Remanufactured Aircraft

 - February 22, 2015, 3:30 PM

The world is not short of updated and refurbished business aircraft. However, few can be considered truly “remanufactured” with major airframe structure, avionics, new design engines, and fresh paint and interior installed. 

The reasons for this dearth are myriad. Corporate owners (and their lenders and insurers) tend to shy away from aircraft more than 20 years old. Historically the remanufactured aircraft business has been dogged by concerns about warranty and product support. Some remanufactured aircraft don’t hold their value. Remanufactured programs that are “one offs”–as opposed to serial production–can have problems with quality control and economy. And of course there are regulatory concerns with the FAA, EASA and other regulatory agencies.

Sierra Industries

Technically, remanufactured aircraft are modified, as opposed to new, aircraft, and their data plates reflect this, said Mark Huffstutler, CEO of Sierra Industries, a Texas company that has been in the modification and remanufacturing business since 1980, most notably with Cessna Citations.

The FAA will not allow you to throw away the old logbooks and start a new set with zero time on a used airplane,” he explained. “But what you can do is say the airplane is remanufactured and you can issue an additional data plate showing the year of remanufacture. We do that on some of our airplanes. They leave here as 2015 factory models with a complete refurbishment, but if you dig down deep enough in the logbooks you will find these airplanes still have, for example, 5,000 hours or 6,000 cycles. You can’t extinguish that. But in the [remanufacturing] process we zero-time all the inspections on the airplane, look hard at all the life-limited components and replace or overhaul them. [Almost every airplane] gets new avionics, paint and interior and is as close to a factory-fresh airplane as you can make it, given the limitations we live with in the aftermarket world.”

For Sierra and others in the business, that limitation mainly boils down to the price. A remanufactured aircraft can cost 40 to 50 percent less than a comparable new model and sometimes even sport engines and avionics that are more technologically advanced. And for the more than 500 Cessna Citations that Sierra has touched over the years with a combination of wing, fuel system, engine and avionics mods, Huffstutler said, more than anyone else, the people who truly understand the value of remanufacturing are owner-pilots.

These guys fly the airplanes,” he said. “When you get into the corporate-owned and professional flight-crewed realm, they typically have prohibitions against airplanes that are more than 15 or 20 years old. They don’t recognize the value of modifications. You really have to have the aficionados, the guys who are flying the airplanes, to totally appreciate it. That’s who our customer base is.”

However, in the main the market for completely remanufactured products remains depressed, Huffstutler said. That is why his company is offering customers an a la carte menu for its new Sapphire program, which installs GE Honda HF120 engines on older Citation CJ1s. Sierra announced the program last October and hopes to have certification work completed in 2017. “I don’t think the market is back to the point where we could be aggressive about a total remanufactured, serial-production aircraft program. I don’t personally think the economics are back there yet; they were until the crash of 2008, but it is too risky today.”

However, Huffstutler sees good growth in his business, especially with avionics mods and with international customers. Sierra currently employs 100 in Uvalde, Texas, and another 15 at its avionics and MRO shop in San Antonio. “Knock on wood we have our shops full and a little bit of backlog,” he said.

Huffstutler estimates that the company will provide MRO service to 75 to 100 airplanes this year. He estimates that the company’s remanufacturing packages, such as the Eagle II and Stallion for the Citation 500/501, account for 25 percent of the company’s total business, with customers willing to invest $2 million to $2.5 million for a package that includes retrofitting their existing aircraft with Williams FJ44 engines and Garmin G1000 avionics. The typical installation takes anywhere from six to nine months depending on options the customer selects.

It’s a great value,” Huffstutler said. “You get the equivalent performance of a Cessna Citation CJ2+ for $2 million compared with more than $5 million for a new airplane. [A 2014 CJ2+ retailed for $7.25 million new. –Ed.] This is a new one for essentially half the price. Our airplane also will run circles around a [new $4.67 million Cessna Citation] M2; it is 30 knots faster, offers 400 nm more range, carries more people and has better field performance.”

Like all remanufacturers or mod centers, Sierra has to grapple with rapid technological change and the risks and costs involved. Huffstutler said Sierra spent $1.25 million getting the Garmin G1000 system certified on the Citation 501/SP. While that modification provides pilots with greater capabilities, more reliability and trims weight from the aircraft, in many ways it is already passé as more pilots are now expressing a preference for touchscreen avionics. The more expensive Garmin G3000 system offers this capability, but the cost involved in getting it certified for older airframes might not make sense, Huffstutler said.

