International alliance greatly enlarged Hamburg to play expanding role as development center
After a successful fiscal 1999 with increased sales and earnings in its fifth year as an independent provider of technical services for aircraft, Lufthansa Technik AG (LHT) finds itself in a very good starting position for a further expansion of its leading role in the global MRO (maintenance, repair and overhaul) business. Once again in 1999, LHT external sales rose faster than did its business with other Lufthansa Group companies. On total sales of 3.6 billion DM, external sales fell just short of 50 percent.
At the company`s annual press conference in Hamburg on May 24th, LHT Executive-Board Chairman Wolfgang Mayrhuber stated that “thanks to the expansion of our international service and production alliance, our complete range of products able to meet each individual customer need, and our innovative strength in development and service, we can be optimistic about the future, despite intensified competition.”
LHT`s network of representative offices and maintenance stations became even closer-meshed in 1999, and its international alliance of subsidiaries and affiliates grew from 10 to 16 companies.
On top of added paint-shop capacity in Ireland, LHT now offers aircraft maintenance in Brussels, and in 1999 strengthened its commitment to the MRO business in the U.S. with a new components-supply company. In Budapest, Lufthansa Technik will soon offer overhauls for Boeing 737s. And for the Asian market, a large mainte-nance and overhaul facility in Manila will open its doors this year. “Setting up locations in our most important markets mainly means closer proximity to the customer. It also helps us use our capacities flexibly, cut costs and bring high-value work into Germany.”
Mayrhuber emphasized that price pressure from airlines on providers of technical services for aircraft has not let up. Against this background, the signing of 81 new contracts in 1999 (33 of them with new customers) demonstrates that Lufthansa Technik can offer custom-tailored service packages to the total of 268 airlines that it presently serves throughout the world (up 14 percent from last year). “This applies not only to big customers like Spanair, for which we provide Total Technical Support on more than 30 aircraft, but also to small new airlines, and to maintenance management for aircraft-leasing companies.”
The price of maintenance and overhaul, he said, could no longer be reckoned merely in terms of hours of labor and individual events. “Our customers purchase the highest possible availability for their aircraft, and they expect quality guarantees on this. A major reason for our success is that Lufthansa Technik has an individualized answer for each customer`s every need.”
LHT`s Hamburg location, a center for logistics and skills in all areas of the MRO business, will increasingly also become a development center, he affirmed. “With innovative product developments, plus design and completion, cockpit reconfiguring and cabin modifications, our customers can find here a highly efficient and highly innovative development operation, able to hold its own against competitors anywhere in the world.”
With an eye to e-business and the new economy, Mayrhuber said that a glance at LHT`s Web site would confirm that the first steps had already been taken, for example with the possible inquiry about engine parts and accessories by the customer. “Expanding e-business will allow the Lufthansa Technik alliance as a whole to tap into new opportunities in procurement and in selling its services.”