Acquisitions, vendor deals fuel growth at Air Method

HAI Convention News » 2008
February 18, 2008, 7:56 AM

With its acquisition last year of Pittsburgh-based CJ Systems, Air Methods (Booth No. 1043) has become the largest civil air ambulance provider in the country. Integrating CJ into Air Methods has proceeded smoothly, so far, said CEO Aaron Todd, but he admitted there are challenges ahead.

The combined company now operates a fleet of 350 aircraft, mostly helicopters, in 42 states. It owns an estimated 80 percent of these aircraft. (The remainder are owned by clients and operated by Denver-based Air Methods under service agreements.) The company is also an aggressive purchaser of new aircraft, with more than 138 helicopters on order over the next five years–38 of them scheduled for delivery this year. The majority of these will replace existing helicopters. These new aircraft orders represent a capital commitment of more than $500 million. While most of those orders are for Eurocopters, Air Methods is also the launch customer for the Bell 429 twin, scheduled for initial deliveries late this year.

CJ operated a fleet of 107 aircraft and had 900 employees. “We are very pleased how smoothly the acquisition has gone and with the merging of the workforces. They have come together in a great spirit of cooperation and support,” Todd said. Air Methods acquired the parent company of CJ, FSS Airholdings, for $25 million and the assumption of debt financed with $100 million in term and line-of-credit bank debt.

The acquisition of CJ not only gives Air Methods “critical mass,” according to Todd, but also much needed maintenance and overhaul facilities in Pittsburgh. Todd pointed out that 60 percent of the combined company’s fleet is located east of the Mississippi, and that transporting those helicopters to Denver was sometimes expensive and impractical. The acquisition also produced greater economies of scale, improved customer service and reduced the insurance rate on CJ’s helicopters.

Todd said he sees retention of CJ’s existing customers as the greatest challenge for the merged companies. “We need to win the trust of their customers. We are a new entity, a new organization, and they need to become comfortable with us. We are making every effort to maintain their loyalty and their business. We need to develop our own track record of performance with them.”

Todd said he thinks consolidation within the market will continue, as will fierce competition for contracts with hospitals. “There is always good, healthy competition each time we have a contract up for renewal,” he said.

Air Medical Services
The company also provides air ambulance equipment and EMS completions through its products division, located in a 48,000-sq-ft plant in Englewood, Colo. Most of the completions and refurbishments are for Air Methods’ own helicopters, which  account for 30 to 50 helicopters per year and involve Air Methods-held STCs medical equipment and avionics packages.

Air Methods is a factory-authorized EMS completion center for Eurocopter on the AS 350B3 and EC 145 and recently delivered a copy of the latter to Omniflight for the Mayo Clinic in Rochester, Minn.

Last month the products division announced that it had received an STC for its single-pilot IFR avionics package for the EC 145. The package includes a bevy of new avionics including dual Garmin GNS 430W GPS/navcom, Garmin GMX multifunction display, Honeywell Mark XXI enhanced ground proximity warning system, Garmin GDL 69/69A satellite datalink weather system, dual Garmin GTX 330 transponders, Bendix/King KRA-405B radar altimeter, Bendix/King RDR-2000 weather radar and other gear.  

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