Avionics change so rapidly. To make a big investment you really have to know that you are going to succeed,” he said. “Over the last 12 months the consumer has fully endorsed touchscreen technology to the point that we have seriously reconsidered the application of the [Garmin] G1000 in anything new. If we want to certify the [touchscreen] G3000 in a CJ, it is a $3 million program because of the autopilot integration. And then you have a product [the avionics mod] that you have to go to market with and sell for $450,000 to $500,000. You wonder how many you can really sell. And when you can put a Garmin 600 [avionics display] and dual GTN 750s [touchscreen GPS/navcom] in the panel for less than $125,000 and have 90 percent of the utility of a G3000, it’s hard to get your customer to bump up another $300,000 for a G3000.”

Huffstutler sees several “engines of interest” for potential future projects, including the GE H75/80 for turboprops and the new Snecma Silvercrest turbofan that Sierra is currently testing on its Gulfstream II under contract for Snecma. While the Citation II and Hawker/Beechjet 400 are currently the largest airframes for which the company has programs, Huffstutler said that could change and mentioned the company is looking at the Citation 650 series for future offerings.

Nextant Aerospace

While Sierra may be reticent when it comes to serial-production remanufacturing programs, Nextant Aerospace jumped in with both feet. The sister company of fractional provider Flight Options was formed in 2007 for the purpose of remanufacturing the Beechjet 400A/Hawker 400XP and refitting it with Williams International FJ44-3AP engines, Rockwell Collins Pro Line 21 avionics, airframe and systems improvements, and an updated interior.

Compared with a stock aircraft, the 400XTi’s maximum range increases by 50 percent, to as much as 2,005 nm (four passengers, NBAA reserves); cruise speed increases to 460 knots; fuel efficiency is potentially boosted 25 to 30 percent; and noise compliance exceeds Stage IV standards. The $5.15 million aircraft (original airframe included) received FAA certification in 2011. To date, the company has delivered 50 aircraft, 20 of those to Flight Options, and others to a diverse customer list in 11 countries.

Recently, Nextant conducted the first flight of its second remanufactured airframe, the G90XT, which installs GE H75 turboprops and Garmin G1000 avionics in the King Air C90. The G90XT package has a bring-your-own-airframe price of $1.95 million. Certification is expected in the second quarter of this year, followed by production of five aircraft by year-end and significantly more next year. Nextant says that its G90XT will best new-production aircraft with features that include digital pressurization control, dual-zone air conditioning and single-lever power control.

We have clearly proved in a short period of time that there is a global market for remanufactured product,” said Nextant vice president Jay Heublein, referring to the 400XTi. “We have a strong order book for the 400XTi and already have taken deposits on the G90XT,” he added. “We have tapped into a segment of the market that didn’t exist. There have been mod programs in the past, but they have always failed in that they were not able to offer fully integrated products that had enduring lives after the initial orders. We’re selling a product on price in a very difficult light jet environment.”

Heublein said Nextant realized early on that for a remanufactured product to have sustained market appeal, it had to provide the same level of training, service and support that OEMs provide with new aircraft sales. That meant partnering with established domestic service providers as well as international ones such as Jet Aviation and Beechcraft Augsburg and an established training company, CAE SimuFlite. “We have to offer everything else you get with any new OEM experience, from dedicated flight crew training on a full-motion simulator, to tip-to-tail warranty, to global product support, to custom paint and interior,” said Heublein. “That’s something that we have been able to offer, and I think other companies are going to follow this. We’ve quickly proved that there is a market for it. But the main barrier to entry is the ability to provide global product support. A company must do that.  

A whole lot of airplanes out there would benefit from our approach, and we spend a lot of time looking at new products,” said Heublein. Nextant is expected to announce its third airframe program by year-end and it could be larger than the 400XTi. Heublein would say only that the company has feasibility studies under way on “four or five” aircraft and is “narrowing the process and getting closer” to making a decision. He did say that larger business jets provide better margins than light jets and therefore make it easier to recapture non-recurring engineering costs over the sale of fewer aircraft. The critical mass for a heavy jet program would be a model with at least 250 to 300 aircraft already in service to justify the program investment required, Heublein noted. He said the company considers its current offerings “entry-level products” and that it will continue to focus on cabin-class business aircraft.

Like Sierra, Nextant says it sees strong interest from the export market holding up.

