When Brian Chafe Helped Sell PAL Group to a Winnipeg Firm, It Was So He Could Create a Stronger Local Company
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When Brian Chafe helped sell PAL Group to a Winnipeg firm, it was so he could create a stronger local company. He includes employees and clients in his definition of family— and invests in them and their communities accordingly. And, he’s determined to take PAL Group into the stratosphere of aviation and aerospace defence by staying firmly grounded in Newfoundland and Labrador. Yes, Chafe’s career has been one of consistent growth for PAL, but also of doing the right thing, for the right reasons— proving once and for all that big business can have a big heart. By Stephen Kimber 42 Atlantic Business Magazine | July/August 2017 ABM V28N4 2017 64.indd 42 2017-06-21 12:06 PM COVER STORY atlanticbusinessmagazine.com | Atlantic Business Magazine 43 ABM V28N4 2017 64.indd 43 2017-06-21 12:06 PM f you had asked Brian Chafe at 10 a.m. on own employees it was good for them? November 12, 2014, where he’d rather be, he might Chafe understood many of those have answered anywhere but where he was— employees, especially the lifers I who had worked for PAL their entire which was standing on a stage inside Hangar 1 at professional careers, would be the St. John’s International Airport in Newfoundland, skeptical. Perhaps most concerning preparing to explain to 200 uncertain-faced employees to the still largely Newfoundland- that the PAL Group of Companies (the venerable, hugely based work force was the reality the new owners were from “away.” successful 40-year-old aviation company they all Would they decide to shift the worked for) had just been sold. company’s corporate headquarters westward? Did they intend to centralize, to consolidate, to cut Exchange Income Corporation of fixed-wing search and rescue and chop, to seek the sort of big- (EIC), a publicly-traded, Winnipeg- aircraft. picture corporate “synergies” that based firm that already owned six Brian Chafe’s reticence had would ultimately disappear PAL’s other Canadian aviation companies nothing to do with the terms of the successful collection of semi- and boasted revenues north of sale. As PAL’s CEO for the past year, autonomous, inter-connected parts one billion dollars annually, had Chafe was without-doubt convinced into a mash-up company in which officially agreed to fork over the sale represented an excellent they would no longer feel welcome? $246 million in cash and stock to deal not only for Gus Ollerhead And if that did happen, what would acquire the PAL Group. (PAL’s long-time owner, key then happen to them? PAL, the brand umbrella shareholder and driving force) and Chafe had answers—reassuring for the legal entity known as for EIC, but also for the PAL Group answers—for all of their questions. Provincial Aerospace Ltd., was and its employees too. The reality, he could tell them, for definitely a worthy prize. Though He wasn’t the only one. Wings, instance, was that PAL was already Newfoundland-birthed-and- Canada’s aviation magazine, praised poised for a new and exciting next headquartered, it was also a PAL’s founders for having “built a stage in its existence, including globally evolving $185-million- wonderful company [that has] gone having built its own first-class a-year company whose various global.” Thanks to the new deal, management team that could moving pieces now numbered not it added, PAL “has more financial lead the way into that future. But only a successful scheduled regional resources to really dominate reaching that next stage, he would airline and an aviation services its market segment… Under its need to explain, would require division, but also an innovative current CEO, Mr. Brian Chafe, there significant investment and even aerospace unit with worldwide is nothing the company cannot more corporate patience. While sky’s-the-limit potential. To achieve in its markets with the Gus Ollerhead’s smarts and passion make the company an even more financial support of EIC.” for the business had brought the attractive prize, PAL had announced Chafe was also certain of the company to the enviable place it only the month before that it had deal’s win-win-win-win, in part, was today, Ollerhead had other teamed up with Airbus Defence and because he himself had worked business and personal interests. Space to bid on a lucrative, long- “hand-in-glove” with Ollerhead to He wasn’t prepared to sit back for term Canadian government contract put the details of the sale together. 10-15 years until those next-stage to replace this country’s aging fleet But could he now convince his PAL investments could bear fruit. 