Podcast: What the Rolls-Royce And Turkish Technic Tie-Up Means For Trent MRO

Listen in as editors discuss Turkish Technic joining Rolls-Royce's aftermarket network and plans to build a new maintenance center in Istanbul for Trent XWB and 7000 engines.

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Transcript

Lee Ann Shay:               Welcome to the MRO podcast. Today's topic, Rolls-Royce's aftermarket network, specifically, insights about the deal signed last week with Turkish Technic. I'm Lee Ann Shay, Aviation Week Network's executive editor for MRO and Business Aviation. And joining me is James Pozzi, Aviation Week's MRO editor for the EMEA region. James, welcome to the podcast.

James Pozzi:                 Hello, Lee Ann.

Lee Ann Shay:               You've been writing quite a bit about Rolls-Royce's TotalCare Network. Let's start with the announcement on May 7th that Turkish Technic is joining Rolls's TotalCare aftermarket support network.

James Pozzi:                 Yeah, absolutely. So this was announced last week at a ceremony in Istanbul at the Turkish Airlines facilities. Very interesting deal and not really all that surprising when you look at the ties between Turkey and Rolls-Royce. But let's look at the deal to start with. So definitely this is essentially what Rolls-Royce said they'd do, add more capacity to the network. They're on a huge drive at the moment, both of their internal shops and their joint venture companies as well. And we'll look at some of those soon. So Rolls want to grow their network up to 2030 because wide-body engine demand has come back very strong and some of their engine programs, of course, are entering cycles of increased shop visit activity as they are starting to mature. So the new venture, and I'll stress venture rather than joint venture, will see Turkish Technic perform full services for two Rolls-Royce wide body engine programs. So first, perhaps the most immediately significant, is the Trent XWB. Two variants of that will be repaired in Istanbul. That's the -97 and the -84, of course both found on the Airbus A350.

                                   And then of course there's the Trent 7000 for the Airbus A330neo, which amazingly entered service in late 2018 and has already traveled around 2,000,000 flying hours and it won't be long of course before those are needing shop visits too. So Turkish Technic will become part of the Trent TotalCare aftermarket network and will eventually perform full services on these engines, both for third party operators as well as the Turkish Airlines fleet. It's worth noting of course, and we'll talk about Turkish Airlines in a bit, but the airline is the world's largest operator of the Trent XWB engine and it does have some big future commitments also for that engine. So that's very much another driver of this, I think. So yeah, Turkish Technic as well have said that the facility will eventually have capacity for up to 200 shop visits per year, once that's operational at the end of 2027. So yeah, a lot of activity on wide-body engines coming into Istanbul in the next few years.

Lee Ann Shay:               Thank you for that. And you've brought up a really significant point. Turkish Airlines is the world's largest operator of the Trent XWB engine. So given that and Turkish Technic's engine experience, including the JV with Pratt and Whitney, the Turkish engine center, was this deal almost inevitable?

James Pozzi:                 Yeah, well of course there are ties between the companies. Over the last few years they've been strengthened, no doubt. So the Turkish government, let's start with them. Of course, Turkish Airlines is the flag carrier of the country. Of course Turkish Technic is affiliated with. Turkish government has been vocal in terms of its ambitions for aerospace growth across several parts of the industry as we've seen. So in the context of commercial MRO what was significant was at the end of 2023, Turkey announced plans with Rolls-Royce to explore, opportunities they called it, in specifically Trent XW maintenance in Turkey as well as supply chain sourcing. So that was a major factor in relation to this. And of course Rolls-Royce are also involved in the Strategic Türkiye Enhanced Program with the acronym STEP. That cooperation of course is Turkish Airlines, Rolls-Royce and Airbus are also involved in that too. And obviously STEP is targeting further development of the Turkish aerospace industry and basically grow its economic value over the next 15 years or so.

                                   And Rolls-Royce obviously aren't alone in terms of OEM involvement there with Airbus. Also, last month Embraer announced plans to expand production capacity in Turkey, signing an MOU with Turkish aerospace, which will look at developing parts, for example, for commercial aviation and possibly introducing the E2 jet into the country as well. So it is a bit of a movement in terms of commercial OEMs looking closer to Turkey. As we mentioned, Turkish Airlines is the largest operator in the world of the Trent XWB and some of their fleet commitments are big over the next few years.

                                   So last year the airline firmed up an order for 80 A350 aircraft, which was signed towards the end of 2023. And that included an order for 120 Trent XWB-84 engines and 40 of the -97 variant too, excluding options and spares as well. So a big, big drive there is with the airlines as well. And also they have the capability. I mean Turkish technic, they recovered very well post-COVID as an MRO. They were quite vocal about the upturn and how quickly it came, and they have a lot of maintenance capacity and a lot of scope. I mean even with that huge Turkish fleet, they do service a lot of third parties as well. And just in the context of their engine activity, of course, their current operation is mostly centered around Sabiha Gokcen airport in Istanbul. They service CFM 56 and CF6 engines to full capability there.

