MTU Maintenance Zhuhai – the engine overhaul joint venture between one of China's big-three airlines China Southern and German powerplant specialist MTU – is seeking to expand across its current narrowbody engine portfolio and has an eye on maintaining new types like CFM International's Leap and Pratt & Whitney’s PW1000.
"We obviously want to adapt to the future and work with these new engine types, but the route to take [to achieve this] is not decided," says Frank Bodenhage, president of MTU Maintenance Zhuhai.
The business would need to obtain licences from the OEM to enter the overhaul business for either type. There are different ways of achieving this and the MRO provider is considering all options, although there is no specific timetable in mind at present.
MTU Maintenance Zhuhai is already in good shape to move into these new types having carved out a strong position from its base near Hong Kong where it supports the CFM56-3, -5B and -7 as well as the International Aero Engines V2500.
"We plan to grow in all of these types except the -3," says Bodenhage. "If you look at the existing engines, over 50% of these have not had their first shop visit yet, so these engines will generate an increasing number of shop visits for the next 10 years."
When MTU evaluates an expansion of its engine maintenance capacity, it considers its entire global network of shops, seeking to place the work in the best location suitable for market and customer needs. However, Bodenhage puts forward ideas for growth from the base he runs in Zhuhai, which is clearly centred in a buoyant market for current and future engine MRO work.
The operation has been successful in capturing a growing proportion of third-party work. "The number of engines we overhaul that are operated by China Southern is now just below 50%," says Bodenhage. "Both parts of our business are growing, with the third-party business growing a little quicker than that of China Southern."
While most of MTU Maintenance Zhuhai's business comes from Chinese operators, about a third comes from non-Chinese customers. The Chinese work, plus a limited number of neighbouring countries, is acquired by the outfit's own salesforce while the rest comes via MTU's centralised global sales operation in Hannover.
MTU Maintenance Zhuhai has a "technical" shop capacity of 300 engine overhauls per year. It conducted 202 overhauls in 2013 and will grow this by 10% to about 225 overhauls this year, says Frank Bodenhage, president of MTU Maintenance Zhuhai. "In 2015 we are looking for another 10% growth," he says.
The operation is unlikely, for the time being, to expand its portfolio into larger engine types, instead focusing on the narrowbody class of powerplants. MTU has centres of excellence for higher-thrust engines in other parts of the world, with work on the GE90, for example, taking place in Hannover, Germany.
The region's operators currently mainly seek shorter-term maintenance deals. "This market sees most customers sticking with package and time & material deals, although there is a trend we are starting to see with more proposals having a power-by-the-hour concept included," says Bodenhage.
"As the airlines and the market matures, more are going for these options. The important thing for us is that we can offer all the solutions our customers want," he adds.
The combined strengths of equal joint shareholders MTU Aero Engines and China Southern Airlines give the venture a solid footing and a clear strategic direction, says Bodenhage. "On the one hand, there is a shareholder in China Southern that brings the strength of delivering on the workload and access to the Chinese market. On the other, you have the strength of technical expertise of dealing with MTU."
MTU Maintenance Zhuhai is run like an MTU company. Most of its 700 staff are Chinese. The chairman is from China Southern and the vice-chair is from MTU. The shop began operations at the end of 2002 and delivered its first engine the following year.
Source: Cirium Dashboard
