Qantas opened its A$55 million ($39.4 million), 17,500-sq.-ft. Material and Logistics Distribution Center in Mascot outside Sydney yesterday. Executive GM-Qantas Engineering David Cox said the project is part of a larger investment in the airline's domestic MRO capabilities, which includes an $85 million facility in Brisbane and a $20 million upgrade to its Rolls-Royce Engine Maintenance Center of Excellence. The Mascot center is anchored by a Miniload Automated Storage and Retrieval System comprising four stacker cranes moving at up to 24 m. per sec.
Lufthansa Technik Group, which saw its operating profit climb 26% to €258 million in 2005 ( ATWOnline, March 24), said growth should slow in 2006 as the competitive environment heats up. LHT Executive Board Member August Wilhelm Henningsen said at a press briefing that he expects 4%-5% growth in business this year, all of which should come from outside Lufthansa Group. Last year, 58% of LHT's work came from third-party clients as it increased its total global customer base by 4%. To compensate for the decline, it will continue to target cost savings.
Qantas confirmed yesterday the closure of its 747 heavy MRO operations in Sydney after 55 years in service, resulting in the loss of approximately 480 jobs although up to 140 employees may be transferred elsewhere in the company, CEO Geoff Dixon said. The airline, which has been considering the move since October as part of the restructuring of its maintenance and engineering operations, said it would make an effort to keep the work in Australia but is looking at securing a cost base that will ensure profitability with oil costing more than $60 per barrel.
Air New Zealand will go ahead and outsource the heavy maintenance of its long-haul fleet after all following the failure of unions to secure adequate support for a compromise proposal that would have kept the operation in-house. The airline had accepted the union's proposal late last month ( ATWOnline, Jan. 31). ANZ CEO Rob Fyfe said he was "extremely disappointed" by the decision that will result in the loss of 507 maintenance jobs.
American Airlines and the Transport Workers Union representing its mechanics reached agreement on a goal "to obtain $150 million in value creation" at its Kansas City Maintenance & Engineering Base and to make the base a profit center by the end of 2007 through developing third-party business and implementing Continuous Improvement. The base, acquired in AA's purchase of TWA in 2000, employs 900 people. The goal was set by a joint team of base management and labor leaders who met recently under the carrier's Working Together initiative.
Air New Zealand, which had been prepared to outsource its widebody heavy airframe maintenance, repair and overhaul activities, said it accepted a counterproposal from union negotiators "that could see [the work] remain in-house through a combination of redundancies and comprehensive labor reform" ( ATWOnline, Dec. 20). ANZ had set a target of achieving $32 million in savings from widebody airframe MRO over five years.
Royal Air Maroc announced creation of an A320 and 737 MRO subsidiary called Aerotechnic Industries to be based at Marrakech-Menara. RAM's initial investment of MAD70 million ($7.5 million) will be directed largely toward the construction of an 11,000-sq.-m. hangar with room for two aircraft.
Boeing and Air India finally put pen to paper on the carrier's 68-aircraft order in Mumbai yesterday, bringing to a close more than eight months of bureaucratic wrangling and controversy and ending a sales campaign that dates back more than a decade.
US FAA needs to increase its oversight of noncertificated aviation repair stations and should consider limiting the scope of work such facilities can perform on behalf of airlines, according to a report released last week by the US Dept. of Transportation's Office of the Inspector General.
Air New Zealand expects to make a decision on whether to outsource its widebody and engine MRO activities on Dec. 19, CEO Rob Fyfe said Friday. Speaking at a Star Alliance media briefing in Montreal, Fyfe said the airline's engineering union presented a counterproposal that is being studied by management. ANZ estimates it would save NZ$25 million per year by sending the work outside at current labor rates.
British Airways, after a two-year review, signed what it called "one of the largest engineering contracts awarded in the airline's history" with GE Engine Services. The 10-year, £1.5 billion ($2.6 billion) agreement will see GEES responsible for MRO on BA's RB211-524s and CFM56s powering its 57 747s, 21 767s, 32 737s and 10 of its 26 A320s. It replaces an existing contract due to expire at year end.
