Private equity firms are increasingly targeting the little-known companies that fix planes for commercial airlines — preying on an industry with already weakened oversight and further stoking aviation safety advocates’ fears.
In the past, commercial airlines in the United States did the critical work of inspecting and repairing their fleets in-house, employing teams of mechanics to conduct airplane maintenance at their facilities across the country. But over the last two decades, repairs have increasingly been outsourced to third parties, many of which operate overseas.
Now private equity — the opaque industry known for hollowing out companies in search of short-term profits — is moving in.
According to a recent report from PitchBook, a financial data service, private equity investors have flooded the airplane maintenance industry over the last five years, driving an increasing number of deals, which reached a high of twenty-four last year. “Private equity interest in the . . . sector shows no signs of slowing,” analysts concluded. The market, they wrote, was “ripe for consolidation plays.”
For decades, advocates have been sounding the alarm about the potential dangers of US airlines outsourcing maintenance overseas, where oversight by US regulators is more limited. Consolidation in the multibillion-dollar industry, paired with private equity’s cost-cutting, extractive playbook, may make things worse.
“Private equity is not there for the long term,” former US representative Peter DeFazio (D-OR), who worked closely on federal aviation policy for decades, told the Lever. “They want to bleed cash and take out equity and then put a bunch of debt on the company. And that can lead to problems.”
In the aviation industry,…
Auteur: Katya Schwenk