44 Atlantic Business Magazine | July/August 2017 ABM V28N4 2017 64.indd 44 2017-06-21 12:07 PM In 2013, Ollerhead had decided it mom-and-pop ventures of the last that day, he also admits, “I was very was time for him to sell. half of the twentieth century to a nervous.” Which had been when he and new generation of well-funded, That was, in part, because of Chafe quietly began to look for a professionally managed 21st century the corporate culture that had buyer. Not just any buyer, to be corporate entities. developed within their privately- sure, but one who understood and What made EIC’s bid especially owned company during the decades appreciated the company’s history interesting to Chafe and Ollerhead, since its founding. “Gus is a very and strengths, and also “supported however, was that EIC’s “acqui- private person. I’m very much that the owner’s vision moving forward.” sitions strategy,” publicly laid out way too.” And, of course, not to forget finding on its corporate home page, was Although speculation about a a buyer who could (and, more not only to “target strong niche possible sale had been rife within importantly, would) willingly reach businesses with strong cash flows” the gossipy aviation community into its own deep pockets to make (check!) but also, and perhaps for months, a PAL spokesman vision reality. more important, “to retain the key had insisted to a CBC reporter as Ollerhead and Chafe invited management personnel following recently as a month before the several potential suitors to kick acquisitions.” Double check! announcement that he was “not PAL’s tires, considered competing “We don’t buy damaged compa- aware” of any plans to sell the bids and eventually “down- nies,” Mike Pyle, the CEO of EIC, company. “We kept it all pretty selected” until they’d found what explained to the CBC after the sale. close,” Chafe acknowledges they considered “the best fit for “We buy strong performing compa- today with a mix of pride and the people who remain, and for the nies and then hopefully give a little embarrassment. In fact, he adds company.” extra access to capital and those with a laugh, PAL—not counting its The company they’d found, of kinds of things to enable them to airline division’s public charitable course, was Exchange Income grow perhaps a little faster than giving and community ventures—is Corporation, “a diversified, acquisi- they could under private owner- Newfoundland and Labrador’s “best tion-oriented corporation focused on ship… [EIC’s motto is] don’t change kept secret.” opportunities in… aviation services the culture of the company you buy.” No more. “Now suddenly, we and equipment, and manufacturing.” In other words, EIC was willing to were going to be a public company EIC had become the pointy end of let PAL be PAL. that reported and was reported on,” a broader movement to consolidate While Brian Chafe harboured no Chafe says. “We had to embrace Canada’s aviation industry as it doubt he had an exciting, upbeat that, including me personally.” transitioned from the pilot-driven, story to share with his employees And he had to start embracing it Congratulations to Brian Chafe, Atlantic Business Magazine’s CEO of the Year. We’d like to extend our congratulations to Brian Chafe on his outstanding accomplishments. We wish him and everyone at PAL Airlines renewed success and we look forward to our continued partnership. Our compliments as well to all the other nominees, from all of us at TELUS. telus.com/business © 2017 TELUS Corporation. 46 Atlantic Business Magazine | July/August 2017 ABM V28N4 2017 64.indd 46 2017-06-20 4:07 PM Dalvay today, beginning with reporting to the company’s own employees, Sydney to explain to them who their new Charlottetown Hospitality... Like Never Before! Moncton owners were, that their jobs were Stay Includes Complimentary: Fredericton safe, that EIC had bought them • Snow removal from your vehicle** because they were successful • Bottled water in guestroom Saint and only wanted to give them the • Soup & evening snacks in lobby* John • Beverage upon arrival • Breakfast* Halifax necessary tools to become even • Parking • Shoeshine • Wi-Fi /DPMurphyHotels /DPMHotelsandResorts more successful. Convincing them *Most locations. **Seasonal. www.DPMurphyHotelsAndResorts.com of that was critical, Chafe knew, PRINCE EDWARD ISLAND NEW BRUNSWICK NOVA SCOTIA because “we would need buy-in from our employees” if the sale’s promise was to be realized. DALVAY CORNWALL CHARLOTTETOWN SAINT JOHN MONCTON MONCTON MONCTON DIEPPE FREDERICTON HALIFAX SYDNEY So Brian Chafe stepped up to the microphone. he company that would eventually become the PAL TGroup was born in 1974 Your business doesn’t stand still. when St. John’s entrepreneur Tom Collingwood helped launch Why should your technology? a modest St. John’s-based flight training school and charter service known as Aztec Aviation. Auto Attendant Hunt Group By 1983, it had changed its name to Atlantic Airways and begun operating scheduled services to a dozen destinations in Atlantic Call Pull Canada, as well as to the French Dual Persona islands of St.