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On the Record With
FRANK KLAUS, PRESIDENT & CEO, GARRETT/PIEDMONT HAWTHORNE/ASSOCIATED
The newly combined Garrett Aviation, Piedmont Hawthorne and Associated Air Center burst upon the scene here at NBAA just 46 days old since being combined under the ownership of The Carlyle Group investment company. So new is the combination that it doesn't yet have a name, but it is represented here by the logos of its three constituents pointing to one spot with the slogan: "Together to serve you better."
And that, according to president & CEO Frank Klaus, is what will make the new company a game changer in business aviation—the fact it will be defined from the customer on back.
Garrett is the number one provider of services for Honeywell's engines (fully one-third of the fleet is powered by the TFE731, and Garrett claims a 65% share in that engine's MRO market). It is also a leading independent provider of airframe MRO services in engine retrofit programs and the development and installation of RVSM solutions.
Piedmont Hawthorne is the second largest FBO in the United States with 33 locations at major airports. Its charter fleet is 67 aircraft strong, and it is the world's number one Raytheon/Beechcraft dealer, representing 15% of all aircraft sold through Raytheon's distribution network. Carlyle acquired Piedmont Hawthorne several years ago, along with its Associated Air Center, which is a leading completion center in the United States for large cabin and VVIP aircraft.
Klaus can hardly contain his enthusiasm over the potential of combining services across all these businesses. He had an exciting enough job before, running the CF34 regional airliner turbofan program at GE Aircraft Engines, where he was charged with managing the flight-test programs at Bombardier and Embraer while planning the production of the backlog of $7 billion worth of engines.
GE took over Garrett in 1997 as part of its acquisition of UNC/Greenwich Air Services, when it said publicly it admired the way Garrett bundled its services. But the airline-oriented engine manufacturer never had the time to bring Garrett to its full potential—hence the sale to Carlyle.
"I came out here on a short time assignment from Cincinnati to sell the business as a favor to [GE Aircraft Engines president] Dave Calhoun," Klaus told ShowNews. "I never dreamed I would leave GE to run the business for Carlyle.
"This is the best thing that ever happened to Garrett—never before have we been in charge of our own destiny here, able to do what we think makes sense rather than being told by a corporate owner in terms of having to meet quarterly numbers.
"Now we really have the opportunity to change the game in terms of how business aviation services are provided. We can do it through full service, one-stop shopping defined from the customer on back. That's our vision in a nutshell."
Klaus has hired Price Waterhouse Cooper to help define the best ways to leverage the company's three identities into a one-stop shop. The new company will have one top management team, one financial operation, and one sales force cross-selling all the products.
He is forming a panel of customers to help define the products the market really wants—and he fully expects requirements to be different between fleet and individual operators.
Examples of products that spring to mind are packaging of fuel, interior grooming, scheduled maintenance, streamlining the backroom and billing, loyalty cards, and customized pricing packages.
"We really haven't defined this yet," said Klaus. "That's why there will be no product announcements from us here at NBAA. We're going to get only one chance to do this right, and I don't want to mess it up."
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