Two and a half years after his appointment as chairman of Lufthansa Technik, August Henningsen finds himself at the head of one of the world's most accomplished MRO companies, specialising in VVIP completions and advanced cabin networking solutions. But, he tells Brendan Gallagher, continued success will demand even greater pressure on costs if the German company is to remain competitive in a market that gets tougher day by day.
Q: Has Lufthansa Technik benefited from a migration away from conventional premium airline travel and towards corporate and business-only operations as a result of 9/11, SARS and other threats to health and security?
A: Airlines are always evaluating new business models. Following the trend towards hub services during the 1990s, the market is now seeing some sort of potential for niche products. At destinations where an Airbus A340 or a Boeing 747 is oversized, types such as the Boeing Business Jet or Airbus A319LR could be an efficient way of offering business-class passengers customised products. To date we have completed one BBJ and two A319LRs, all with 48-seat business-class interiors, for PrivatAir and are offering this option to other operators.
Q: Boeing projects 1,000 installations within five years for its Connexion satellite broadband service, which has just been adopted for Lufthansa's long-haul fleet. What are your own views on Connexion's market penetration? How many installations do you expect to carry out over the next five years? What is the potential value to you of that work?
A: So far four airlines have announced their interest in Connexion by Boeing. Following our agreement with Connexion by Boeing at the end of last month, we will not only design and install the system for the Lufthansa long-haul fleet but will also provide a kit supporting the quick and reliable integration of the system in the aircraft of other carriers.
It is difficult to predict volumes, but we expect to offer both customised and all-in-one package solutions for other airlines. In addition, we are the first company to receive an STC for the installation of an onboard wireless LAN network, needed to get the most out of systems such as Connexion by Boeing.
Q: Do you see Connexion as the only connectivity game in town, or do you think that the Inmarsat community will retain significant market share through the forthcoming fourth-generation satellites?
A: The airlines and business-jet operators must define their needs - different users could find that different systems are more efficient. But seeing the results and customer surveys from the first flights with Connexion by Boeing, it seems that it provides broadband connectivity at a price that is reasonable in comparison with the features on offer.
Q: Lufthansa Technik, with partner Cisco, has established a leading position in the provision of advanced cabin networking solutions aboard VIP aircraft. How significant a proportion of your business does this currently represent, and what are your hopes for growth?
A: Our co-operation with Cisco Systems is one of a number of long-term relationships with partners. Each finished project is seen as the first step towards the next. With our activity in VIP completions and system integrations we are constantly creating new communications solutions. We also see a strong market for this capability in modifications of existing VIP aircraft.
Q: As new customer requirements emerge, how do you set about acquiring the skills needed to meet them? Through partnerships? Through internal training programmes? By stimulating local technical training in your community?
A: The Lufthansa Technik Group consists of 26 internationally located companies and affiliates. We can therefore draw on local knowledge as well as experience gained in serving Lufthansa and more than 370 other customers. We also carry out training at our foreign facilities and our centres in Hamburg and Frankfurt.
Q: How long will it be before air transport returns to "normal"? When it does, how do you expect your own business prospects to evolve against a background of greater stability and improved economic growth. Or do you think that "normal" is gone forever?
A: After 9/11, all hopes were concentrated on an upturn this year. But the situation in Iraq and the SARS outbreak have again put air transport under renewed pressure, and this cannot help but affect the MRO industry. It's hard to say when growth will resume, but it cannot come any earlier than next year.
Q: Lufthansa Technik is a successful company with an impressive recent record. Anything coming that might threaten that?
A: Even if our 2002 results looked acceptable, we are not immune to the effects of the current crisis. We will have to further reduce costs to remain competitive within a market that gets tougher day by day. Trying to concentrate on modern aircraft and their services might no longer be enough. We have to offer our customers solutions that yield even higher added value. To remain strong in the future, we aim to develop new repair technologies, communications systems and individual service packages.
Source: Flight Daily News
