Aircraft charter specialist Gama Aviation PLC (LON:GMAA) and aviation services provider BBA Aviation PLC (LON:BBA) are to merge their US aircraft management and charter businesses.
Shares in both companies rose on news of the agreement, which will see the creation of the US’s largest aircraft management business.
Gama’s shares were up 18p to 154p in early trading, while BBA’s shares rose 1.1p to 284.4p.
Gama said the tie-up is expected to deliver significant additional growth for Gama Aviation's US Ground business through the ability to cross sell maintenance services to the additional aircraft now under management.
Those benefits will take a while to filter through, however, with Gama saying the deal is expected to have no impact on earnings in 2017 and 2018.
The agreement is expected to deliver significant cost synergies of not less than US$2mln over two years.
“The enlarged business creates a market leader and an unrivalled platform for growing our share of this massive business aviation market. The combination diversifies our customer base and extends our network coverage nationally whilst simplifying the financial arrangements with our US partners. As part of this strategically important transaction, we are also excited by the potential to cross sell our US maintenance services into the enlarged fleet," said Marwan Khalek, chief executive of Gama.