Fast 5: ATS Work Hints At Transitioning Fleet

Paul Dolan

ATS has worked on more than 200 aircraft that required storage maintenance plus many lease returns, which required maintenance program bridging. As airlines adjust their fleets—from aircraft types to quantity—ATS president and COO Paul Dolan talks about how the Everett, Washington-based MRO is handling the shifting work, along with new customers. 

What lease return work is ATS doing? 

Airlines have aggressively taken leased aircraft out of service, prioritizing the parking and storage of those that are older with the goal of avoiding expensive heavy checks while working through lease return options. I think we are at the peak of servicing leased aircraft that are leaving fleets to be parked. However, I don’t think airlines will bring those aircraft back for a while. About 30% of the aircraft that we’re seeing in our hangars is return work, but based on hours of production, that activity is probably just 10%. That will slow down as airlines start flying and stabilizing. I think it will be a while before airlines pull significant numbers of leased aircraft back into their fleets because they will understandably prioritize parked aircraft that they own. 

Is ATS doing teardown work?

Our acquisition of Ranger Air is finally hitting its stride. We bought and are tearing down a Boeing 767 and an Airbus A321 aircraft, with the A321 activity being conducted by our operations in Kansas City. Aircraft are not going fast to part out: they are going fast to parking. They are trying to return them but leasing companies are managing challenging book values and considering how best to keep aircraft flying, including holding out for further leasing opportunities and even investing in conversions for cargo operation.

Airlines such as Alaska and American Airlines are streamlining their fleet types. Is ATS getting any of this type of work? 

Yes, but not necessarily with those, or just those customers. We are supporting multiple new and core customers as they update fleets and acquire new aircraft. We have done this type of work throughout our history, but there is a significant increase in activity, especially with 737 MAX return to service approval. We have invested in MAX training and have a sizeable workforce ready to support numerous projects related to customers’ current and future needs on this aircraft. We expect this to increase steadily throughout the year and continue to grow in 2022. This is part of the airlines’ fleet streamlining you refer to. 

What is your outlook for airframe MRO in 2021? 

We are seeing recovery from the low points of 50% and expect to be at about 70% in the first half of this year, increasing toward about 80% in the second half, both of which are in reference to our 2019 levels. But, as we have experienced, there remains much uncertainty tied to COVID-19 rates, load factors and bookings. Early to mid-April will tell us a lot about summer 2021 bookings. Our biggest change is that we have taken on new customers, including cargo, which has helped support our operations throughout the pandemic. Our Kansas City operation has an entirely new customer base. And we are benefiting from the ecosystem of our airframe maintenance, component repair/sales and engineered PMA/STC products. This collaboration and customer focus is driving new business growth.

Can you elaborate on the new customer base at Kansas City?

Our Kansas City operation lost its core customer as a casualty of the pandemic. Fortunately, our commercial team had started a relationship with a cargo operator for whom we had performed maintenance in Everett. While you never expect it, that work led to a relationship with their operator, which, together with strong performance, led to maintenance in Kansas City and a new core customer to replace a major hole in the schedule. At the same time, we were fortunate to expand our relationship with a major North American carrier, supporting it with widebody heavy maintenance and mods in Kansas City. The combination of both new programs has created a solid base load of maintenance and is working well with drop-ins from these operators and other important customers. The Kansas City team has matured into a solid heavy maintenance operation and they are performing well. With any luck in the market recovery, we have plans to further grow our Kansas City operations from here.

Lee Ann Shay

As executive editor of MRO and business aviation, Lee Ann Shay directs Aviation Week's coverage of maintenance, repair and overhaul (MRO), including Inside MRO, and business aviation, including BCA.