Business aviation group Signature Aviation has taken financial steps to secure the company during the coronavirus crisis over the coming year, including a suspension on bonus payments throughout the company.
Signature runs the world’s largest FBO network with almost 400 sites, including the Epic-branded locations it acquired in 2018. The group also includes sister company, Engine Repair and Overhaul (ERO). Both businesses are classed as essential critical infrastructure providers and remain open throughout the crisis.
In a statement released this week, Signature’s Board suspended the final 2019 share dividend it had proposed earlier in March and its guidance on expected results for the coming year.
Mark Johnstone, Signature Aviation’s CEO said, “The health and safety of our employees and customers remains our utmost priority during these unprecedented times. Our Signature business is a provider of critical infrastructure and as such we remain both open and trading.
“We are taking the necessary and appropriate action to manage our costs to a level consistent with flying activity. The business continues to have attractive fundamentals and robust medium-term prospects, underpinned by our market leading FBO network and its strong cash generative characteristics.”
According to Signature, the last week of March saw a decline in flight activity across its network of on average 65% per day, as customers observed temporary stay at home orders and enforce social distancing.
Signature had originally projected a flat market for the coming year in the US business and general aviation market (US B&GA), which it said is now “unlikely to materialize”. The US B&GA market is approximately 90% domestic movements.
The company said in its statement: “We have already started to take action on our cost base, around 75% of which is variable. Our largest cost, fuel, naturally flexes with the volumes in the market and we hold less than a week’s inventory across the network.
“We have well established practices to manage our second largest cost, labour, and management is taking the appropriate steps to best match our labour costs to flying activity.
“As a further prudent measure, management has taken the decision to suspend all bonus and variable pay plans throughout the Group. We will continue to evaluate and take advantage of appropriate government financial support and assistance that is available in both the US and Europe.”