A shortage of skilled labor is severely affecting Hong Kong aircraft maintenance provider Haeco, and this year will cause a second annual decline in airframe maintenance volume.

Although group sales and profits rose in 2012, Haeco was unable to fully exploit strong demand for its services at its Hong Kong base. It sold 1.3% fewer worker-hours last year than it did in 2011, says Chairman Christopher Pratt.

“Haeco expects to do less airframe maintenance work in Hong Kong in 2013 than in 2012, with labor shortages restricting man hours expected to be sold in the first half to 1.2 million compared with 1.6 million in the first half of 2012,” Pratt continues, adding, “Although these labor shortages may ease in the second half of 2013, the first half shortfall is likely to have a material adverse effect on overall group turnover and profit for the full year.”

Haeco has interests in Chinese mainland maintenance operations including Xiamen-based Taeco. “The group’s joint ventures in mainland China continued to develop technical capabilities,” says Pratt in a statement accompanying Haeco’s annual results report. “Output was higher, but losses continued to be incurred because of underutilization of facilities.”

The group made a profit attributable to shareholders of HK$876 million ($113 million) in 2012, up 6.7% year-over-year, on a 12.7% increase in revenue to HK$5.8 billion.

In 2013, Haeco’s engine overhaul unit Haesl will be limited by the early retirement of some Boeing 747-400s of Cathay Pacific Airways, which like Haeco in owned the Swire Group, and by less frequent scheduled maintenance of Rolls-Royce Trent 700 engines. Haesl overhauls Trent 700s for the rapidly growing fleet of Airbus A330s in mainland China.

Haeco expects the Taeco landing gear overhaul shop at Xiamen to take nine months to recover from a fire in November. The plant has been idle since the fire.