The rebound from the recession—and companies' relative success in managing the last market cycle—is what this installment of O&M's biennial survey of the airframe maintenance, repair and overhaul business reveals most acutely. Openings and closings, growth and stagnation, strategy shifts and continued consolidation over the last two years have impacted the major players in the business. Our rankings illustrate those changes, especially when you look at movement and new entrants at the top of our charts.

Airframe maintenance is a labor-intensive, low-margin business compared to, say, high-tech engine overhaul. And due to ferry costs, not to mention the price of fuel, aircraft tend to stay close to home for structural checks. That's why we consider airframe maintenance a useful indicator of certain trends. First, it highlights consolidation efforts by companies that aim to capitalize on volume to turn low margins into good profits. These conglomerates are changing the landscape of the MRO business. Second, it highlights world regions where air travel and subsequent MRO activities are on the rise. And finally, airframe maintenance is a good gauge for economic recovery. Maintenance activities tend to pick up after airline traffic numbers; as flight hours increase, so do the heavy checks that aircraft require.

As in our six previous surveys, we aim to rank the world's largest competitors in commercial airframe MRO based on man-hours of work achieved in the previous year. (You can find a more detailed explanation of our methodology on pg. 27.)

The chart on pg. 24 excludes work for parent and sister airlines, ranking companies based solely on airframe maintenance work for third-party customers. On pg. 22, we include work for parent and sister airlines, ranking companies based on the total number of man-hours for each corporate entity. Majority owned subsidiaries and operating units are included in the figures (with exceptions noted at the foot of each chart). We continue to roll up the data this way rather than splitting it out by region to reflect the global nature of the industry. ST Aerospace, for example, has facilities in Singapore as well as China, Panama, and the U.S.

While we value airframe maintenance as a reference point, we also want to provide a broader look at the industry's prime players. As we did in the last survey, we have compiled the latest annual revenues for the Top 10 companies (see pg. 26). While the percentages of airframe revenue to the total amount vary greatly from company to company due to core activities, revenues and profits highlight overall capabilities and strength. For instance, MROs that perform hundreds of engine overhauls each year should post higher figures. Other aftermarket companies include robust military maintenance activities, which we exclude from the Top 10 numbers. Given that most major MROs cite bundled services as a primary capability, listing annual results hints at their breadth and depth.

This year, we've also asked the dozens of companies we surveyed to include their total annual airframe maintenance capacity in man-hours. We wanted to find out how world-class companies managed their capacity during lowest points of the economic crisis, and we also wanted to take a look at regions where facilities were operating at the highest capacity. Based on the numbers you can find on pg. 26, the top-ranking companies filled 75% or more of their total capacity during the year. And many of them have expansion plans.

Recovery and Growth

Many companies O&M queried report a dip in 2010, especially for third-party services. This is not surprising given that the year marked the low point of the recession for aviation aftermarket service providers, as we noted in our MRO market forecast (April, pg. 28). A 7.5% decline in the total value of the civil aviation MRO market, from $45.7 million in 2009 to $42.3 million in 2010, was the bad news last year. Maintenance-intensive aircraft went into storage or were parted out as airlines coped with fluctuations in passenger demands and fuel prices. This, of course, continues to impact facilities whose portfolios depended on maintaining those types. This survey's results reflect the closing of many businesses hit hard by that contraction. But it also reflects strategic investments made by others.

It's also important to note that our survey takes supplemental work such as cabin refurbishments and passenger-to-freighter conversions into account alongside regularly scheduled maintenance. These activities slowed as many airlines deferred non-vital maintenance and cargo shipments fell. Today many providers of such services say they see increases in elective activities such as interior upgrades and a pick-up in conversions.

Compared to our last survey, the majority of companies that remain in O&M's Top 10 show a decline, and others were edged out. The difference in numbers for each company is up to a million man-hours in some cases, and the gulf between the top three players and their competitors widened significantly. But recovery over the next year should foster growth that will help widen the playing field for competitors.

