Hangar 8

Despite delivering a robust operational performance, shares in charter aircraft specialist Hangar 8 (HGR8) have been in a tailspin since joining AIM a year ago at 150p. 

The Oxford-based firm manages jets on behalf of their owners and rents the aircraft out to third-party customers. Due to the benefit of its greater buying power, Hangar 8 estimates that it can save up to $500,000 a year on the running costs of a mid-sized jet.

When it raised £800,000 on listing, the intention was to target new customers, increase its operational efficiency and seek additional revenue by providing maintenance services. With 32 aircraft under management (2010: 19) it has also enjoyed a 58% hike in charter hours flown to 3,813.

Hangar 8 has flown to 452 different destinations and recently opened a new hub in India as well as sites in Europe and Africa. Hitherto it has been spending £1m on maintenance with third parties, and by securing approval to do its own engineering work, this business should be able to be brought in-house.

In the 14-month period to June, sales increased 67% to £18.2m (2010: £10.9m), as operating profits came in at £700,000 (2010: £100,000 loss). The £1m cost of the float dented the bottom line, but broker Daniel Stewart predicts 2012 pre-tax profits of £1.2m and EPS of 15.4p.

Hangar 8 continues to enjoy strong charter demand across its fleet, and is also winning market share as rivals that offer uneconomic rates continue to struggle. Co-founder, CEO and trained pilot Dustin Dryden says, 'We continue to seek a balance between business, leisure and government clients so we are not exposed to any one sector.' With cash of £2.2m, current trading good and the outlook positive, the shares have fallen far enough.