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Bad News: Continental Aerospace sold to private equity firm
- Thread starter Walt
- Start date
Educate me as to why this is a bad thing. Currently owned by a chinese equity firm. Will be owned by an American equity firm. Seems like a win to me.
We won’t know until he find out. Most PE firms want to maximize profits. Look at Thoma Bravo for example.
Thoma Bravo will certainly sell Jepp and ForeFlight in the next ten years or so. Not sure what will happen in this case
Rdog420
Well Known Member
Continental sells to China
“it’s the end of the world”
Continental sells back to the USA
“it’s the end of the world”
Idk…. Continental has lost out on several defense contracts due to the China ownership and they can’t sell any engines to the civil air patrol. This may force Lycoming to be more competitive in that space.
“it’s the end of the world”
Continental sells back to the USA
“it’s the end of the world”
Idk…. Continental has lost out on several defense contracts due to the China ownership and they can’t sell any engines to the civil air patrol. This may force Lycoming to be more competitive in that space.
Ownership changes carry risk...the PE buyout of Hartzell has effectively doubled their prices on smaller stuff (Plane Power alternators for example). Maybe that means they are actually profitable, or maybe that means us, the consumer, are paying for the PE debt load (look at the West Marine bankruptcy for a case study).
The concern, real or not, is escalating price.
For example, Arcline owns Signia Aerospace, who owns Hartzell Aerospace, which brought you the $1600 Chinese alternator...a $150~$350 product in any other market.
BTW, Hartzell Aerospace is not Hartzell Propeller, although Signia owns them too.
For example, Arcline owns Signia Aerospace, who owns Hartzell Aerospace, which brought you the $1600 Chinese alternator...a $150~$350 product in any other market.
BTW, Hartzell Aerospace is not Hartzell Propeller, although Signia owns them too.
Pretty much everything they have acquired resulted in a doubling of the retail price along with substantially higher repair costs. These speculative PE firms tend to find brands with strong and sticky demand that have financial issues. They inject the cash necessary and then milk that demand with generally very large price increases untill the demand dries up, then sell the assets. Its a fairly profitable approach when there are smart people running the show, but it tends to be unpleasant for the consumer and often results in driving the brand out of the business; Eventually competitors arrive with more realistic prices, but not always the case. In the interim, customers get a wallet dent. In cases like ours, the market is small, so competitors don't rush in.
If these guys start doubling conti prices, we can hope that superior sees the opportunity and steps things up to improve quality, keep prices constant and see a big boost in revenue.. Also possible they just follow suit, then everything is priced at Lyc levels. I see a scenariowhere this can drive things MUCH worse than they are right now depending upon how this plays out.
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They can command the high prices because there is no competition for the aviation parts. The FAA can help by reducing the onerous rules and regulations to allow off the shelf replacement such as alternators for examples. Until this is changed, the manufacturers have the market cornered and they can command the high prices for the parts.
My disappointment with Continental over the last few years has stemmed from the fact that they shrunk their product offerings. We have a Titan IOX-360 on our -7, and it is fantastic. They dropped almost everything from their experimental production line except for the 340 and 370 almost immediately after our purchase, which are fine but don't meet the profiles of the next two airplanes in our queue. They let Lycoming dominate the market; what business has ever thrived by ceding significant ground to a competitor? I hope new ownership reconsiders the path.
+1... This is no bueno for the GA community IMHO. Of course it depends on which side of the table you sit on. Private equity (PE) ownership often leads to efforts to improve efficiency, margins, and pricing power, which translates to rising prices for engines, parts, and related services. PE firms typically acquire companies with stable cash flows and aim for 3–7 year holds to generate strong returns. Aftermarket parts/services (high-margin) are common targets. I suspect we're gonna see aggressive pricing strategies. PE firms do whats in the best interest of their bottom line... not the interest of the GA community. A Gordon Gekko kind of move.
Rdog420
Well Known Member
I don't see prices for our titan engines going up much. They are already pretty much in line with lycoming. I think I saved 1, maybe 2 grand but gained 2 years of not waiting. The only reason I went with Titan was the reduced lead time.
It was announced today that Cirrus is barred from any DOW contracts because of being Chinese owned.
It was announced today that Cirrus is barred from any DOW contracts because of being Chinese owned.
Isn’t there supposed to be some laws that protect consumers from monopolies? Those laws should be able to track this type of ownership control before there is an actual monopoly. Maybe that doesn’t apply to foreign ownership.
I was gloom and doom over Hartzell buying E-MAG who of sells the self powered Electronic Ignition P-Mag, which I have two. Reading another thread a P-mag owner sent in one for bearing repair. It cost more than before, and turn was longer than in Brad days. However it was not horrible. The best news is they rebuilt the unit verses forcing them to buy a new one at about $2500.
However this is the honey moon phase and no telling what the future brings. They (accountants, business majors) may say "HEY!" I got a great idea to increase profits, if we double and triple prices we will make more. Genius.
However this is the honey moon phase and no telling what the future brings. They (accountants, business majors) may say "HEY!" I got a great idea to increase profits, if we double and triple prices we will make more. Genius.
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As an aside -- shortly after Arcline, et al, purchased Plane Power/Hartzell Engine Technologies, the retail price of the Plane Power Alternator AL12EI60/B kit shot up to ~$1600 at 'Spruce, Airpower, others.
