Mainland China's largest maintenance, repair and overhaul company is confident a recovering market will drive growth in 2010 after a challenging but relatively successful 2009.
Ameco Beijing executive director Christian Reck says it "looks like" the market is starting to rebound, and the Air China-Lufthansa joint venture is responding to tenders from several airlines including US majors that are seeking to outsource large maintenance packages.
"It will be a good year for third-party MROs, not only us," Reck predicts.
But, he warns, the market is not as buoyant as before the global downturn and MROs now face "huge cost pressures" from airlines. "You have to be with your service offers ahead of the competition, otherwise it won't be a prosperous year," he says.
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© BillypixReck: "The MRO market is already bouncing back" |
"We can't afford to stand still. It won't be business as usual as it was before the crisis. Cost pressure, efficiency and best value products are important drivers for the airlines."
He says Ameco last year experienced a "lack of demand" in its airframe and components businesses, but "even so we had a very successful 2009" with revenues increasing 6% over 2008 to $350 million and headcount reaching about 5,600.
Reck is confident of higher growth this year as the component business has already recovered and demand for airframe heavy checks shows signs of improvement, although there are still some unsold slots for 2010. Ameco's third major product line, engine overhauls, remained strong last year and continues to be a strong performer.
"Airframe is still the one that is the weakest, but is improving and is much better than last year," Reck says. "Our capacities in the engine overhaul business and in the component business are pretty much used. Airframe overhaul we still have some slots but I'm very confident we can utilise most of them.
"The MRO market is already bouncing back. The airlines are operating their equipment more intensely now."
For example, Reck points out that "Air China is really increasing their flight hours and utilisation in the magnitude of 10% compared to last year. And they were already at a high level."
CHINESE GROWTH SOLID
Ameco has particularly benefited over the last year from Air China's rapid growth. Reck points out that while Chinese carriers saw their international traffic plummet during the global economic downturn "this has been compensated by increased domestic demand. I think China in total has been less affected by the crisis than the rest of the world."
Reck says the Air China group now accounts for 50-60% of Ameco's total revenues, including 90% of its line maintenance revenues. But Ameco's international business, which accounts for 80% of its heavy airframe maintenance revenues, is growing just as fast. "Luckily we are also able to grow our international business," he says.
"I think the market is coming back a little bit and the long-term customers we are dealing with, like United [Airlines], have decided to continue to do business with us. So we're in a very good position."
United earlier this year signed a five-year contract with Ameco covering heavy maintenance checks for the carrier's Boeing 747 and 777 fleets. The 777 work represents repeat business for Ameco while the 747s represent an expanded relationship between the two companies.
Reck says the 21-year-old joint venture company, which last September opened a new 747 hangar but has no plans for further expansion, will dedicate from later this year one full-time widebody line to the new United contract and, possibly, a second during certain periods.
United is the only US major airline in Ameco's portfolio but it is in talks with other US majors for airframe maintenance. Reck says the USA is already one of Ameco's most significant markets - roughly the same size as its European business and bigger than its non-Chinese Asian business - and Ameco overhauls components and engines for several non-major US airlines.
Asked if the new contract with United could help Ameco cement another landmark deal with an international carrier, Reck responds: "It's good for any discussion with any customer that we can now say that United entrusted us for work for the years to come. It's an augmentation but it's not an opener."
Source: Flight International
