August W. Henningsen Chairman Lufthansa Technik
August W. Henningsen Chairman Lufthansa Technik
Where is the state of the industry? The general situation in the MRO business becomes more challenging. We see capacity growing over demand in certain business areas. The cost pressure to our customers, the airlines, remains high and might even increase further, depending on fuel prices, taxes and so on. On top of that we see a certain hesitation to issue long term tenders or to contract business over longer time periods. The business becomes more fragmented in terms of contract duration. How’s the regulatory environment right now? Is there any legislation coming up that might impact your business? The regulatory environment as such is never steady. We are subject to two main factors. Due to new customers, we are required to acquire new international aviation authority approvals and regulations do change over time. • New approvals: In 2011 only we enlarged our approval base by seven new aviation authorities in the “Lufthansa Technik Common Group Approval Companies” (i.e. in the LHT group of firms that is under the same EASA/LBA Part-145 approval DE.145.0001). This means changes to our Quality Management Documentation and training of personnel to new or deviating procedures.
• Recent changes in regulations: —Europe: EASA is very busy in adjusting their regulations. Mainly due to real or perceived safety concerns. This leads naturally to more effort and spending of resources within our company. Examples are the higher training requirements for personnel created by several AMC- 20 (electrical wiring, composite). Another point is the more stringent training requirements for “contracted maintenance personnel” which may add to further cost and narrowing the flexibility. —USA: (1)Last year’s start of the Bilateral Aviation Safety Agreement (BASA) between the USA
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and the European Union (in May) with its implementation in certification and maintenance gave relief, namely on mutual acceptance of most of each other’s repairs and modifications. A further positive effect was that LHT could collect some of their European Group Companies under the single LHT FAA Repair Station Approval. As many as three European LHT Group companies have been included in 2011. Three others are in the pipeline to be included in the next months.
Franck Terner President AFIKLM E&M
Where is the state of the industry? The industry is definitely revamped on new and recent generation aircraft. The MRO market shifts to MEA and Far East regions, where fleet growth is, with new aircraft. [There is an] increasing need for financing on the MRO side. Inventory and benches costs, as well as reliability, increase for new gen aircraft. The trend will be the shift of the financing burden from airlines to MRO providers. As aconsequence, the MROs will look for scale effects through partnerships and joint ventures. All these trends are likely to increase the MRO market consolidation pace.
Franck Terner President
AFIKLM E&M continued on page 52
How is 2012 looking so far in terms of the health of the industry? Is 2012 the comeback year? Not yet. There is a progressive volume recovery on new and recent technology fleet, but with a permanent price pressure from airlines and MRO competition, which is strongly refocused on these segments. Differentiated situations depending on world regions, which are not always reflecting the long term potential (like in India for example). Do global politics impact your business? Yes, and not only global politics. European MROs, including AFI KLM E&M, had to face the Arab spring consequences. Nevertheless, the situation is getting much better. For example, we’ve recently signed contracts with the two Libyan airlines and extended our A330 component contract with Yemenia Airways. The recent European debt crisis also inpacts our business. Other kinds of crises (natural disasters, epidemics...) do have strong impact on airlines and indirectly on MRO business. How’s the regulatory environment right now? Is there any legislation coming up that might impact your business? Technically speaking, we are in a highly regulated environment. We are used to this necessary framework. The changes that affect the airline environment can have impact on MRO. For example, the recent European carbon initiative lead to an increased price pressure and to fleet choices related with fuel consumption...which is not neutral for MROs. Another impact is on the
Aviation Maintenance |
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