United Airlines' UAL Services, Air Canada and Lufthansa Technik are to form a joint venture company to buy and sell aircraft materials in the secondary spare parts market.
"There is a big need among airlines for high quality spare parts at low prices which can be produced quickly using existing surplus parts," says Wolfgang Mayrhuber, chairman of Lufthansa Technik.
Currently the airline industry spends more than $10 billion for spare parts annually, with approximately 10% of that total coming from the pre-owned stocks of airlines and overhaul agencies. Worldwide there are hundred of suppliers in a highly-fragmented market.
"Having three partners gives us critical mass, and will initially make us the fourth or fifth-biggest player when the company is launched in the summer.
"We expect annual turnover in parts in the first year to reach over $80 million, although we plan to more than double this figure within five years and thus to become one of the top two suppliers," says Oliver Martins, director of strategic planning at Air Canada.
The company will be based in the USA, most probably Chicago, with a CEO brought in from outside the three airlines, but within the industry.
"Basically, we have taken the best parts of this industry and thrown away the bad parts. What that means is that although we will not start out as number one in size, we will certainly start out as already number one in terms of quality," said Mayrhuber.
Stephan Regulinski, president of UAL Services, says: "I am sure that there will be followers among the other airlines - it just doesn't make sense for airlines to buy and sell parts through middlemen.
"Certainly we are very open to the idea of bringing other airlines on board our new company."
Source: Flight Daily News
