LHT Shenzhen Benefits From China’s Recovery
Lufthansa Technik’s parent company began last week in gloomy mood, warning of further job cuts, fleet reductions and the distinct possibility that demand for the rest of the year will be nowhere near what it projected just a few months ago.
Having previously hoped to take its capacity back up to half the previous year’s level in the fourth quarter, Lufthansa now predicts that “if the current trend continues, the available seat kilometers will probably only be in a range between 20-30%, compared to the previous year.”
With Europe’s coronavirus infection rates soaring, Lufthansa is having to fall back on other parts of its business, notably cargo operations and MRO.
Thankfully for the company the latter business—Lufthansa Technik—is a global one and so able to benefit from recovery in other parts of the world, notably China, where Lufthansa Technik Shenzhen has just signed a long-term total component support contract for Qingdao Airlines, which recently became a subsidiary of the its local government.
Under a deal with state company China Aviation Supplies, LHT Shenzhen will add more than 40 Airbus A320s to an existing component support contract.
The full-service contract includes closed-loop component repair and overhaul service for selected parts or the entire aircraft and will be invoiced on a cost-per-flight-hour basis.
Speaking to Inside MRO in February, when China was the country worst hit by the coronavirus, Konstantin Stathopoulos, senior director of corporate sales North East Asia at Lufthansa Technik, predicted several months of reduced demand as Chinese airlines cut back on flights.
However, the recent Qingdao deal could be emblematic of the country’s recovery for MRO providers—and LHT Shenzhen made sure it was ready to ramp up again.
“The extended [Chinese] New Year break until Feb. 9 gave the task force here in Lufthansa Technik Shenzhen sufficient time to establish all the pandemic control mechanisms and to resume operations with almost 90% production capacity effective Feb. 10,” said Stathopoulos.