12 February 2007   

Star Capital Partners Acquires Two Flight Training Businesses, Creating A Leading Global Independant Service Provider

STAR Capital Partners (“STAR”), a leading European investment fund focused on investing in capital intensive businesses, announces today it has reached agreements to acquire:

• A majority stake in General Electric Commercial Aviation Training ("GECAT") from GE's Commercial Aviation Services business ("GECAS"); and
• The entire share capital of SAS Flight Academy ("Flight Academy") from SAS AB ("SAS").

The transaction is expected to value the combined businesses in excess of $275 million (€212 million) and is expected to complete in the next few weeks. Under terms of the agreement, GECAS will retain a significant equity stake in the combined entity of just under 20 percent and under a marketing alliance agreement will work with the merged businesses to assist in future development plans.

GECAT is the second largest provider of flight training services in Europe, with its principal operations at London's Heathrow and Gatwick Airports, and Hong Kong's Chek Lap Kok airport. GECAT has more than 120 customers, mainly in Europe and Asia, who include BMI, First Choice, Jet Airways, SpiceJet and Philippine Airlines. It has 83 employees and operates 23 commercial flight simulators. GECAT is a JAA Type Rating Training Organisation (TRTO) with approval for the most popular aircraft types. GECAT has developed a worldwide network of 55 simulators, its partners include Cathay Pacific, Aero Madrid, Air Canada, China Eastern, and Shandong Airlines.

Flight Academy is the leading provider of flight training services in Scandinavia and the Baltic regions, operating flight training centres at Stockholm, Oslo, Copenhagen and Riga. Flight Academy has 220 customers, including Scandinavian Airlines, its largest customer. It has approximately 180 employees and operates 17 commercial flight simulators

The combined business will be one of the leading independent flight training businesses globally. Pro-forma combined revenues for the year ended 31 December 2006 were $110 million (€85 million). The new entity will be led by current GECAT head Brian Simpson who will be supported by Olof Bärve, the current head of Flight Academy. Brian Simpson and Olof Bärve together noted:

"STAR's investment will help accelerate our growth in the commercial pilot training sector, while continuing to leverage GECAS' strong relationships with the world's airlines. Combining our businesses is excellent news for all our customers and employees and will help position us for long-term success in this market."

Paul Gough, Investment Director of STAR said:

“The expected shortfall of qualified pilots to service the world’s growing aircraft fleet combined with a continued drive by airlines to focus on their core businesses by outsourcing key support services makes established well run pilot training operations like GECAT and Flight Academy all the more critical going forward.

"The acquisition of GECAT and Flight Academy is another excellent example of how STAR's capital outsourcing strategy can be put to work in the aviation industry. These transactions follow our successful investment in SR Technics, which played a major role in consolidating the European aircraft maintenance, repair and overhaul market. We think the flight training market also offers excellent opportunities for consolidation and capital-led growth."

GECAS President Henry Hubschman noted, "We believe our worldwide customers will benefit from the creation of one of the global leaders in flight training. We are pleased to be a continued shareholder and partner with the management team and STAR to grow the business".

Frank Turner, previously Chairman of SR Technics and a STAR Advisor, has been appointed Chairman of the new entity. Commenting on the transaction Frank said:

"Both companies represent businesses that, when funded and run in-house are highly capital intensive and require significant management input. By merging these two businesses, we believe that we can further enhance and broaden the offering to the world's airline industry while at the same time drive operational effectiveness through the benefits of scale."