Performance is king as Chapman Freeborn rings the changes at the top

When you start to get a lot of PRs about new people arriving at a company, it can mean one of two things: that a company is growing; or that a company has lost staff. (Both things can be true, of course.) 

In the case of Chapman Freeborn, the award-winning air charter broker, certainly the former is true, leading to the latter, according to some. A quick (and likely incomplete) look through LinkedIn shows about a dozen senior managers leaving in the past couple of years – which could easily be natural attrition. But one or two have left noisily, indicating there may be more to it. 

One comment to The Loadstar from an outgoing manager was that the culture had become political: “Multiple senior leaders have resigned this year. It’s not the company I believed I was joining.” 

Others have a more nuanced view. In 2019, Chapman was acquired by passenger-focused Lithuanian company Avia Solutions Group (ASG), marking its first foray into cargo. It was immediately blessed with the craziness of the pandemic, seeing cargo revenues soar.  

As one now-former CF manager explained: “ASG did a fantastic job of building its portfolio. But it was not experienced at cargo. Once the world had come out of the pandemic, ASG and CF wanted to invest more and add infrastructure. But the reality was different. 

“Costs went up – and because of results in the pandemic, the targets were out of this world, in some cases, 50% higher. It was exaggerated ambition, and the surge of growth colliding with reality. It was a ‘growth-come-what-may attitude’, and staff numbers, in the US in particular, grew. They’ve gone now though.” 

The former manager also said along with challenging, if not impossible targets, bureaucracy also rose. 

“There was more centralisation with ASG, and it began to spill out of Lithuania into daily life. There was an explosion of unnecessary bureaucracy, and people got really bogged down in it. Some of the upgrades were very productive, but a lot of other stuff, while making sense in principle, wasn’t making sense in the execution. It got a little too centrally driven. But it was certainly an ambitious growth phase.” 

ASG-owned companies The Loadstar has spoken to generally are upbeat about the ownership, which is said to have a ‘hands-off’ approach, and looks for growth and synergies in its companies’ best interests. It is certainly ambitious: as of March, the company owned 12 AOC-certified airlines, including Magma and SmartLynx, and plans to increase it to about 20 AOCs by the end of Q1 next year. 

And, of course, what employees feel can be very different to what employers feel. Russi Batliwala, chairman of Chapman Freeborn, who, along with Shahe Ouzounian, sold his shares in CF to ASG, explained that the world is a different place than when he was CEO, an astonishing 33+ years at the helm. 

“None of us were money people. We didn’t really care whether we made $1m, $5m or $10m. It didn’t matter. You could afford to keep people. But things have changed and the key word is performance. 

“I’m a dinosaur, you know, these new wonderful words like KPIs – we never used to have KPIs. But they tell you what you’re supposed to achieve. 

“Ten years ago we used to have a lot of people that were not necessarily pulling their weight, in terms of what they were supposed to bring into the business. If someone is paid a six-figure amount and doesn’t bring anything in, we used to put up with that a lot. It was a lot down to friendships, or that somebody’s been there a long time, and if there’s a profit at the end of the year, everybody’s happy. 

“Things have changed, and not only with us, but with a lot of the other competitors in the industry. You start now to look at departments and costs more closely. And then you suddenly see a big cost and want to know to what it’s contributing.” 

Mr Batliwala also pointed out that brokerages are a people business – it’s not about working assets, it’s about working people. And, rarely in the world of business, he pointed to a competitor, Air Charter Service (ACS). I have huge respect for what ACS has done, and their systems and all the rest of it.

“But it focuses on performance. They’ve always been like that. Perform, you can stay. You don’t perform, you’re out. They would never put up with somebody who was being paid $200K or whatever and wasn’t performing. They’d be gone.” 

Mr Batliwala also denied that ASG, which owns some 40 companies, with upwards of 11,000 staff, was behind the management exodus. 

“Contrary to some people’s belief, actually ASG has almost zero input. The way Avia Solutions Group is run, every company is responsible for their own P&L. The only time we have dealings with high-level people at the group is in board meetings. 

“And quite honestly, they bought the company, they’ve invested in it and they want to see a return. Which is more than normal. But apart from that, we have actually no real connection with what goes on in there.  

 “All the companies are just interested in doing their own business. And the more time I’ve spent thinking about it, the more I appreciate the fact that we’re completely left to our own devices. We do whatever we want. Yes, if we want to sign a $100m contract, we need to get them to sign off on it. But at the end of the day, we are autonomous.” 

He added that there are perks to working in an ASG company – annual events for staff, meeting rooms being named after deserving employees. 

But the drive to boost productivity does seem to stem from its ownership, which, added Mr Batliwala, is not unreasonable for an investor. 

“Although we are autonomous in our day-to-day business, we have to improve our efficiencies. We’ve got people that are not performing. We need efficiencies in our systems, which haven’t necessarily been as good as they should be today.” 

This progress is said to be under way now that CF has hired Bernado Nunes, who joined as COO this month. But last week news arrived of the appointment of Linas Dovydenas, a 16-year veteran ASG executive, who joined CF in 2022 as VP ACMI leasing, and who is now president, India, Middle East & Africa (IMEA). It is interesting to note that an almost identical announcement in March, named Alain Champonnois as president and CEO of the IMEA region. He has now left. That’s quite a quick turnaround.  

(The same March release announced a new president for Asia Pacific, after the incumbent left after just two years.) 

In fact, one of the complaints from ex-managers was CF’s move from being a centralised business to a regional one, with four groupings, which some say came with no warning. 

“Two summers ago, without a discussion, CF created four global regions. Sometimes, if you promote the wrong people into senior roles, this can (and has) created massive issues,” said one former manager. 

“Each region has its own local president that’s responsible for the P&L in that region,” explained Mr Batliwala. “And we’re very happy that we’ve got it where we have it now, rather than trying to run it as a UK business with a lot of offices around the world, which doesn’t really work.” 

What does work, he added, is the now-diversified nature of CF’s business, with subsidiaries Magma, Arcus, OBC and Intradco, which account for half of CF’s revenues. 

“There are huge amounts of transparency in the market now, so being a middleman has not become easier, and in our [charter broker] business, the biggest challenge is volatility. If we hadn’t diversified, there would have been times when we would have been sitting there waiting for the phone to ring.” 

There is more of this strategy on the way: CF is eyeing other M&A targets, ones that “will support our core charter-broking functions”, niche charterers, for example. 

“We’re maybe looking at some other onboard courier businesses, but on the passenger side there’s a lot more opportunity to get involved in M&A on niche businesses, because it’s so much bigger.” 

None of this will be of much comfort to those managers who have left. But for those who stay, they have been warned. Performance, however the company is run, or however fast it’s growing, is king.