The good news for maintenance, repair and overhaul suppliers is that the market is in full recovery mode. Stronger-than-expected traffic demand in 2005 is causing airlines to fly their aircraft harder, many of the thousands of jets ordered between 1996 and 2000 are coming due for heavy checks, and relatively few airlines are investing in new repair facilities.
Just days after Air New Zealand said it likely will outsource a major share of its heavy maintenance requirement ( ATWOnline, Oct. 20), Qantas confirmed that it is considering a substantial restructure of its engineering and maintenance operation as well, with a decision expected within 3-4 months. MRO operations "are changing rapidly throughout the world, with a big push towards scale and lower cost locations," CEO Geoff Dixon said in a statement. "The competition between MROs is becoming as competitive as the rest of the industry."
Air New Zealand, citing an inability to attract sufficient third-party work and a lack of internal scale, is proposing to outsource heavy maintenance and engine overhauls for its long-haul fleet of 747s and 767s as well as its new 777s that begin arriving at the end of October. The work currently is done by Air New Zealand Engineering Services. Under the proposal, some 600 jobs would be eliminated out of an ANZES staff of 2,100, with work transferred to "a specialist large scale maintenance center in Asia or Europe." ANZ estimated it will save NZ$100 million over five years.
General Electric's Aviation Engine Services unit, in one of the largest such deals it has done, signed an eight-year OnPoint Solutions service agreement valued at $1.5 billion covering maintenance, repair and overhaul of the nearly 600 CFM56-7 engines in service or on order powering Southwest Airlines' 737-700s. According to GE, the new deal is a "hybrid" blending traditional OnPoint time-and-materials and cost-per-flight-hour agreements.
Bucking the trend toward outsourcing maintenance, Qantas said it intends to establish a new consolidated "center of excellence" in Sydney for maintenance of Rolls-Royce RB211 engines. However, the airline also said it will eliminate 60 positions from its Sydney workforce as a result of consolidation and the establishment of Jet Turbine Services, a joint venture with Virgin Blue parent Patrick Corp. for maintenance of CF6 and CFM56 engines in Melbourne. The consolidated facility will employ around 300.
Targeting what it sees as the changing needs of the short-haul operator market, International Aero Engines launched V2500 Select, a new maintenance program linked to a package of technology enhancements that promises to cut MRO costs 20%-30%, reduce fuel burn up to 1% and increase time-on-wing by 20% compared to current-standard engines.
In a big win for the company, MTU Maintenance Hannover was awarded a contract from JetBlue Airways to maintain the 360 IAE V2500 engines powering the carrier's current and future A320s. The contract runs for 10 years and is valued at roughly €750 million ($906.2 million). "This larger order adds substantially to the continued growth of our civil repair business," MTU Aero Engines Holding AG President and CEO Udo Stark said. "Having JetBlue as a partner consolidates our position as the world's largest independent provider of engine services measured by sales."
Lufthansa Technik signed two MOUs with Qatar Airways valued at more than $100 million. Under the first, LHT will take over maintenance and overhaul of the V2500 engines powering Qatar's fleet of 17 A320s over the next 10 years under a Total Engine Support contract. The second agreement calls for LHT to install Rockwell Collins' Tailwind 560 for onboard live satellite television on the carrier's 15 A330s. LHT said its engineers and technicians will equip the aircraft with antennas and corresponding systems and integrate the TV function into the existing IFE system.
American Airlines yesterday said it reached an agreement in principle on a multimillion-dollar contract with Synergy Aerospace to perform heavy maintenance on 29 F100s formerly leased by American. The aircraft, which have been in storage, recently were sold to Brazil's Synergy Group, which holds controlling interest in Avianca of Colombia, OceanAir of Brazil and Wayra Peru.
Citing "a growing trend towards the outsourcing of maintenance," Airbus yesterday unveiled a Maintenance Repair & Overhaul Network consisting of 11 service providers around the world.
Enterprise resource planning systems and related software are becoming mandatory components of the maintenance, repair and overhaul supply chain at many airlines. Once the sole province of finance, human resources and management, these single-point and complex IT solutions are being acquired by carriers to cut costs and streamline MRO as well as to replace outdated and expensive-to-maintain legacy systems.