This survey comes out as airframe maintenance is entering a peak period, particularly for narrowbody C checks (January, pg. 28). Airbus A320s and Boeing 737-800s will lead the way, with the number of C checks for the worldwide 737-800 fleet set to grow from 1,580 to 1,678 over the 12-month period from September 2011 to September 2012, and the number needed for A320 family aircraft expected to increase from 1,811 to 1,950. The demand for Airbus A330-200/-300 C checks should trail behind the 737 and A320 families, followed by Bombardier CRJ700 and CRJ900 variants and ATR 72 aircraft. On the heavy maintenance side, aviation consultants expect significant growth in the number of heavy maintenance events among Boeing 737-700, 757-200 and Airbus A319/A320 and A321 aircraft.

Timco is one company seeing signs of the projected increase in airframe demand. “We expect total hours to be modestly higher at each of the facilities over the 2010 figures,” says Leonard Kazmerski, VP marketing and business development. “They have been tracking that way since the beginning of the year, and we expect that to continue for the remainder.”

Another example is Israel Aerospace Industries/Bedek Aviation Group, which again is number three in our survey based on total airframe maintenance man-hours. Its stats for 2010 fell slightly from 2008 (from 3.7 million man-hours to 3.1 million man-hours)—strong results considering the depression in the conversion market. However, Jack Gaber, the company's corporate departmental VP and general manager of market and business development, says that 2010's figures show an increase over 2009, and that IAI/Bedek Aviation Group has seen further signs of improvement lately.

“Our growth will be driven by the pick-up in the cargo conversion business while most aircraft undergoing cargo conversions require heavy airframe base checks to be performed in parallel to the conversions,” Gaber says.

And IAI/Bedek finally succeeded in selling Empire Aero Center, its overhaul center in Rome, N.Y. Premier Aerospace, which is operating in major expansion mode, snapped up the property in November 2010 to complement its growing MRO business along the U.S.-Canada border. Premier accomplished 700,000 man-hours of airframe maintenance work in 2010 at its New York and Canada sites, and it expects to grow that figure by adding one to 1.5 lines of maintenance per year, says Dave Diggle, VP marketing and sales. Next year, he says, Premier expects to utilize 200,000-300,000 additional maintenance man-hours.

“Premier saw a significant improvement in man-hour utilization in 2010 over 2009, and we see continuing good news in the industry for 2011, barring any catastrophic event,” says Diggle.

Since 2008, several companies have grown aggressively and now rank among our Top 10—Malaysian Aerospace Engineering, for example; others shot up this year to rank in the Top 15. Asia is generating much activity as countries build their aviation and aerospace sectors and China seeks to bring in more work from foreign countries. (For more on how other countries in Southeast Asia aim to compete with Singapore, see the aerospace parks story on pg. 29.)

The Hong Kong Aircraft Engineering Co. Ltd, better known as Haeco, saw its stocks fall last summer when a buyout by Hong Kong investor and major stockholder Swire Pacific fell through, but its rating on our charts remains high. The group's figures grew from 5.36 million in 2008, to 6.02 million in 2010. It commenced operations at Taikoo Sichuan Aircraft Engineering Services Co. Ltd (Taikoo Sichuan), where it provides heavy maintenance and other engineering services for Airbus aircraft, in August 2010, and it plans to launch Taikoo (Xiamen) Aircraft Engineering Co. Ltd's (Taeco) sixth hangar in Xiamen in the middle of this year. The company, which today is owned 60.96% by Swire Pacific, operates facilities in Hong Kong, China, Singapore, and Bahrain and has joint ventures with Boeing, Honeywell and Goodrich.

Further south, Malaysian Aerospace Engineering (MAE) has been fiercely promoting Malaysia as an aerospace hub. In 2010, it completed more work for third-party customers—2.5 million man-hours' worth—than it did for parent Malaysia Airlines (2.3 million man-hours), says Shankar Menon, manager of fleet technical management and business development. MAE secured 17 new customers last year. Menon says he expects to see integrated fleet management services, component support and asset management lead growth in the near term, and he notes that Malaysia Airlines' engineering arm does have an eye on expansion. It aims to launch operations in the third quarter at its first overseas venture: MAS-GMR Aero Technics, a joint venture with GMR in Hyderabad.