Checking again this AM, shows the price for this unit has dropped back down to near earth orbit levels -- $866.00 for the kit, $639.81 for the alternator.
Before the acquisition, the price was ~$600ish for the kit IIRC. So only a 44% increase or so
Checking again this AM, shows the price for this unit has dropped back down to near earth orbit levels -- $866.00 for the kit, $639.81 for the alternator.
Before the acquisition, the price was ~$600ish for the kit IIRC. So only a 44% increase or so
?? There are three companies selling engine parts. Do you not see them as competitors?
Parts market is very different. Conti is right in line with superior and they are typically 2/3-1/2 the lyc price.
The feds have mostly given up enforcement except in the largest examples. Even then, most get away with it these days. Companies are smart and don’t go for traditional monopolies, just strong vertical integration and consolidation without removing all competitors. On paper it looks fair, in reality they just leave the competition with sub par performance.
That is good to see they may have come to their senses. Question is why. I wonder if word is getting out about the reliability issues.As an aside -- shortly after Arcline, et al, purchased Plane Power/Hartzell Engine Technologies, the retail price of the Plane Power Alternator AL12EI60/B kit shot up to ~$1600 at 'Spruce, Airpower, others.
Checking again this AM, shows the price for this unit has dropped back down to near earth orbit levels -- $866.00 for the kit, $639.81 for the alternator.
Before the acquisition, the price was ~$600ish for the kit IIRC. So only a 44% increase or so
I think most would pay extra to avoid them
I think they realize dollar and cents matter even if they corner the market of PP products.
Saw this years ago in software. Very successful product / company. Is bought out. All development is stopped, prices increased massively. Customer support goes away. Those using the product stick with it for a while (use what you know, inertia...). Then they would repeat with some other software firm. Smart investment! Just profit! Remember rule 1: the goal is to maximize return to the shareholders. Anything else is some kind of charity. [Not my belief, just my observation!!!]
I'm no fan of the PE scarf up of GA assets, however.....on whole this is a good thing. I used to work for a Chinese owned GA manufacturer. It was a nightmare of unrealistic expectations, unfulfilled promises of support, and an unnecessary bankruptcy. We too lost out on lucrative contracts due to our Chinese ownership. They weren't bad guys, it's just that their business practices are not compatible with Western GA. Prices may go up, but it's better than Continental going away....which is what they typically do with companies they don't want anymore. (I'm amazed they are selling it, and part of me says I'll believe it when it's actually done.)
Me too. The IP has already gone and I bet there is a conti clone in Chinese drones.
Given the chinese ownership of superior, I have to wonder if the long term plan is to acquire them as well. Wouldn't be a surprise to find there are similar issues there. That would be quite painfull, as it removes competition outside of lycoming and removes a barrier to raising prices. Not a big deal losing a decent percentage of business back to Lyc, if they could raise prices 50-75%.
Hopefully that doesn't happen, but have to wonder.
Hopefully that doesn't happen, but have to wonder.
To be fair to the Chinese I really don’t think they would have to buy a company to be able to come up with a horizontally opposed 4/6 pot engine. They’ve been around for decades.
Funny cause I got a call out of the blue from the Continental engine sales rep I got a quote from last year at OSH. Long story short, he says he doesn't know anything but thinks prices will go up at some point. His pitch is that if I put a deposit down now, that will lock in the current price.....
The IP is useless without the tribal knowledge. Bob the veteran machinist knows that you always make XYZ123 part to the high side of the tolerance because the castings for ABC789 part run a little tight, etc..... He teaches this to Scott, the new hire out of trade school.
In my experience the Chinese have no interest in the tribal knowledge, and if they do the guy that learns it almost immediately leaves for a different job.
That might be a reason for China selling - - Conti has been on the edge since I worked there in '85. They did a lot of outside (military) contracts on various things to keep fresh money coming in and share usage of engineering talent. That could directly affect the balance sheet if terminated by DoW. All speculation of course.
SantosDumont
Well Known Member
So... which drone company is using Continental engines?
Was reading this today: https://prospect.org/2026/06/16/nothing-is-safe-from-private-equity-rollups/
The following paragraph caught my eye:
"Typically, the PE partners put little of their own cash into a deal, but borrow most of the money, and then pile the debt onto the books of the operating company. Following the acquisition, the new PE owner may run the company for a while and reap supernormal profits, or may extract so much money from the operating business that it will be driven into bankruptcy, by which time the PE company has made back its own investment many times over."
Me wonders if Spruce might be an attractive PE target? With their recent price increases, one wonders if they haven't already been acquired...just joking, kinda
In all seriousness, if my business was predicated on a healthy, well run Vans Aircraft, the threat of the above paragraph would have me laying awake at night...as if I don't already do that
The following paragraph caught my eye:
"Typically, the PE partners put little of their own cash into a deal, but borrow most of the money, and then pile the debt onto the books of the operating company. Following the acquisition, the new PE owner may run the company for a while and reap supernormal profits, or may extract so much money from the operating business that it will be driven into bankruptcy, by which time the PE company has made back its own investment many times over."
Me wonders if Spruce might be an attractive PE target? With their recent price increases, one wonders if they haven't already been acquired...just joking, kinda
In all seriousness, if my business was predicated on a healthy, well run Vans Aircraft, the threat of the above paragraph would have me laying awake at night...as if I don't already do that
