Air France-KLM Group’s maintenance, repair and overhaul division, AFI KLM E&M, will be able to further expand its international footprint with new facilities and joint ventures despite the Perform 2020 restructuring program, its executives said.  

“Our international expansion is not in question. Quite the opposite. While Perform 2020 calls for cost reductions, it also has AFI KLM E&M earmarked as one of the group’s main growth [areas], and we will [make] acquisitions to supplement organic growth,” AFI KLM M&E EVP Frank Terner said. The Franco-Dutch group’s MRO arm will have to deliver 170 million euros ($190.6 million) in cost savings over the next three years.

Terner also believes that the considered deferral by Air France of the delivery of its next-gen long-haul aircraft, Boeing 787s and Airbus A350s, would not have “a tremendous impact” on AFI KLM E&M’s business. But the impact could be bigger “if other measures are coming,” he warned. Aftermarket support of the fleets of the group’s airlines – Air France, KLM, Hop! and Transavia – account for a large part of  the MRO’s revenue.  

Conversely, the group’s decision to retire several of its widebodies creates opportunities to develop its engine and aircraft tear-down business and the associated parts repair and asset management business. KLM E&M just acquired a Boeing 747 from Martinair to disassemble, KLM E&M executive vice president Ton Dortmans said. “And there are more aircraft to be phased out. We are close to the source and thus are the first to assess the opportunity.”

AFI KLM E&M has won several new contracts in recent weeks, including one from Vietnam Airlines, Royal Air Maroc and Thai Airways International for 787 component support; from TNT Airways for GE90 engine support of its 777 fleet; and from CityJet for the heavy maintenance of the airline’s Bae Avro RJ85. Its orderbook grew 5% in the first quarter over the previous year’s period, and with 800 million euros since March 31. Last year, AFI KLM E&M recorded a 28% growth of its orderbook, driven mainly by the components and engine business.

The MRO provider aims to keep its current market share in the engine segment and expand its share of the component maintenance market from 4% to 5% this year and 8% in 2020, Terner said.