Lufthansa Technik (LHT) is further slimming down its aircraft parts inventory by expanding its long-term aftermarket sales agreement with AvAir.
Under the initial agreement, signed in April 2020, AvAir acquired the majority of LHT’s overstock of rotable spares inventory, comprising 9,000 line items valued at $100 million. According to AvAir CEO Mike Bianco, the initial agreement was an “overwhelming success for both parties.”
In light of this success, the two companies have now signed an addendum to the agreement which includes a second large material takeover, under which AvAir will acquire an additional 9,000 aircraft components. The assets will include parts for Airbus A320, A330, A340, A350 and A380, Boeing 737, 737NG, 747-400 and -8, 777 Freighter and 787 aircraft, as well as regional aircraft types and miscellaneous material.
Delivery of the components to AvAir’s facilities in Ireland and Chandler, Arizona is underway, and the companies expect complete transfer of material in the next 90 days. AvAir plans to make the acquired inventory available for both exchanges and outright sales.
In addition to serviceable and overhauled items, this time the agreement will also include as-removed and unserviceable units that are considered overstock from LHT’s material pool and aircraft teardowns. As was the case with the initial agreement, all material will come with FAA, European Union Aviation Safety Agency or Civil Aviation Administration of China dual or triple release certification, as well as a 12-month warranty from LHT. According to LHT, the deal implies that it will receive a share of the proceeds from resold components under a profit share agreement.
LHT says the sale will help it significantly optimize inventory at its warehouses in Germany. “Our long-standing partnership with AvAir demonstrates our commitment to continuously improve the allocation of our rotable spare parts inventory,” says Christian Ehard, director of production alternatives at Lufthansa Technik Component Services. “It is also a sign of a recovering industry and we look forward to further increasing efficiency in our supply chain with similar opportunities in the future.”
It is not surprising that LHT is seeking further efficiencies and opportunities for extra profits. The MRO has been in the process of restructuring after a difficult period during the pandemic. In December 2021 it sold off Lufthansa Technik Brussels and Lufthansa Technik Maintenance International to Sabena Aerospace, and in August 2021 it closed six line maintenance stations in Germany. However, the MRO returned to profitability in 2021 and foresees a return to pre-COVID-19 levels in 2023.
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