Lufthansa Technik expands bizav presence in U.S. market

 - January 30, 2007, 8:40 AM

Lufthansa Technik, the Hamburg, Germany-based maintenance, overhaul and interiors completion and refurbishment giant, continues to expand its U.S. presence. First it acquired BizJet International in Tulsa, Okla., then established a nearby interiors engineering design office. Now Lufthansa has announced it will open a widebody business jet completion hangar at Tulsa International Airport.

According to Ken Goldsmith, president and COO of Lufthansa Technik Completion Engineering, LTCE was planning to take over the 53,500-sq-ft hangar this month, leasing the facility from its sister subsidiary, BizJet International.

When LTCE was created in May 2002, a spokesman forparent company Lufthansa Technik described the move as being prompted by a shortage of engineers in Germany with experience in large-aircraft interior design. It was a joint venture formed with Yankee Pacific of Rye, N.H., with Lufthansa as a majority shareholder and Yankee Pacific holding the remaining 49 percent. It was also a move calculated to expand Lufthansa Technik’s North American presence, particularly with regard to interior completion and refurbishment work on the Boeing Business Jet.

The center, currently in quarters leased from the Tulsa Airport Authority, now houses about two dozen engineers and administrative workers. “We picked the best of the best,” Goldsmith claimed. The company also has a sales and interior design office in Dallas.

Since its opening, LTCE engineers have been involved in the interior design of two BBJs completed at Hamburg and is now prepared to take on its first BBJ to be finished at the Tulsa facility. With that in mind, LTCE is also hiring completion installation specialists.

To bolster its design capabilities, LTCE last month acquired Interior Computer-Aided Design (ICAD) of Denton, Texas. The company is being relocated to the Tulsa LTCE facility. The 3D solid modeling of ICAD, said LTCE v-p of engineering and certification Rick Richaedson, will allow rapid response to the customer with fully rendered solid models of a proposed interior, directly transform these models to complete, detailed engineering packages and quickly deliver ready-for-production drawings to the shop floor.

Goldsmith said the intent is to outsource for the interior components, from independent vendors as well as from its parent company in Hamburg. “We look at ourselves as an in-house installer,” he explained.

LTCE currently has no contract to finish a BBJ, but Goldsmith emphasized that the company is taking “a very positive approach” to the economic recovery and intends to be ready for its first widebody business jet interior job in the near future. LTCE will also take an active role in supporting BBJ’s already finished at the Lufthansa Technik Completion Center in Hamburg and now in service or flying in North America.

This includes not only interior refurbishment and component upgrades, but heavy maintenance as well through BizJet International. BizJet is a Boeing-approved maintenance center for the 737. The BBJ is built on a hybrid next-generation Boeing 737 platform.

“Our role in a traditional sense is to help Lufthansa win its fair share of the market here in the United States,” said Goldsmith.

Bizjet International Opens R-R Test Cell
BizJet International has a similar goal. The company was acquired by Lufthansa Technik in May 2000, and while it has continued to operate as BizJet International, the support of Lufthansa Technik has allowed for considerable growth. A second-tier center for maintenance, support, engine overhaul and cabin refurbishment, BizJet is now actively bidding against its larger competitors and seeking a growing market share.

The company has become a major source of service and support for Gulfstreams. This month, it assumes a new role as a factory-authorized maintenance and overhaul center for the Rolls-Royce Tay and Spey, engines that power some 900 Gulfstream IIs, IIIs, IVs and IV-SPs. Part of that approval has included the purchase of several new Tay engines for lease support and the acquisition of a Gulfstream II for the express purpose of acquiring its Spey engines for use in lease support. The aircraft will then be used to add to the pool of airframe components.

A new 13,000-sq-ft engine test cell is schedule to go on line this month and is capable of accommodating engines generating up to 50,000 pounds of thrust, including the CFM56 that is standard on the BBJ. “As we grow with Lufthansa, we might expand to include larger engines,” said Jace Stone, BizJet v-p of sales, marketing and business development. However, he noted, “Our focus will continue to be on the business jet market.” Lufthansa Technik chairman August Henningsen is expected to be a guest at the official ribbon cutting on January 30.

Stone said BizJet now has the overhaul turnaround for a Spey engine down to 60 days, “and we expect to improve on that.”

According to Stone, engine overhauls continue to account for about two-thirds of BizJet’s revenue, with the remaining one-third generated by airframe work, refurbishment, exterior paint and a full-service FBO.

Stone said business-jet interior refurbishment work has been steady, despite the recession. Scheduled for last month were a Gulfstream IV and Challenger 601 for major interior refurb work. Also expected were a Learjet, two Falcons and a Sabreliner for lesser refurbishment jobs. “We’re booked solid with refurb work through February,” said Stone. “That’s not to say we couldn’t make a slot for someone, but it’s tight.”

