Yehia Zakaria, chairman and CEO of Egyptair Maintenance & Engineering, talks with James Pozzi about growing the carrier’s MRO business.
What are the key elements of Egyptair’s maintenance strategy?
Egyptair Maintenance & Engineering inherited the legacy of the EgyptAir technical division. We evolved its business model to an affiliated MRO, capitalizing on immense experience in maintaining modern aircraft types and the wide scope of capabilities and the quality-assurance system that had been developed based on international standards and accreditations. We formulated our customer-focused strategy through exploiting the embedded know-how, modern capabilities and geographic proximity to vibrantly growing regions to support aviation regional growth by offering a wide range of maintenance services, addressing operators’ needs and aiming to be the preferred technical partner for many clients other than our own airline. The rollout of aviation-related technologies and digitalization have been accelerated as we strive for productivity and maximizing the returns on our valuable assets. We are focusing on upgrading capabilities, organizational systems and digital platforms to cope with ever-evolving operational and business requirements.
How has your maintenance operation recovered since the COVID-19 outbreak began two years ago?
The vulnerability of aviation industry to such crises is very high. Over the history of aviation, it has experienced either regional outbreaks or limited-time disruptions, and the COVID-19 outbreak has maintained its global consequences for a couple of years now. During the complete lockdown, early in the outbreak, all line maintenance activities were suspended; while maintaining some level of activities in hangar maintenance work, [we] took advantage of the lull to address the light and heavy maintenance requirements. Supported by repatriation operations, plus the need for vaccine and medical supplies’ transportation, we managed to continue a very limited level of operations. Easing of travel constraints after worldwide campaigns of vaccination has enabled us to recover almost 50% of our operations. Our full workforce is back at work, with operations returning to 70% of pre-pandemic levels. We managed to limit our losses for two fiscal years, and we expect to slowly regain the momentum for profitability, as the estimates show, by the end of our current fiscal year on June 30.
Has the pandemic presented a good chance for airlines to innovate in MRO?
It was a challenge to maintain the serviceability of huge fleets that had been stored and parked. Many solutions have been developed in cooperation with manufacturers and authorities to address the technical requirements. Turning around aircraft between flights and health precautions for both passengers and maintenance crews has translated into maintenance procedure burdens. This is in addition to massive disruptions in supply chains and the fact that almost all contractual terms had been severely stretched, requiring special measures and arrangements between airlines and MRO service providers to navigate safely through the crisis.
What is the ratio of Egyptair fleet maintenance work versus third-party maintenance?
We’ve managed to leverage the third-party contribution to operating revenue to almost 30%, with plans to increase it to 40% soon. We have the advantage of having a wide customer base from Europe, Africa and the Middle East, given our list of international approvals, along with our expansion plan to attract more customers from different regions. Our geographic location is an advantage as well.
Do you foresee adding new maintenance services or capabilities, and if so, what will you prioritize?
Developing new services and adding new capabilities are continuously managed in response to customer needs and market dynamics. Egyptair has given priority to collaborative initiatives with potential regional partners to introduce new services and/or expand our regional presence adjacent to point-of-service delivery and our customer base of operations. In addition, we can increase our light and heavy maintenance capacity to fulfill the growing regional demand for such services, along with developing a new paint facility to complement our service portfolio. However, we made a major leap during the pandemic over the past couple of years by intensifying our training programs and adding more aircraft types to our line maintenance capabilities, such as the Airbus A380, A350 and A320neo with Pratt & Whitney engines, along with intensive training plans for component workshop staff.
Which MRO technologies are you looking at investing in for the future?
We’ve managed to implement the initial milestone in digital transformation to streamline operational processes and leverage the integration capabilities with OEMs, manufacturers and customers’ digital platforms. This will provide a solid foundation to introduce new digitally based predictive maintenance tools.
Are you anticipating capacity constraints across your maintenance network as soon as maintenance demand picks up?
Yes, for sure, as the maintenance requirements creep up, which had been postponed for stored fleets, as well as airlines’ needs to recover faster to compensate for some of their losses and/or gain new market share. Many operators already have made decisions for returning leased aircraft, creating additional demand for maintenance to fulfill end-of-lease return conditions.
How has the Egyptair Maintenance & Engineering supply chain held up over the past few years? Have there been challenges?
Recently, supply chain challenges started ramping up, driven by many causes; a shortage in capacity for engine maintenance services resulted from early demand for shop visits for some of the newly deployed engine fleets and the availability of spare engines to compensate for service outages. OEM production challenges resulted in extremely long lead times to supply some types of spares. Lockdown and travel restrictions have squeezed capacity availability and the efficiency of logistics networks. It looks like MRO facilities don’t have the agility to ramp up sharply above steady-state demand.
How has the MRO labor market changed over the past few years? What is Egyptair seeing in terms of technician recruitment and attracting new talent into the industry?
The demand for MRO labor is constantly increasing, especially in the Middle East and even in Europe. The huge demand in China and Asia to support the growth of fleets and traffic motivates many MRO workers in the Gulf area to return to their own countries in the Far East, resulting in scaling up wages for expatriate MRO technicians. All of our staff is locally recruited, and we have the privilege of access to a steady flow of fresh graduate engineers and technicians. We also train our MRO staff either as new recruits or to improve the skills of experienced staff. That allows us to maintain an adequate workforce at a very competitive cost. On the other hand, many regional MROs and operators have eliminated many jobs during the pandemic crisis. It will take time for them to re-recruit well-trained staff and recover operational capacity, but this has not been the case for Egyptair.