                                   But also, of course, it operates the Turkish engine center joint venture with Pratt and Whitney at that site too, which focuses on CFM56-7B repairs. But this of course is at the new Istanbul airport, which has been open since 2019 amazingly, and it seems like yesterday when it was made operational with a lot of fanfare. And of course that's going to be ramping up over the decades to its targeting eventually becoming the largest passenger airport in the world in terms of passenger numbers certainly.

                                   And they did move a lot of their activity from Istanbul's other airport, the former big airport of the city Ataturk airport. They moved a lot of some of their stuff over across to the new Istanbul airport. So I guess giving that site the kind of engine presence is pretty significant too. And setting up a full big engine shop there, because that's not something that has been the case so far. A lot of base maintenance and component repairs activities happening around Istanbul Airport. So there'll be an engine presence there, so that's also significant as well.

Lee Ann Shay:               That was just a lot of information and insight. James, thank you for that. Lots of activity obviously happening in Turkey. Let's go back to Rolls-Royce and the aftermarket. Rolls has traditionally had a more closed network than say some of the other engine OEMs. Let's put this deal with Turkish in context with that. How do you see that aftermarket evolving?

James Pozzi:                 Well, Rolls will certainly grow it. They've made no secret of that. They are looking to expand both internally and potentially through partners as well. But let's see what's going on, I think, would be interesting. So there's several drivers of this, obviously the need for capacity. Another one of course is the enhancement package they signed early last year at the Singapore Air show as I remember. That's around 1 billion British pounds and that was for the Trent 1000, 7000 and XWB engines of course, which is aimed or was aimed at increasing durability. Rolls have been pretty confident and buoyant about how that's going. And they've obviously are growing that aftermarket to ready themselves for the growth of those fleets.

                                   So I spoke to Paul Keenan at the end of last year, who of course heads up the aftermarket operation at Rolls-Royce. He said it was looking to add new partners, although interestingly it'll likely be in the mold of, think back to, I remember late 2019 when it signed an agreement with Sanad in Abu Dhabi. It will be more of those center of excellence partnerships joining the network rather than joint ventures being set up, obviously, of course, except for the one it is currently setting up in China, of course with Air China, which we'll talk about in a minute.

                                   So yeah, potential new additions also with the Sanad partnership, the Rolls-Royce certifying grant, the MRO, the necessary approvals for them to carry out the engine maintenance for them. So that was what Paul hinted that they were looking at. It goes without saying, services have been a real sweet spot for Rolls-Royce for some time now, maybe excluding perhaps those couple of COVID years when the wide-body market was severely hit. But yeah, they will be very, very active in the wide-body space as one of the two major OEM players, and that will obviously be reflected as well by their great rival GE Aerospace. They've made some significant announcements lately expanding their premier MRO network to include the GE9X over in Dallas with MTU.

                                   And yeah, I'd say expect more of this across the board in the wide-body market. But certainly with what Rolls is doing, it's worth highlighting some of their activities there. Of course, the end of last year, Dahlewitz in Germany, traditionally a bizjet engine center, they resumed commercial activity by inducting a Trent 1000 engine, and of course they've allocated around the 55 million British pounds, 70 million US dollars at the time of that story in boosting capacity, not just in Dahlewitz, but in Derby, of course, its longstanding headquarters as well.

                                   And I think where a lot of the very interesting stuff is happening as well is with the joint ventures. So the Singapore Aero Engine Services, SAESL in Singapore, where, Lee Ann, actually you and me visited just less than a year ago and had a look around, they're going to be expanding capacity and growing their volumes to about 40% and they're building a new site as well to add to their existing operation. Then in Europe, there's N3 Aero Engine Services, of course, the Lufthansa Technik JV. They're undertaking a big construction to increase their engine outputs from about 160 engines a year to 250 Rolls-Royce engines annually. As I alluded to earlier as well, there's the Chinese joint venture with Air China, China Beijing Aero Engine Services with the acronym BAESL. They're expected to come online late next year. And yeah, there's going to be a lot of engine capacity there, of course in China, to service that pretty huge market too.

                                   So yeah, I wouldn't be surprised to see more partners down the line. But yeah, I mean Turkish as well worth mentioning, we've obviously talked about the airline side of things, but geographically very significant because Turkey of course has a, I said Istanbul airport will be one of the largest airports in the world over time. It's aiming to be the biggest, but also Turkey is a traditional gateway, I guess, between East and West, obviously Europe to one side and then the Middle East, and obviously the wider huge Asia continent the other side. So a lot of airlines going through there. And of course Istanbul is a hub and a lot of commercial elements flying through. So a lot of activity and a lot of wide-body Rolls-Royce engines to be serviced, it goes without saying.

Lee Ann Shay:               Thanks for outlining all those changes. And I think you bring up a really good point about just the geographical mix. It's like you've got Turkey now and you mentioned the Beijing Aero Engine Services company, BAESL, is opening in Beijing next year, spreading the network out to service all those engines that are coming online.

                                   So we've run out of time. James, thank you so much for all of your insights. And listeners, don't miss the next episode by subscribing to the MRO podcast wherever you listen to them. And one last request, please consider leaving us a star rating or writing a review. Thank you so much.