or we may look at it alone. There are some highly symbiotic relationships that could go together well, with the BBJ completions capability and some of Jet’s portal locations. It has been my dream to operate portal-to-portal service between Europe and North America. We’re doing that now with Lufthansa. [The German flag carrier wet-leases a PrivatAir BBJ for first-class-only regular service between Dusseldorf, Germany, and Newark–Ed.] And Jet Aviation controls a number of those key ‘portals’ around the world.” Hurley agreed that most buyers would likely spin off the FBO segment.

To many observers, the diversity that makes Jet Aviation such a complete business-aviation entity may have been one of the largest obstacles to a sale. For a dedicated aviation company, the massive size of the Jet Aviation operation and its scope are daunting. That’s why most speculated that the buyer would be a financial house, such as 3i, which could subdivide the charter/management, maintenance, completions and FBO segments of the business for redistribution. The only prior experience 3i had in the aviation industry was buying Go, the low-fare UK airline, which it sold at a profit shortly thereafter. A Jet Aviation spokesman told AIN last June that the company would not consider spinning off the components itself. He said, “The strategic options would have to include everything, the whole company.”    
Another deterrent to a timely sale was the asking price. It has been reported (but never confirmed) that Warren Buffett made an early offer of about $485 million. According to the same reports, the Hirschmann family was looking for $520 million, a multiple of eight times the company’s earnings before interest, taxes, depreciation and amortization. How much the current economic downturn has affected potential buyers’ appetites for such an acquisition can only be guessed. But in one of his quarterly reports, Buffett wrote to stockholders that Berkshire Hathaway must seek out “elephants” to buy, deals that are simply too good to pass up.

From the outset, other alternatives to an outright sale included strategic partnerships and withdrawing the company from the market. Early on, neither was thought to be a viable scenario–especially the latter. But one industry observer told AIN last June, “They don’t have to sell. This isn’t a foreclosure. It’s up to the Hirschmann family to decide if any offers are consistent with what they believe is the value of the company.” Those words proved to be prophetic.

Jet Aviation was founded in 1967 by the late aviation enthusiast Carl Hirschmann in his native Switzerland. Hirschmann established maintenance and airline handling services in Basel, Zurich and Geneva. The Dusseldorf, Germany maintenance base opened in 1975, and four years later Hirschmann penetrated the Middle East market, establishing a partnership with a group of high-level Saudi executives. Later, Jet Aviation established a string of four FBOs in the U.S., setting up its global company headquarters in West Palm Beach, Fla. Its other bases are at Bedford, Mass., outside Boston, Dallas Love Field and Teterboro, N.J. Jet’s European operations number 10 in total, with the emphasis on maintenance and aircraft sales and management services. Jet Aviation’s charter fleet is one of the world’s largest, with more than 150 business jets.