Ameco Beijing also edged its way closer to the Top 10. The joint venture of Air China (60%) and Lufthansa (40%) derived 40% of its 2010 business from third-party customers, and it expects to see its overall airframe maintenance work increase by 15% in 2011, says spokeswoman Zhang Na. Accomplishing this level of growth would help fill its total annual capacity of 2.9 million man-hours, which includes a massive Airbus A380 hangar it inaugurated in 2008.

With competition burgeoning in other parts of Southeast Asia, ST Aerospace continues to sit securely at the top of our charts, with a margin of nearly 3 million airframe maintenance man-hours between it and the closest competitor. In 2010, airframe maintenance and modifications offset lower turnover in the component and engine repair business, for revenue of nearly $1.9 billion—equivalent to 31% of parent company Singapore Technologies' total 2010 revenue.

In the first three months of 2011, ST Aero redelivered 144 aircraft to various customers following airframe maintenance and modification work. The first quarter also saw ST Aero induct the first Boeing 757-200 into its Singapore facility for a passenger-to-passenger/cargo combi conversion; secure work for its widebody hangar in San Antonio; obtain a business license for its Guangzhou joint venture; and receive Argentinean certification on the Boeing 737, Airbus A320 and Embraer 190 types at its Panama facility.

In El Salvador, Aeroman is generating significant business for its Canadian parent company, Aveos Fleet Performance. Just under half of Aveos' 2010 total airframe maintenance man-hours—1.1 million of the total 2.6 million—derived from work completed at Aeroman, says Aveos Fleet Performance marketing manager Pascale Lambert.

Dublin Aerospace, which launched operations in 2009, saw “much larger” numbers in 2010, with a total of 145,000 airframe maintenance man-hours, says Frank Burke, head of sales. In 2011, Burke says he expects Dublin Aerospace to grow that figure by around 35% to better utilize its hangar facilities, which consist of part of the former SR Technics operation in Dublin.

Airline Strategy

Malaysian Aerospace Engineering and Ameco's successes point to another trend: larger airlines' interest in building internal airframe maintenance capacity, whether directly or through joint ventures. Ameco Beijing, for example, handles sister airline Lufthansa's Airbus A380 maintenance in China.

But the trend is visible around the globe. Egyptair Maintenance & Engineering, for example, has built up its airframe business in tandem with its parent airline's fleet. Since 2009, it has grown these figures 20% due to parent company and third-party demand, and it has a robust expansion plan for the next 20 years, says Sayed Anwar, marketing and customer service director. It recently added capability on the Boeing 767 and 757 and Embraer 190, and it intends “to increase the scope of approvals to cover most of the types in our potential market,” says Anwar, pointing to the Middle East, Africa and Europe. Plans to add hangars and improve its IT systems will help Egyptair Maintenance & Engineering manage the expansion.

And the biggest airline-affiliated maintenance organizations continue to get bigger. More than 30% of AFI KLM Engineering & Maintenance's airframe maintenance work in 2010 came from external customers; Lufthansa Technik garnered 55% and SIA Engineering Co. 45% from third-party work.

Growth Plans

In the Top 10 and beyond, O&M learned of many companies' expansion plans. Several will add hangar space with the flexibility to paint. In the U.S., Airborne Maintenance & Engineering Services (AMES), the former maintenance division of ABX Air, reports that it is considering a hangar expansion that would add around 100,000 sq. ft. to its capacity, including space to launch aircraft paint operations. AMES accumulated 450,000 airframe maintenance man-hours in 2010, but it expects that figure to grow by about 10% this year to 495,000 man-hours.

In India, Air Works Engineering also plans to add a paint hangar—the region's first dedicated to that activity—in Bangalore by the third quarter, expand its work scope up to C6 checks and gain FAA certification (see pg. 13). And in Pakistan, PIA Engineering/PKMRO is constructing a new, combined facility for paint and maintenance services for Boeing 777 aircraft, says Amir Ali.

GMF AeroAsia, the maintenance arm of Garuda Indonesia, posted 2010 figures that fell short of 2009, but Jemsly Hutabarat, VP marketing and sales, plans to grow its annual man-hour figure for airframe maintenance by 25% in 2011. Hutabarat also says his company plans to develop a new hangar and Boeing 777 airframe capability in the next three years.

