GRAHAM WARWICK / WASHINGTON DC
Can maintenance centres survive in the current economic climate? Regional jet growth offers hope amid the 'sold' and 'for sale' signs
Signs saying "under new ownership" have appeared over several North American maintenance centres over the past year. "For sale" boards remain over many more, while some have been forced to put up "closed for business" notices.
The 16 months since 11 September have not been kind to the third-party maintenance business in North America. As airlines cut back flying and grounded aircraft, maintenance providers - particularly those handling older airframes and engines - saw their already-slender margins evaporate.
But the continued financial struggles of the airlines could produce a windfall for the independent providers as cash-strapped carriers try to cut their costs, possibly by outsourcing maintenance. But airlines with revenues from third-party work are likely to become fiercer competitors.
The rash of maintenance company bankruptcies after 11 September sparked a consolidation in the industry. In May 2002, Singapore Technologies Aerospace (ST Aero) acquired the assets of bankrupt Dee Howard in San Antonio, Texas. The renamed San Antonio Aerospace joins DalFort Aerospace and ST Mobile Aerospace Engineering in ST Aero's US network.
Also in May, Tucson, Arizona-based Hamilton Aviation was acquired out of bankruptcy by investment vehicle Renegade Ventures, re-emerging as Hamilton Aerospace Technologies. The company is focusing on cargo and charter operators and lessors of older aircraft as it rebuilds its business.
In December, Timco Aviation Services - just out of its own painful restructuring - acquired the Goodyear, Arizona, maintenance base of bankrupt Aviation Management Systems. This consolidated the former Aviation Sales' position at the top of the third-party maintenance market, but the restructured company still has to prove itself, and whether bankrupt United Airlines decides to outsource maintenance could hold the key.
Not all bankrupt operations have found buyers. Former Swissair maintenance arm SR Technics Switzerland completed a management buyout last year, but its Palmdale, California, arm was not included and is now in liquidation. Several US airline maintenance operations also closed during 2002. Bankrupt US Airways closed its Tampa, Florida, base and Northwest Airlines closed its Atlanta, Georgia, centre.
Regional growth
But some sectors are growing. Low-cost carrier AirTran Airways plans a maintenance base in Atlanta, and the regional airline sector is booming. Regional carriers are adding maintenance bases, and third-party providers are gearing up to challenge the airframe and engine manufacturers' dominance of the business. Air Canada, which plans to spin off its Technical Services arm, and Delta Air Lines' TechOps division are tooling up to maintain the popular CF34 regional turbofan in competition with manufacturer General Electric.
Bombardier, meanwhile, is looking to expand its maintenance capability for the CRJ regional jet by setting up a centre on the US West Coast to complement its sites in Montreal and on the US East Coast. Embraer added its first regional aircraft maintenance base in North America last year, with the purchase of the former Celsius Aerotech in Nashville, Tennessee. But both Air Canada and Delta have their eyes firmly fixed on the regional jet maintenance business.
Source: Flight International
