ECS Group back on the acquisition trail

The ECS Group is back on the acquisition trail following a break in activity due to the Covid crisis.

The general sales and service agent (GSSA) has announced three takeover deals in the past three months and executive chairman Adrien Thominet says there are more deals in the pipeline.

Explaining the decision to step back from acquisitions during Covid, Thominet says that the high yields that air cargo companies were able to achieve during the pandemic made it difficult to assess a fair price.

“Covid, unfortunately, changed the economic value of the companies because the sudden increase of the yields meant that everyone was enjoying crazy results,” says Thominet. “And then the question was what is the real economic value of this company.

“During Covid it was impossible to analyse what is the right price because everyone was impressed by the results.

“We knew it was bit disconnected from the real level of the activity so I think it was healthy for everyone to wait for the end of Covid and for everything to return to normal.”

On future deals, Thominet outlined some of the regions where the ECS Group is looking to expand its presence.

“Our group needs to reinforce its position in North Asia,” he says. “Last year we opened offices in Japan and Korea, but China remains an area of interest, Southeast Asia as well.”

He adds that Africa is another area the company is exploring further investment.

Thominet explains that GSA’s on the continent are mostly small organisations that will require investment if they wish to grow further.

“We believe a wedding or a marriage between a big organisation like us with our practices, our standards, our processes and our financial background, can fit very well with local heroes,” he explains.

He adds that another criteria for making an acquisition is the personality of the manager.

Thominet explains that when ECS invests in a company it asks the mangers to stay on for a period of time to ensure consistency of service.

He adds that many of the companies that ECS invests in are already partners or representatives that it has been working with for many years, with owners now looking to exit the business or alternatively the company could be looking for investment to meet changing airline requirements.

“When you remain a small GSA you have more and more constraints from the airlines because of their demands in terms of bank guarantees, when it comes to digital tools they expect you to have, where they have demands in terms of business intelligence and so on and so on,” he says.

“For a small GSA it is becoming harder and harder every year – an airline can suddenly double their frequency and then ask for a bank guarantee in the millions.

“And the owner has to put down a bank guarantee for each airline so they are under a lot of pressure.

“Being attached to a group like us, it is a way to protect a bit their financial background because the group can provide corporate bank guarantees and bring the business intelligence and synergies.”

The firm’s most recent acquisitions came in the shape of EFIS Maroc in Morocco, Americas GSA in central America and Ireland-based International Airline Marketing.

EFIS MAROC is headquartered at Casablanca Mohammed V Airport and provides commercial coverage for the country’s major cargo gateways, including Marrakesh Menara Airport, Agadir Al Massira Airport and Tangier Ibn Battuta Airport.

The two companies had been working together for more than two decades when the deal was completed.

Americas GSA employs 42 members of staff across 13 offices and has contracts with LATAM Airlines, MAS, Turkish Airlines, Lufthansa, Swiss, Korean Air, and Ethiopian Airlines.

The deal expands ECS’ presence in the Americas to Bolivia, Costa Rica, El Salvador, Guatemala, Nicaragua, and Panamá alongside its existing network covering Argentina, Brazil, Canada, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Peru, and the US.

Meanwhile, the purchase of IAM expanded the ECS Group’s market share in Ireland to 30%.

“Our logic on acquisitions is to either open countries where we do not exist or if we already existing in those countries it is to reinforce our position to give us a leadership position,” Thominet says.

On EFIS MARCO, Thominet adds: “We already have an existing activity in Africa so it is giving us one more foot in this market, which is really opening up.

“And we know this company – they were our representative, our subagent, so it is someone that we have known for a long time.”

He adds: “And it is the same for Americas GSA, it gave us a presence in all those central American countries where we did not exist.”

“So those two acquisitions were helping us to enlarge our network. And in Ireland we were already have a presence, but IAM is the leading GSA in Ireland and so for us it was an opportunity to massively reinforce our position.”

> ECS Group back on the acquisition trail