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Jamco wants to reenter business class seat market

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Bain bought cabin interiors manufacturer for $700 million

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Delays in installing seats a key bottleneck for new

aircraft

deliveries

By Lisa Barrington

SEOUL, Aug 5 (Reuters) - Japanese aircraft interiors

manufacturer Jamco Corporation is seeking to cash in on a global

shortage of new plane seats by reentering the business class

seat market under its new owner, Bain Capital, company

executives said.

Jamco, which the U.S. private equity firm bought for $700

million this year, also plans to pursue acquisitions globally,

chasing premium cabin products for the Airbus and

Boeing ( BA ) wide-body airliners the firm supplies.

Aerospace suppliers like Jamco, which mostly makes galley

areas and lavatories for twin-aisle planes, have faced parts and

labour shortages and cost difficulties as commercial aviation

emerged from the pandemic.

"We see that innovation today happening from small

companies," Nick Gattas, a managing director in Bain's Asia

Pacific private equity team, told Reuters.

Bain also sees the potential for integrating Japanese

suppliers further down the supply chain into Jamco, Gattas

added.

Jamco was delisted from the Tokyo Stock Exchange in July and

Bain's deal to acquire the firm is expected to fully close in

September. Jamco's major shareholders had included ANA Holdings ( ALNPF )

and Itochu ( ITOCF ).

It also announced a new leadership team on Tuesday, led by

Executive Chair Kate Schaefer, currently a senior adviser to

Bain Capital and formerly senior vice president at Boeing Global

Services.

Jamco's interest in premium seats comes as planemakers are

struggling to make airliners fast enough to meet demand. Delays

in installing new seats are a key bottleneck, which has left

many airlines waiting impatiently for new jets.

Jamco in 2023 stopped taking new orders for business class

seats due to intense demand for other products, but Bain wants

the firm to start selling them again.

"The interest from the airlines has been pretty

overwhelming," Schaefer said.

Bain also sees opportunity in airlines' growing need to

re-fit ageing planes that they cannot retire due to a global

shortage of new jets.

"We see billions of dollars being spent on first class,

business class and premium economy retrofits of planes that are

10 years old or more. That's a huge opportunity for a company

like Jamco," Gattas said.

Aerospace has been caught up in the global trade war,

upending decades of largely duty-free trading in civil aircraft.

The United States and Japan last month agreed a trade deal

that put a 15% tariff on exports from Japan to the United

States.

Jamco products that go to Boeing ( BA ) would be subjected to a

tariff, Gattas said. However, as many Boeing ( BA ) aircraft are then

exported they can benefit from duty drawbacks - a mechanism

whereby duties paid on imported goods can be refunded if those

goods are subsequently exported.

For the remaining exposure to U.S. airlines, the question of

who should pay for the hit from tariffs "is a topic of active

discussion" among Boeing ( BA ) suppliers today, Gattas said.

Bain has a number of aviation investments, including Virgin

Australia which returned to the Australian Securities

Exchange in June after the private equity firm rescued it from

administration in 2020.