BBA Aviation PLC (LON:BBA) reported revenue growth in the first quarter of the year, driven primarily by an outperformance of its premium Signature support service.
The FTSE-250 aviation support services provider said group revenue for the period was up 9.7% year-on-year, and up 2.9% on a like-for-like basis.
Signature service drives revenue growth
The group’s Signature service, which provides support to owners and operators of private and business aircraft, saw its revenue grow 13.9% (or 5.5% LFL) in the flight support division, while the Signature revenues in the business & general aviation (B&GA) division were up 2.6% (4.7% LFL).
BBA said the market outperformance reflected the momentum from the commercial negotiations concluded around the middle of 2017, but was expected to moderate, compared to US B&GA market movements, as comparatives strengthened in the second half.
The company added that the US B&GA market was weaker than expected during the first quarter as weather impacted flight movements, particularly in January and March.
BBA also said Signature had secured a lease term extension with a new 20-year lease (with a possible five-year extension) at its sole source fixed base operation (FBO) at Hartsfield Jackson Atlanta International Airport.
Aftermarket declines
In aftermarket services, group revenue declined 0.5% (3.8% LFL) in the period, with BBA’s equipment arm, Ontic, impacted by the phasing of its revenues against a strong prior year comparative.
However, BBA added that Ontic had recently signed a new licensing agreement with Honeywell for cockpit LCD displays on multiple commercial, military fixed-wing and rotorcraft platforms.
The firm also announced the signing of its first product licence with Engine Control Services (part of United Technologies Aerospace Systems) for the manufacturing and aftermarket support for military fuel control products.
The firms’ engine repair business (ERO) saw flat revenues for the period, continuing a trend from the second half of the previous year while a strategic review, announced on March 1, remained ongoing.
Mark Johnstone, BBA chief executive, said: "Momentum in the Group continues with market outperformance in Signature, building our non-fuel services, the extension of our lease term at Hartsfield Jackson Atlanta International Airport and the acquisition of new Ontic licences.
He added: “We are pleased to have concluded the refinancing of the Group and have the capital structure in place to execute on our strategy. The outlook for the full year remains unchanged."
In a note to clients, analysts at Liberum commented: “Signature continues to outperform its market, although the latter showed evidence of some reduction in growth from winter weather being worse than normal.
They added: “This outperformance was supported by the renegotiation of customer deals last year, so the comparative gets tougher in H2 and management expects the outperformance to moderate in H2.”
At the open, BBA shares were steady around 331p.