The good news for maintenance, repair and overhaul suppliers is that the market is in full recovery mode. Stronger-than-expected traffic demand in 2005 is causing airlines to fly their aircraft harder, many of the thousands of jets ordered between 1996 and 2000 are coming due for heavy checks, and relatively few airlines are investing in new repair facilities.

Just days after Air New Zealand said it likely will outsource a major share of its heavy maintenance requirement (ATWOnline, Oct. 20), Qantas confirmed that it is considering a substantial restructure of its engineering and maintenance operation as well, with a decision expected within 3-4 months. MRO operations "are changing rapidly throughout the world, with a big push towards scale and lower cost locations," CEO Geoff Dixon said in a statement. "The competition between MROs is becoming as competitive as the rest of the industry."

Air New Zealand, citing an inability to attract sufficient third-party work and a lack of internal scale, is proposing to outsource heavy maintenance and engine overhauls for its long-haul fleet of 747s and 767s as well as its new 777s that begin arriving at the end of October. The work currently is done by Air New Zealand Engineering Services. Under the proposal, some 600 jobs would be eliminated out of an ANZES staff of 2,100, with work transferred to "a specialist large scale maintenance center in Asia or Europe." ANZ estimated it will save NZ$100 million over five years.

Jet Airways of India will install its own 737 maintenance, repair, overhaul and training center in cooperation with an international MRO provider.

General Electric's Aviation Engine Services unit, in one of the largest such deals it has done, signed an eight-year OnPoint Solutions service agreement valued at $1.5 billion covering maintenance, repair and overhaul of the nearly 600 CFM56-7 engines in service or on order powering Southwest Airlines' 737-700s. According to GE, the new deal is a "hybrid" blending traditional OnPoint time-and-materials and cost-per-flight-hour agreements.

Bucking the trend toward outsourcing maintenance, Qantas said it intends to establish a new consolidated "center of excellence" in Sydney for maintenance of Rolls-Royce RB211 engines. However, the airline also said it will eliminate 60 positions from its Sydney workforce as a result of consolidation and the establishment of Jet Turbine Services, a joint venture with Virgin Blue parent Patrick Corp. for maintenance of CF6 and CFM56 engines in Melbourne. The consolidated facility will employ around 300.

Targeting what it sees as the changing needs of the short-haul operator market, International Aero Engines launched V2500 Select, a new maintenance program linked to a package of technology enhancements that promises to cut MRO costs 20%-30%, reduce fuel burn up to 1% and increase time-on-wing by 20% compared to current-standard engines.

In a big win for the company, MTU Maintenance Hannover was awarded a contract from JetBlue Airways to maintain the 360 IAE V2500 engines powering the carrier's current and future A320s. The contract runs for 10 years and is valued at roughly €750 million ($906.2 million). "This larger order adds substantially to the continued growth of our civil repair business," MTU Aero Engines Holding AG President and CEO Udo Stark said. "Having JetBlue as a partner consolidates our position as the world's largest independent provider of engine services measured by sales."