Japanese aircraft interiors manufacturer Jamco Corporation is seeking to cash in on a global shortage of new plane seats by reentering the business class seat market under its new owner, Bain Capital, company executives said.
Jamco, which the U.S. private equity firm bought for $700 million this year, also plans to pursue acquisitions globally, chasing premium cabin products for the Airbus and Boeing wide-body airliners the firm supplies.
Aerospace suppliers like Jamco, which mostly makes galley areas and lavatories for twin-aisle planes, have faced parts and labour shortages and cost difficulties as commercial aviation emerged from the pandemic.
“We see that innovation today happening from small companies,” Nick Gattas, a managing director in Bain’s Asia Pacific private equity team, told Reuters.
Bain also sees the potential for integrating Japanese suppliers further down the supply chain into Jamco, Gattas added.
Jamco was delisted from the Tokyo Stock Exchange in July and Bain’s deal to acquire the firm is expected to fully close in September. Jamco’s major shareholders had included ANA Holdings and Itochu.
It also announced a new leadership team on Tuesday, led by Executive Chair Kate Schaefer, currently a senior adviser to Bain Capital and formerly senior vice president at Boeing Global Services.
Jamco’s interest in premium seats comes as planemakers are struggling to make airliners fast enough to meet demand. Delays in installing new seats are a key bottleneck, which has left many airlines waiting impatiently for new jets.
Jamco in 2023 stopped taking new orders for business class seats due to intense demand for other products, but Bain wants the firm to start selling them again.
“The interest from the airlines has been pretty overwhelming,” Schaefer said.
Bain also sees opportunity in airlines’ growing need to re-fit ageing planes that they cannot retire due to a global shortage of new jets.
“We see billions of dollars being spent on first class, business class and premium economy retrofits of planes that are 10 years old or more. That’s a huge opportunity for a company like Jamco,” Gattas said.
Aerospace has been caught up in the global trade war, upending decades of largely duty-free trading in civil aircraft.
The United States and Japan last month agreed a trade deal that put a 15% tariff on exports from Japan to the United States.
Jamco products that go to Boeing would be subjected to a tariff, Gattas said. However, as many Boeing aircraft are then exported they can benefit from duty drawbacks – a mechanism whereby duties paid on imported goods can be refunded if those goods are subsequently exported.
For the remaining exposure to U.S. airlines, the question of who should pay for the hit from tariffs “is a topic of active discussion” among Boeing suppliers today, Gattas said.
Bain has a number of aviation investments, including Virgin Australia which returned to the Australian Securities Exchange in June after the private equity firm rescued it from administration in 2020.
Reuters
