Lufthansa Technik (LHT) has written down half the value of its US maintenance, completions and handling subsidiary BizJet International, throwing its US expansion strategy into doubt.
The German maintenance, repair and overhaul (MRO) specialist has downgraded the value of the Tulsa, Oklahoma facility by "more than 50%", says Dr Peter Jansen, LHT's chief financial officer. The plant is now understood to be worth only fractionally more than its assets, which includes 32,500m2 (350,000ft2) of space accommodating engine, airframe, avionics, interior and paint capabilities and a fixed-based operation.
Jansen says the value of the company is "not so high" now, but adds that the company views BizJet as a strategic asset. "We have a footprint in the USA, we have space and people," he says.
LHT says BizJet's main business areas - engine overhaul and small jet cabin completions - were hit disproportionately hard by the prolonged US economic downturn. The BizJet subsidiary recorded sales of around $26 million last year, but interiors work accounted for less than one-tenth, compared with 40% normally, says Jansen.
The subsidiary recorded "tens of redundancies" from its cabin completion workers last year, he adds. Despite the devaluation, LHT remains "committed to the company and to the location", according to Jansen.
BizJet is now approved to service Rolls-Royce Spey and Tay engines for business jets and two months ago opened a new test facility to allow it to handle engines up to 50,000lb thrust (220kN). Several companies are also working on cost-effective avionics upgrades to bring older business jets back into current fleets, which could bring engine maintenance work back in the short term.
LHT's acquisition of BizJet four years ago represented the first step in the German company's plan to expand its business aviation services into the USA. LHT's strategy still includes a plan to service smaller business aircraft in the USA, using German expertise at a US facility, says August-Wilhelm Henningsen, LHT chairman.
Source: Flight International