Beechcraft

Textron Aviation’s Beechcraft unit is also slated to offer a remanufactured Beechjet 400A/Hawker 400XP dubbed the Hawker XPR. The program was announced in 2011 by Hawker Beechcraft before the company declared bankruptcy in 2012 and was subsequently acquired by Cessna parent Textron last year. It has been plagued by delays and still awaits certification. It differs from the Nextant offering in several respects as it is a $2 million (2011 average price) bring-your-own-airplane program, uses the Williams International FJ44-4A-32, offers a choice of retrofit avionics (Rockwell Collins Pro Line 21 or Garmin G5000) and a different style winglet.

As previously noted, both Sierra and Nextant use Williams engines for their retrofits. While Williams vice president Matt Huff said that the remanufacturing market accounts for only a small percentage of the company’s overall sales, he noted that the company provides the exact same product support and warranties to end-users of remanufactured aircraft and the same engineering assistance to the remanufacturers as it does to new aircraft OEMs, including installation and operating instructions “plus whatever engineering expertise the manufacturer needs to fully understand the documentation and safely integrate the engine into the airframe.”

Nevertheless, not all remanufacturing projects are necessarily a good fit for the company, Huff said. “Our selection criteria include the age of the fleet as well as how much improvement in performance or reduction in fuel burn and noise can be realized. Also critical is the size of the market. It is rare that a fleet fulfills these criteria as well as the Beechjet 400 did. We have generally found it difficult to make an acceptable return on investment to certify and support the installation of our new engines onto older platforms.”

 

Turboprop Remanufacturing

Remanufacturing generally is attractive when the price difference between remanufactured and new-production aircraft is compelling, the installed fleet is large, and the aircraft remains in demand, as in the case of the de Havilland Canada DHC-6 Twin Otter twin turboprop, now being produced as the new $7.5 million Viking 400. More than 800 legacy Twin Otters were produced and an estimated 500 are still flying. Customers who want a new Twin Otter can turn to Viking, or they can opt for a $4.5 million remanufactured X2 from Ikhana Aircraft. The bring-your-own aircraft process takes between six and nine months.

Ikhana was formed in 2007 through the merger of R.W. Martin (RWMI) and Total Aircraft Services. RWMI held numerous STCs for the DHC-6: mtow increase to 12,500 pounds and re-lifed wing box, nacelles, flight controls and fuselage. All these components have hard life limits that are, in several cases, substantially less than the overall airframe life limit. Ikhana has combined these along with factory fresh Pratt & Whitney Canada (PWC) PT6A-34 engines and new interiors in the Twin Otter X2 package, giving owners of timed-out aircraft an economically viable alternative to buying a new aircraft. (The DHC-6 has a life limit of 66,000 hours or 132,000 cycles. Customers can also purchase STC installations individually.) Ikhana is working on an STC to raise mtow to 14,000 pounds and hopes to have that in hand by year-end and added to the X2.

The first X2 is preparing for delivery, said Ikhana CEO John Zublin. “It is a developing market. We’ve sold the first one and have several inquiries. We think it is a solid place to be. It’s about the best pickup truck on the market.”

Ikhana’s remanufacturing process is extensive, Zublin said. It requires six to nine months of downtime. The aircraft is essentially “zero-timed” and good for another 66,000 hours when the process is complete. “It gets a new birth certificate. We tear the aircraft down, incorporate the STCs, change out the structural components, etch alodine the entire inside of the aircraft, and install all-new wiring, circuit breakers and avionics. We turn it into as new an airplane as possible,” he said. All of the major STC installations are given new data plates and the entire aircraft gets a type certificate overhaul that reflects the X2’s “zero-time” status. “We give such continuing value to the airframe that you are basically ending up with a new airplane,” Zublin said.

Ikhana holds parts manufacturing authority (PMA) for all aircraft components save the fuselage. Any fuselage parts it needs it buys from Viking.

Zublin said most, but not every, aircraft offers the potential for remanufacture. “If it is still flying, how bad can it be? Sure, you have to be careful and know the aircraft’s history, but ultimately it’s an economic decision. [On STC installation] we’ve never had to turn a customer away because the airframe is too rough. Because the Twin Otter is not pressurized, it lends itself to the [remanufacturing] process pretty readily.”

International customers account for approximately 70 percent of the company’s Twin Otter business, Zublin reports. After it is rebuilt, the aircraft can be disassembled and put into two standard 40-foot shipping containers, which people at the company call “Otter in a box.”

May 2017
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