Saturday, September 1, 2007
Rotorcraft Report: Air Methods Shakes Up EMS Sector
Health care providers, pilots, mechanics, competitors, aircraft manufacturers, and completions shops are all trying to sort out the impact on their futures of Air Methods Corp.’s pending acquisition of CJ Systems Aviation Group.
Englewood, Colo.-based Air Methods, which bills itself as the world’s largest air ambulance operator, had been working for months on a deal with FSS Airholdings, the parent of CJ Systems. Under the deal Air Methods CEO Aaron Todd revealed July 31, that company will pay about $25 million in cash for 100 percent of FSS’s outstanding common stock. In exchange, it gets CJ, headquartered in West Mifflin, Pa. (near Pittsburgh) and among the world’s largest air medical operators. CJ Systems has a fleet of 113 helicopters and fixed-wing aircraft.
In addition to CJ Systems’s fleet and its stable of air-ambulance contracts with hospitals throughout the United States, its headquarters maintenance and logistics base would give Air Methods an added capability and a major market presence.
"The significant maintenance, overhaul, and logistics capabilities at CJ Systems’s headquarters will be able to provide added support for all our aircraft operating in the Eastern United States," Todd said. "The operational efficiencies to be realized from the combination will help to offset the high rates of inflation associated with these key services, as well."
Air Methods is looking to close on the transaction by Oct. 1, but no later than Oct. 31.
Completion of the deal would mark a major consolidation of the U.S. helicopter EMS sector. That naturally raises a host of questions and concerns for those involved with either company.
Hospital managers are wondering how the deal might affect their existing agreements with CJ Systems.
Pilots particularly are anxious about the integration of the CJ and Air Methods workforces.
Pilots at CJ Systems in 2004 rejected union representation. Air Methods pilots voted the Office and Professional Employees International Union in as their bargaining agent, and the union negotiated a contract with the company in March 2006. Union leaders said they are committed to "the successful integration of the newly acquired pilots into our organization." But some CJ Systems pilots fear retribution for that anti-union vote.
Other employees, competitors, and major suppliers will carefully watch whether the deal leads to an expansion or a consolidation of Air Methods’ business.