How to make a small fortune

[Yellowstone]

….start with a big one. Or so the saying goes I’ve heard. 

I’m a low hours private fixed wing pilot that has had some success in business. I’ve had an opportunity come my way to invest in a 133, 135, 137 helicopter operation focused mainly on wildfire services up the the Rocky Mountain region. 

Let’s assume the business is managed well and efficiently. Generally speaking, is aviation a good, decent, or horrible idea?

The goal would be to spin off enough profit to pay my mortgage, a good salary for a hired pilot, and maybe set something aside to slowly grow the fleet to two, three, or even four aircraft.

My current business is highly regulated, capital intensive, high barrier to entry, and technical which seems similar to that of a helicopter business. So it seems like a good fit for my management background. 

Aviation; guaranteed money pit or good opportunity?

[helonorth]

Plenty of people make money in aviation. It sounds like you have what could be considered a half way reliable customer base and already have the certificates. Have you asked to look at the books? I wouldn't do much until then.

One thing I have noticed, just about every small operator I know is an A&P mechanic as well as a pilot. Being able to keep the aircraft available and safe is key. Good luck.

[PRJ]

Great advice by helonorth. Think of it soup-to-nuts to include insurance requirements and training/qualifications to get on the aerial firefighting contract list. Money can be made but you have to be able to operate at different economies of scale. 
 

Good luck! 

[500E]

The problem is scale one machine = disaster on contract work, one big break down =hire in machine & poss pilot + big bill say $110k gearbox $120k engine rebuilds  blade12k last time I think  this is for MD500 smaller bits still scary

[Yellowstone]

Yeah, it’s sounds like these ops are very much on the risky side of the scale, even when done right.  It’s hard on equipment and people. And the environmental conditions are the worst. So that is a real gut check right there. And that’s probably why there are relatively few that do it. It’s a very interesting perspective, thank you!

[helonorth]

1 hour ago, Yellowstone said:

Yeah, it’s sounds like these ops are very much on the risky side of the scale, even when done right.  It’s hard on equipment and people. And the environmental conditions are the worst. So that is a real gut check right there. And that’s probably why there are relatively few that do it. It’s a very interesting perspective, thank you!

Whose post are you reading? 

Edited July 18, 2021 by helonorth

[Yellowstone]

Helonorth, I was responding to 500E specifically, but your comments were very valid as well. But I’ve also been talking personally to several folks I know the the helicopter services industry, specifically power line work. Which is also dangerous. But if I think about it, any real “work” with external loads amps up the risk factors. 

[adam32]

What aircraft do they currently operate? What type of contract do they have? CWN? EU? How many years left on the contract? Do you they anything besides fire work? 

[RisePilot]

Even if a smallish deal, I'd have financial, technical and legal DD done by a third party.  I'd structure with a deferred comp payout to vendor of at least 2yrs on agreed parameters - possibly three tranches.  Lastly, this is not a growth business, so don't pay any more than 3-5 times EBITDA maximum.

[helonorth]

5 hours ago, RisePilot said:

Even if a smallish deal, I'd have financial, technical and legal DD done by a third party.  I'd structure with a deferred comp payout to vendor of at least 2yrs on agreed parameters - possibly three tranches.  Lastly, this is not a growth business, so don't pay any more than 3-5 times EBITDA maximum.

Yeah, yeah. Definitely. Three tranches, minimum. 

Edited July 20, 2021 by helonorth

[RisePilot]

This would mean part of the purchase cost would be paid on 1) day one of acquisition, 2) part at end of year one after acquisition and 3) part at end of year two.  The two deferred payments to possibly vary against an agreed metric such as EBITDA remaining at level of day one.  This makes sure the seller isn't handing you a "dud"