Initially to service Philippine Airlines fleet; intended ultimately to operate regionally and internationally
With yet another facility in Asia, Lufthansa Technik AG (LHT) is strengthening its presence in the market for aircraft MRO (maintenance, repair and overhaul) services. Globally the MRO sector in Asia will experience the strongest growth over the long term.
As a joint venture with MacroAsia Corporation (49 percent) Lufthansa Technik AG (51 percent) established in 1999 in Manila Lufthansa Technik Philippines (LTP). LTP is taking over the MRO operations of Philippine Airlines (PAL) in the areas of aircraft maintenance and overhaul plus the servicing of engines and components.
When it starts operating in September, Lufthansa Technik Philippines will initially be maintaining the active fleet of Philippine Airlines, which consists of 31 aircraft. LTP`s medium-term goal is to turn its Manila facility with its central location in Southeast Asia into another “one-stop shop” offering the full line of aircraft MRO services - at first locally and regionally, then internationally.
“This new facility in Asia - plus AMECO in Beijing, plus our components-servicing center being established in the Chinese city of Shenzhen, plus our China Aviation School in Taipei - is a crucial next step in setting up our global network,” said LHT Executive Board Chairman Wolfgang Mayrhuber at the signing of the contract in Manila on July 12th. “We are thus better able to meet the airlines` global demand for MRO services.”
Having opened regional sales offices in Beijing, Singapore and Tokyo, LHT is pursuing a strategy of better serving Asian markets by establishing locally based MRO operations. Total MRO sales in those markets amount to some 3.5 billion dollars. Nine percent of LHT`s own sales already come from Asia
(77 million dollars in 1999), and the intention is to increase that proportion.
Given the Philippines` central location in Southeast Asia, the new LHT facility in Manila enjoys numerous advantages. All the region`s major airtransport hubs are within three hours from it. Manila is already an important hub for many U.S. airlines, and locally available personnel are highly trained and skilled.
The existing maintenance and engineering operations of Philippine Airlines, which is recovering nicely from its recent troubles, will be taken over by Lufthansa Technik Philippines. LTP will buy their buildings, equipment and tools and absorb their roughly 1,400 employees. Maintenance of all Philippine Airlines and Air Philippines aircraft types, up to and including C checks, plus the servicing of CF6-50 engines will continue to be done. The big international hangar can accommodate four jumbos.
LTP will also provide routine maintenance and troubleshooting to regional and international passenger and cargo carriers. In the engine sector its range of services will soon be expanded to cover an additional engine type in wide-spread regional use. Its aircraft overhauls will extend initially to D checks of the 737 but may later include widebodies.
Adding this additional Asian facility to Lufthansa Technik`s global network benefits not only the customers but LHT`s own operations as well. Just as, through LTP, Lufthansa Technik will be beefing up its worldwide offerings in the area of engine and components servicing, LTP for its part will be able to order services from other LHT facilities.
With its 49-percent interest in Lufthansa Technik Philippines, MacroAsia Corporation is entering a new field. Its activities were previously confined to offering ground handling and catering services at the Manila and Cebu airports.
Lufthansa Technik with its 10-percent share of the world market is the largest provider of aircraft MRO services. Its own sales plus those of its 16 subsidiaries and affiliates totaled 5.2 billion marks in 1999.