- Group’s combined maintenance, repair and overhaul (MRO) unit, bolstered by several new ventures, grew third-party revenues 12% in 2013 to €1.2 billon ($1.7 billion) and is in position to deliver more of the same thanks to a swelling order book.
Third-party work accounts for about one-third of the MRO unit’s total business and contributed about 5% to the parent group’s €25.5 billion in 2013 revenue. Air France-KLM posted an operating profit last year, reversing three years of annual losses. The turnaround effort has the group seeking improvements throughout the organization. The maintenance unit, which posted a €159 million operating profit on its €3.3 billion in total revenue, is delivering results.
“This is clearly a demonstration that maintenance is a growth driver,” group CFO Pierre-François Riolacci says of the MRO unit’s performance.
Like the airline operation, which has 79% of its capacity on long-haul routes, Air France-KLM’s maintenance division is looking far beyond its national borders for growth opportunities.
Last April, the MRO unit bought equity stakes in Miami-based engine teardown and repair specialist Bonus Aerospace and its Bonus Tech affiliate. The effort both expanded the Air France-KLM MRO engine repair network and gave the carrier a stronger foothold in the engine teardown and surplus parts businesses.
In December, Air France-KLM received Chinese regulatory approval for a new component support center in Shanghai.
The new ventures, combined with adding standard MRO contracts for existing and new customers, helped the group grow its MRO backlog 15% year-over-year, to €4.4 billion at the end of 2013.