Zodiac Aerospace has inked a letter of intent (LOI) to acquire US inflight entertainment firm The IMS Company in a move that will make the interiors giant a power player in the world of embedded IFE, and see it compete for business with stalwarts Panasonic Avionics and Thales.
Confirming the deal today during an earnings conference call, Zodiac said its acquisition of IMS – which is subject to regulatory approval – is expected to close before the end of this year.
Over the past few years Zodiac has been seeking to make its mark in IFE. The company’s SiT (Seat Integrated Technology) IFE system is a seat-centric solution that is offered as a linefit option on Airbus A330/A340 widebodies.
Airbus is also closing in an a supplier of lightweight IFE for the A350 XWB, and Zodiac is understood to be a strong contender.
But SiT’s success pales in comparison to what has been accomplished by IMS in the retrofit market. IMS in May announced a deal with Lufthansa to retrofit a large portion of the German carrier’s widebody fleet with its seat-centric RAVE IFE system. Unlike traditional headend server-based IFE, RAVE stores content in seat-back displays.
Lufthansa is among a growing list of carriers to adopt the lightweight, easy-to-retrofit RAVE IFE system. In announcing the Lufthansa deal, IMS CEO Joseph Renton said: “With this order our customer backlog should put us on par to be the number three IFE supplier based on the fast acceptance of RAVE in the market. Technology has enabled someone like us to come in and do something different that kind of goes to the fundamentals of delivering a solution that’s reliable and less expensive. It opens the market up.”
More recently, IMS told the APEX editor’s blog that it sees no slow-down in demand for RAVE.
Such bravado appears to be well placed. IFE hardware expenditure is expected to rise to $2 billion per year in 2015, according to renowned consultancy IMDC. Increasingly, engineering services companies and MRO facilities that retrofit IFE – and inflight connectivity – to aircraft are experiencing a growing business bonanza.
Zodiac’s acquisition of IMS is in line with Zodiac’s broader external growth strategy, which has seen the company acquire interiors specialists Heath Tecna and Contour during the 2011/12 fiscal year. The company saw a 26.4% rise in operating income to €486.4 million. Sales revenue increased by 25.8% to €3440.6 million, including a 14.4% increase in organic revenue during the fiscal year.
Despite talk of a bottleneck in the aircraft interiors supply chain, Zodiac – which is among the top three players in aircraft seat manufacturing – says it will be able to keep pace with the increased production rates of current and new aircraft programmes. For the 2012/13 fiscal year, Zodiac is aiming to have another year of organic growth, reveals the firm.