This survey is our first whose figures reflect SR Technics' new ownership, as our 2009 survey compiled 2008 data. Mubadala Development Co. bought out Istithmar's shares in the Zurich-based MRO in 2009, and the Abu Dhabi investment arm now holds a controlling share (70%), while Dubai Aerospace Enretains its 30% share. Although it retains its own brand, SR Technics now approaches work jointly with Mubadala sister company Abu Dhabi Aircraft Technologies; together the companies have garnered work for airlines such as easyJet, Thomson Airways and Etihad.

Mubadala has aggressively promoted its intention to become a top-performing MRO company, and it has made progress toward that goal. This growth comes via geographic growth and facility expansion. In October 2010, SR Technics opened its Malta airframe maintenance operation, which contributed 35,000 of its 1 million man-hour total. In 2011, SR Technics spokeswoman Annabel Watson says it has budgeted to achieve 10% growth over 2010's airframe maintenance man-hours, largely due to more heavy checks and more widebody checks.

In the next two years, we can expect to see many companies continue to catch up from the downturn and ride the narrowbody maintenance wave. The 2011 survey points to the Middle East and Southeast Asia as emerging centers of bustling aerospace activity where new competitors will continue to spring up. But it also points to growth in some unexpected places—Quebec and upstate New York, for example. Based on our survey, we can support predictions that forecasts project: We expect signs of growth, with airframe maintenance increasingly amassed by specialists or integrated as a highly efficient part of a total support package.

Rank Company 2010 Total Airframe Man-hours By Corporate Entities
1 Singapore Technologies Aerospace 8.78 million
2 Haeco/Taeco/Staeco 6.02 million
3 Malaysian Aerospace Engineering 4.8 million
4 SIA Engineering Co. 4.6 million
5 AFI KLM E&M 3.6 million
6 AAR Corp. 3.46 million
7 Israel Aerospace Industries/Bedek Aviation Group** 3.1 million
8 Aveos Fleet Performance*** 2.6 million
9 EgyptAir Maintenance & Engineering 2.55 million
10 Abu Dhabi Aircraft Technologies/SR Technics**** 2.54 million
Rank Company 2010 Third-party Airframe Man-hours By Corporate Entities
1 Singapore Technologies Aerospace 8.78 million
2 Haeco/Taeco/Staeco 6.02 million
3 AAR Corp. 3.46 million
4 Israel Aerospace Industries/Bedek Aviation Group** 3.1 million
5 Aveos Fleet Performance*** 2.6 million
6 Abu Dhabi Aircraft Technologies/SR Technics**** 2.54 million
7 Malaysian Aerospace Engineering 2.5 million
8 Timco Aviation Services 2.22 million
9 SIA Engineering Co. 2.07 million
10 Aviation Technical Services 2 million
10 Sabena technics 2 million
Company 2010 Revenue (USD) 2010 Gross/Operating Profit (USD)
Singapore Technologies Aerospace $1,519,766,513 $280,148,613
Haeco Group $548,832,079 $90,185,056
Malaysian Aerospace Engineering $820,000,000 $170,000,000
SIA Engineering Co. $900,365,773 $110,382,825
AFI KLM E&M releasing May 19 releasing May 19
AAR Corp.* $1,661,000,000 $288,000,000
Israel Aerospace Industries $3,148,000,000 $455,000,000
Aveos Fleet Performance would not disclose would not disclose
EgyptAir Maintenance & Engineering would not disclose would not disclose
Abu Dhabi Aircraft Technologies/SR Technics would not disclose would not disclose
Lufthansa Technik** $5,771,926,192 $385,365,075
Company % Capacity Utilized in 2010
Singapore Technologies Aerospace 96%
Haeco/Taeco/Staeco 75%
Malaysian Aerospace Engineering 91%
SIA Engineering Co. would not disclose
AAR Corp. 87%
AFI KLM E&M 96%
Israel Aerospace Industries/Bedek Aviation Group 95%
Aveos Fleet Maintenance 88%
Egyptair Maintenance & Engineering 85%
Abu Dhabi Aircraft Technologies/SR Technics would not disclose
Ameco Beijing 83%
Timco Aviation Services 84%
Aviation Technical Services would not disclose
Sabena technics 80%
Pemco World Air Services ~46%
TAP Maintenance & Engineering 46%