Singapore Air Show

LHT exec guarded about future growth

 - February 19, 2008, 10:27 PM

The world’s airlines may have made $5.6 billion profit last year and achieved record load factors of 77 percent but Lufthansa Technik CEO August Wilhelm Hennigsen said here yesterday, “With fuel at $100 a barrel and the smell of recession coming from the U.S. the question is whether the industry will continue to grow.”

For now, though, the manufacturers’ order books are bulging and the German maintenance, repair and overhaul (MRO) major, with its 28 companies around the world employing 25,000 people and a 10-percent market share here in Asia, appears well placed to cope with their deliveries.

Along with expanding its Asia Pacific joint ventures, which include Airfoil Services in Kuala Lumpur and the major overhaul centers in China and the Philippines, it continues to expand its training capability. Later this year around 200 trainees will start their courses in a new LHT school at Temasek Polytechnic University here in Singapore.

Overall, Hennigsen said, the MRO industry is expected to grow at just over 4 percent annually, from $42 billion in 2007 to $50 billion in 2012. LHT itself is aiming to do much better, with a growth target of at least 7 percent.

The likelihood of further airline consolidation in the U.S. and the possibility of carriers divesting their MRO operations may result in new opportunities, Hennigsen said, “It just has to make business sense to us.”

The impact of economic downturn will hit LHT when passenger numbers fall and airlines reduce the number of flights. “We had some experience of downturns in 1971, 1981, 1991 and 2001,” he said. “But it’s management’s task to cope with that and we have some flexibility in how to react if there is another downturn.”