Canada's Vector to purchase DARA divisions

The UK government has confirmed it is to sell the rotary wing and components businesses of the state-owned Defence Aviation and Repair Agency (DARA) to Canadian maintenance company Vector Aerospace.

The two sides announced Feb. 5 they had entered into a definitive purchase and sale agreement transferring helicopter repair and maintenance facilities at Fleetlands in Southern England and a helicopter component repair operation at Almondbank, Scotland.

The deal, costing the company 17 million pounds ($33.5 million), is expected to be completed by the end of March.

The centerpiece of the acquisition is the 34-year deal Fleetlands has to conduct maintenance on British military Chinooks and agreements to undertake similar work on the Sea King and current variants of the Lynx until they go out of service in the next decade or so.

The sale is part of a wider restructuring of Ministry of Defence (MOD)-owned maintenance and repair businesses in the air and land sectors.

Vector is best known for its maintenance and repair work in Canada and the United States. The company had 168 million pounds in sales in 2006, dominated by its engine repair activities, much of that in the civil sector.

Its activities in the United Kingdom until now have been confined to an engine maintenance and repair business, Sigma Aerospace. Based just outside London, the business primarily services fixed-wing aircraft engines used by the Royal Air Force on its C-130 Hercules and VC-10 fleets.

Don Jackson, Vector’s chief executive and president, said the acquisition of the DARA activities was a significant expansion by the company into the military structures market.

Vector was named preferred bidder last July but has been locked in what Armed Forces Minister Bob Ainsworth described Feb. 5 as “extended consultation” with lawmakers, trades unions and the government itself over the sale.

In addition, one lawmaker here raised the issue of Vector’s size as a reason for reconsidering the deal during a parliamentary defense committee hearing on equipment procurement last week.

Jackson rebuffed any suggestion that his company faced credibility issues in its acquisition talks here.

“We never faced credibility problems over our size or capabilities,” he said. “Additionally [helicopter-makers] Boeing and AgustaWestland have both indicated their willingness to work with us.”

In a written statement to Parliament, Ainsworth said the sale of DARA to Vector “offers the opportunity for investment and growth but also provides us with operational certainty on a vitally important maintenance service that has every chance of improving under new ownership. ... On current plans, these businesses have a finite life; privatization could develop the business further.”

The Vector boss said all three British-based businesses are commercially and economically viable. “We take a cautious view of any consolidation potential. It is not a priority,” he said.

Jackson said the acquisition could be a stepping stone for the company to widen its business by creating a European center of excellence in helicopter maintenance.

“Our Sigma business already brings T56 engines from all over Europe for maintenance in the U.K., and I think we could see a similar model evolve for the Almondbank components operation,” he said.

Vector is also looking at commercial helicopter markets for work, and Jackson said he recognizes Fleetlands potential to expand the company’s engine repair and overhaul capabilities into the helicopter sector.

The British are anxious to ensure Vector retains the skills and capabilities of the DARA operation in the United Kingdom. The company has legally undertaken to retain the operational capability currently provided in the country.

Chief Financial Officer Randle Levene says the undertaking means the facilities will remain in place as long as they are economically viable.

“The British government also has the right to approve any takeover of Vector by a third party,” he said.

Source: A. Chuter - DefenseNews

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