LHT Aims for Growth

 - February 15, 2012, 8:00 PM
Lufthansa Technik Philippines.

Weak airline profits are increasing pricing pressure on the maintenance, repair and overhaul (MRO) market. That’s a big challenge–but by no means the only one–facing MRO providers in 2012, the Year of the Dragon, according to Lufthansa Technik chairman August Henningsen. “We’re happy we’re in a growth market, not a shrinking one,” he told a press conference in Singapore yesterday.

LHT has a not insignificant 60-customer presence in the Asian market, and this week the German group has been confirming more new business. Yesterday, SriLankan Airlines signed a five-year component supply contract through which LHT will support its Airbus A320 fleet. Spare parts will be supplied to the airline’s home base at Bandaranaike International Airport in Colombo, which will also house the main stocks of components needed for responding to aircraft-on-the-ground (AOG) situations.

Repair and pooling of components will be done at LHT’s headquarters in Hamburg. But customer support staff are based in Bangalore, India, which is in the same time zone as Sri Lanka.

Also announced this week is an extension of LHT’s Total Component Support agreement with South Korea’s Asiana Airlines. This covers the carrier’s fleet of A320 and Boeing 737 aircraft.

A new customer, Bangkok-based Nok Air, also signed up for major maintenance packages (excluding line maintenance), for its Boeing 737NG fleet. In addition, reported Henningsen, Air Macau has extended its component service contracts, while Japan Air Lines has signed a TCS contract covering soon-to-be-delivered Boeing 787s.

LHT recently opened its third widebody hangar in Manila, which can host an A380 for C-checks and modifications. The company recently opened a pool-storage facility in Singapore for components to be operated by Lufthansa Technik Logistik Services (LTLS) to handle storage of routine, AOG and dangerous goods shipments.

LTLS has been chosen by Chinese carrier Shenzhen Airlines as its transportation-management partner for services such as routine, AOG and dangerous goods transport for the airline’s growing fleet. Its present fleet comprises more than 105 medium-haul aircraft, and this number will increase to 180 by the end of 2012.

Indonesia holds major potential given its recent large orders. “We are talking to them to bring in our expertise [but] this is a moving target,” said Henningsen.

Challenges over how to gain productivity from new technology are prompting LHT to look at new tools for inspection and carbon fiber structures. Closer to home, there is a concern with OEMs competing for third-party providers’ business. “They [OEMs] should concentrate on their business…the MRO industry is more over-served than underserved,” said Henningsen.