Story ID: 041
GippsAero Shuts Down Airvan Manufacturing
By: Neelam Mathews
Caption: India’s Mahindra Aerospace has shuttered its GippsAero subsidiary in Australia that had manufactured the GA8 Airvan.
Word Count: 410
India’s Mahindra Aerospace has exited its GippsAero subsidiary in Australia, announcing during a recent earnings call that it had shuttered this business. “GippsAero is up for sale for someone who wants to buy it. But, if there is no buyer, the business has been shut down already,” said Anish Shah, deputy managing director and group CFO at Mahindra and Mahindra. He added there are no aircraft orders currently in hand.

“We have moved to a service model right now and will continue with [that] model to meet the contractual obligations of the planes. But there is no further activity in terms of manufacturing or selling these planes,” Shah said.

The company was producing the GA8 Airvan piston single and was developing the 10-seat GA10 turboprop single. Certified in 43 countries, more than 250 GA8 Airvans operate globally in tourism, freight, law enforcement, and sports flying, among others.

A former value-added reseller (VAR) for GippsAero contradicted the statement that there were no more orders for the GA8, according to a company representative who asked to remain anonymous. “As a VAR integrating the Airvan for surveillance customers,” he told AIN, “we were forced to abandon a contract for several aircraft acquisitions with a major state agency. Well before cessation of operations, GippsAero refused to take our order for several aircraft, prompting the cancellation of our contract with the agency. Additionally and by necessity, we have developed new capabilities for competing airframes and are in the process of transitioning current prospects to other platforms.”

On track to “reignite value creation,” Mahindra officials said that the group would look at products that yield an 18 percent return on equity or are a strategic investment. “GippsAero falls in neither of the categories,” said Shah. “The positive is that the aircraft business is behind us as it has taken a significant amount of cash, and the industry even earlier was not in a good shape.”

AIN has learned that Mahindra had invested more than $100 million into the subsidiary, with little return on investment since 2009 when it purchased Gippsland Aeronautics (GippsAero) and Aerostaff Australia to manufacture aircraft and allied components to service the global market.

The Mahindra Group will, however, continue with its aerospace business in India. “It has got good long-term potential for us,” explained Shah. The group's aerospace facility in India produces 100,000 parts and components monthly for OEMs such as Airbus and Boeing.