Not content after establishing itself as the world's largest independent distributor of aircraft parts, Copenhagen-headquartered Satair is now positioning itself to exploit the rapid expansion of China's maintenance market.
The company announced a small but strategically significant investment in Chengdu-based hydraulic products repair provider Sichuan Ruibo Hydraulic Component Service (Ruibo) during the Singapore air show in February, putting down $1.1 million for a 49% stake, and Satair chief executive John Staer says there is more to come.
"Initially, Ruibo will provide services to the rapidly growing Chinese aircraft fleet, but in just a few years from now, China may become a central market for aircraft maintenance and so we wish to establish a foothold there as soon as possible," he says.
Ruibo was formed in 2000 and posted revenue of about $2 million in 2007. It has 25 employees and its customers include Air China, China Eastern Airlines and China Southern Airlines, as well as smaller Chinese carriers.
Local presence
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Key facts History of Satair December 1957: Company founded to buy airlines' surplus spare parts when they phase out aircraft and buy new ones, and sell parts to other airlines. 1970-1989: Obtains distribution rights to market and sell new spare parts from US manufacturers in overseas markets. Satair USA established in 1986 and Satair Asia in 1988. 1990-1999: Authorities tighten regulations on traceability and certification of parts. Satair moves to focus on distribution of new parts. Representative offices set up in Malaysia and China. Internet-based ordering system begins. 1994: John Staer joins Satair as chief executive from career in accountancy. He adopts a new strategy to end activities such as aircraft leasing and trading of surplus materials. 2000-2007: Series of mergers and acquisitions, plus organic growth, see Satair become world's largest independent distributor of spare parts. |
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"It is an important parameter for our partners, such as Airbus and several suppliers of aircraft parts, who are constantly expanding their operations in China."
Meanwhile, Satair has been involved in product qualification work for China's indigenous AVIC I ARJ21 regional jet. "We have high expectations for this programme, both with regard to the OEM division during the production stage, and with regard to the aftermarket division once the aircraft starts up its commercial operations," says Staer.
Ruibo will be added to Satair's existing Asian portfolio - which includes a representative office in Beijing, set up 12 years ago - and its repair facilities and regional headquarters in Singapore.
Satair, which generates revenues of about $400 million a year with a 500-strong workforce, is expecting its Asian business to grow by "about 10% annually, and 15% in China", says Staer. Asia currently contributes about one-quarter of the 50-year-old company's annual revenue.
Fast-growing Asian carriers are increasingly looking to outsource their component inventory management and maintenance, repair and overhaul operations, says Staer, and Satair is postioning itself to capitalise on this.
"Our business model comes from supplying all the spares a maintenance organisation needs to do their work, on time and at a reasonable price," he says.
"It's clear there has been a change in the market since 9/11. Low-cost carriers are looking for outsourcing. They kicked off the process and now the major carriers in the region are following up on this.
"We are adding more services and we are continuing to expand the service element. We have a portfolio of things we are looking at. For the last six quarters, we have been running at 20% organic growth without any acquisition."
Satair's aftermarket division serves more than 2,000 customers in 100 countries and makes up about 70% of total sales.
Underpinning the company's expansion strategy is the roll-out of an enterprise resource planning system and a rebranding initiative to establish a single identity for Satair's international businesses.
Source: Flight International