A Commitment To ‘Mature’ Bizjets
At the NBAA Convention in October, BizJet announced a reaffirmation of its commitment to “mature aircraft” such as the Citation 500, Falcon 20, Gulfstream II and Learjet 25, and older engines such as the General Electric CJ610 and CF700, Pratt & Whitney Canada JT15D and Rolls-Royce Spey.

Since its beginning in 1986, BizJet has focused almost exclusively on supporting this “mature” market. Stone emphasized that even while BizJet seeks a market among newer business jets, “Through the Legends Program, we continue to maintain and expand our rotable, lease and exchange pool of airframe and engine parts [and] provide competitive labor and material rates, fixed-price overhauls and flexible finance plans.”

The shop at BizJet has already painted 17 BBJs and is expected play a role in the LTCE completion center project as it begins finishing and refurbishing BBJs. However, said Stone, “At this point, like the refurb shop, we’re booked through February.”
Stone said BizJet is currently “looking at ways to integrate interior expertise, technology and products from Lufthansa Technik into our own services and products.” A Lufthansa Technik entertainment center originally designed for a BBJ, he said, might easily be scaled down for installation in a smaller business jet with no loss in quality.

BizJet International is also the first approved service center for Embraer’s Legacy, the business jet version of the Brazilian company’s ERJ-135.

As for the importance of the association with Lufthansa Technik, Stone said the actual injection of funding from the parent company has been minimal. However, he added, “Its buying power has been of considerable benefit.”

Nordam solidifies bizav niche

The Nordam Group, tucked away in the flat, green countryside some 10 miles north of Tulsa, has been quietly creating a niche market for business aircraft interior shell liners and flat panels. In fact, the list of business aircraft manufacturers or completion and refurbishment centers that are not customers is by far the shorter list.

The company’s cabin shell liners are standard in Bombardier’s Global Express, Challenger 604 and Learjet 60, in Raytheon Aircraft’s Hawker 800XP, 400A and 400XP, in Cessna’s Bravo and Sovereign, and in Gulfstream’s G500, G400, G200 and G100. Nordam was also picked to provide shell liners and cabinetry for the Legacy executive version of Embraer’s ERJ-135 airliner. And the company will be providing “fairly complete” shell liners as well as floor panels for the new Sino-Swearingen SJ30-2 very light jet.

Nordam is also a major supplier for many of the companies doing Boeing Business Jet interior completions, including Associated Air Center in Dallas, Lufthansa Technik Completion Center in Hamburg, Germany, and Sogerma in Bordeaux, France.

Expansion Pays Off
According to director of strategic accounts Jim Sweedyk, Nordam ships anywhere from 5,000 to 7,000 parts per month to its customers. What Nordam doesn’t do in interior shell liners it provides in bulkhead panels, flooring and custom-formed interior sections for nearly two dozen types of business aircraft.

One of the company’s advantages is a total in-house ability to build not only composite cabin shell liners, but virtually any associated item, from specially shaped composite panels to ductwork and cabinetry paneling. Nordam assembles its own flat panels–aluminum, Nomex paper, balsa and foam cores–from the raw components provided by vendors, allowing the company greater flexibility and less room for error, and lowering production costs.

Before the current recession, Nordam had expanded its floor space at the Tulsa plant. While it might not have seemed a good move in light of later workforce reductions, the expansion now houses some 6,000 interior parts and 15,000 tools, as well as assorted equipment acquired from Raytheon Aircraft’s old Salina, Kan. Center. As a result, Nordam is now the primary supplier for virtually all of the interior shell liners and related components for Raytheon aircraft. “We’ve been providing the components to them for about four months now,” said Sweedyk.

With an eye to increasing its market presence in Wichita, Nordam has also established a 70,000-sq-ft cabinetry shop in the city that is home to three of the largest business aircraft manufacturers–Bombardier, Cessna and Raytheon. The focus at the Wichita plant is currently on interior shipsets for the Legacy. Working from a floor plan provided by Embraer, Nordam creates the interior shell components and cabinetry and ships them to the Embraer factory in São José dos Campos, Brazil, for installation.

The Wichita facility is also intended as a major inventory stock area for interior components intended for the area OEMs. While Nordam has been slowly expanding its role as a vendor of strategic interior components for business aircraft, the company has expressed no intention of becoming a competitor in the completion and refurbishment business. “We do not compete with our customers, and we typically do not communicate with the end-user,” said Sweedyk. “We want our customers to want us, and we have no intention of leveraging them into using us as a supplier. The small independent vendors are what got us where we are today,” he pointed out.

Competing With A Vendor
Sweedyk is well aware of the unease among the independent completion and refurbishment center owners over the expansion of DeCrane Aircraft into that business not long after it acquired a number of major interior components vendors, including seating specialists ERDA and Dettmers. And in fact, Sweedyk recently found himself bidding against DeCrane for an interior integration project. “They got the same bid package I did, so why would I go to them and ask for a quote for seats from ERDA?”

Nordam’s Interiors and Structures Division is part of the manufacturing operation and is a key facility, and sales revenues are expected to rise next year.