Paul Lewis/SINGAPORE
HONG KONG AIRCRAFT Engineering (HAECO) is to hive off its engine-overhaul business to a new 50:50 joint-venture company to be formed in partnership with Rolls-Royce Aero Engine services.
Hong Kong Aero Engine Services (HAESL) is expected to begin operations from I January, 1997. HAECO and R-R plan to appoint a board of directors in February and to begin marketing services regionally from mid-1996.
HAESL will take over the running of HAECO's existing engine workshops at Kai Tak, together with responsibility for the financing and building of a new $100 million test and overhaul centre at Tseung Kwan O in Hong Kong. The phase one construction of a new 530kN (120,000lb)-thrust test cell is due to be completed by late 1996
HAECO commercial director Tom Begley explains: "We're making a big investment in the new test-cell and feeding this machine is a major consideration. It's far better to address half the world without competing against each other and bring the work into one company rather than splitting it."
The new company will initially concentrate on serving the R-R RB.211 series and Trent 700/800s for Cathay Pacific and sister carrier Dragonair. R-R will pay HAECO $20 million in return for inheriting its existing revenue stream.
HAESL is also targeting third-party R-R engine work throughout the Asia-Pacific region. In the past, HAECO has secured engine contracts from Air Lanka, China Southern Airlines, Royal Brunei Airlines and smaller contracts from Air New Zealand and Qantas.
Potential new customers include Garuda Indonesia and Thai Airways International, which have ordered Trent-powered Airbus A330s and Boeing 777s, respectively.
The two partners are also looking at eventually expanding their capabilities to other engine types, such as the R-R Tay, International Aero Engines V2500 and the CFM International CFM56. Work on Dragonair's V2500s and Cathay's CFM56s is now contracted out and a business case would need to be made to invest in added capability, according to Begley.
Neither R-R nor HAECO rules out the possibility of the joint venture being opened up to other partners. Singapore Airlines (SIA) recently placed an order for 28 Trent 800-powered 777s and is discussing support for the engine with R-R.
According to an SIA source, overhaul of the Trent engines will either be performed by itself or as part of a joint venture with R-R. The airline has traditionally concentrated on Pratt & Whitney engines and would require a new, larger, test cell for the Trent.
Source: Flight International
