Perth-based engineering firm Monadelphous has established what appears to be a tidy little earner servicing the aviation sector.
Perth-based engineering firm Monadelphous has established what appears to be a tidy little earner servicing the aviation sector.
Formed three months before the demise of Ansett Airlines in September 2001, Monadelphous offshoot Skystar Airport Services has steadily been expanding its market share of Australia’s estimated $500 million ground-handling industry.
Skystar’s revenue has grown from an initial turnover of $250,000 to a forecast $7.5 million this fiscal year.
Skystar claims to be a unique ground-handling business that stands alone in being able to provide a single service source to clients, from aircraft marshalling and refuelling through to passenger check-in and baggage handling.
From its Perth base, since 2001 Skystar has secured a small number of contracts with both domestic and international airlines, including Skywest and Emirates.
Last year, however, marked a significant growth period for the company when it was awarded a string of two- to three-year contracts, particularly with airlines based out of Asia.
It more recently secured handling contracts with Malaysian Airlines and Valuair in Perth, as well as a contract with Air Paradise out of Brisbane Airport, and is currently forecast to turnover $12 million next financial year.
While Skystar national business manager Neil Bolton wouldn’t comment on the business’ profitability, he said it made a very healthy net contribution to the group.
The ASX-listed Monadelphous, which apart from its engineering division also offers maintenance and support service to the resource and energy sector, has recently been benefiting from the resources boom in Australia.
In its recent half yearly report for the six months ending December 2004 it recorded a $8 million after-tax profit, up 101 per cent from the corresponding period last year, on revenue of almost $200 million, an increase of 76 per cent.
However, the resources sector is well known for its cyclical nature, which is what led Monadelphous to look outside its traditional field of expertise for growth opportunities.
Mr Bolton attributes Skystar’s success so far to two key factors – the collapse of Ansett, which created a void in the market while also freeing up skills and expertise, and the strong backing of Monadelphous.
While Mr Bolton admits Skystar is still a niche operator in the sector in Australia, dominated by Qantas and specialist UK player Menzies Aviation, he said it was becoming a significant player and was evaluating several growth opportunities.
Mr Bolton said the increased confidence in international travel provided good growth potential and to a lesser extent so did the current buoyant economic times.
In the past year Perth airports have recorded record numbers of domestic and international passengers, he said.
Another growth area is the launch of new domestic low-cost carriers.
“For example, Valuair is a low cost airline which we handle and Jetstar is another one,” Mr Bolton said.
“There is talk at the moment of at least one or two more coming to Perth.”
To achieve that growth, Mr Bolton said Skystar was focused on organic opportunities within Australia, although it was prepared to look at acquisitions.
“Because we have got so much room for growth, given our current market share, organic growth is probably going to be the dominant factor,” he said.
