Turkish Technic is finally ready to break ground this month on a new MRO complex that should help the overhauler reach $1 billion in revenues by 2012
Turkish Technic has embarked on a major expansion programme under the leadership of general manager Ismail Demir that will see the maintenance, repair and overhaul specialist triple in size over the next nine years.
Demir says the company will double its capacity next year when it opens a new $200 million MRO complex at Istanbul's secondary airport, Sabiha Gökçen. The complex will feature two hangars where nine narrowbodies and three widebodies can be overhauled simultaneously. It will also include a new joint venture engine shop with Pratt & Whitney and a joint venture engine nacelles and thrust reverser facility with Goodrich.
Demir says the engine shop, which will have capability on both the CFM56 and rival IAE V2500 with a capacity of 200 visits annually, will open in July 2009. The rest of the Sahiba Gökçen complex is to open later that year. Demir says Turkish Technic will break ground on the project, which has been on the drawing board since 2003 and was originally to open by 2007, later this month.
Growing third-party business
The expansion is designed to keep up with fast growth at parent Turkish Airlines. THY has doubled its fleet over the past five years to 106 aircraft and has just unveiled a new five-year plan that will see its fleet double in size again. It will also allow the company to pursue more third-party work. "We will start more actively marketing our capacity," Demir says. "A lot of people don't know what we have. A lot of them ask, why are you hiding what you have?"
He adds that only 20% of revenue now comes from third-party work, but Turkish Technic aims to increase this to 50% in five years as it expands its capacity. It currently lacks the capacity to grow its third-party business because it only has the capacity for five widebodies or seven narrowbodies at its two-hangar base at Atatürk, Istanbul's main airport and THY's hub. Its engine capacity is also limited to 70 overhauls a year. Most heavy work will shift to Sabiha Gökçen, but the Atatürk facility will stay open, with a focus on light maintenance. Turkish Technic is also building a new line maintenance hangar at the capital Ankara, where THY launched a new low-cost unit in April. THY's maintenance division was originally based at Ankara, operating there from 1933 until it moved to Istanbul in 1955.
Demir says the expansion at Sabiha Gökçen will put Turkish Technic on the global MRO map. The company projects that its revenues will grow from just over $400 million with 2,600 personnel in 2008 to $1.2 billion and 4,700 personnel in 2015 (see chart). "Our plan is to reach $1 billion revenue in four years," Demir says. "We are actively seeking opportunities in Turkey and abroad."
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Crossroads of the world
Demir says that the MRO operation is talking to several potential foreign partners to back expansion in Turkey and overseas, including a possible passenger-to-freighter conversion line. But he says the company is equally capable of growing independently. For example, it had initially planned to recruit a joint venture partner for its new airframe MRO facility at Sabiha Gökçen and, in 2005, signed a memorandum of understanding with Singapore Technologies. But talks with ST Aero ended without agreement and Turkish Technic pushed ahead with the project without a partner.
Demir says the company's business is now evenly split between airframes, engines and components, with each accounting for about one-third of its revenue stream. Almost all of its business is commercial, but it does have a small military MRO business, which accounts for 1% of its revenues and is expected to grow as Turkish Technic starts to support Turkey's future fleets of Boeing 737-based airborne early warning aircraft and Airbus A400M transports.
Demir says Turkish Technic benefits from having lower costs than other European providers and from its ideal location at the crossroads of Asia, Europe and the Middle East. "Our geographic position has the potential of attracting a lot of customers," he says.
It also helps that the company has the full backing of the Turkish government, which owns 49% of THY and has major plans to grow Turkey's aviation and maintenance industry. In 2006 Turkish Technic was separated from parent company THY, but it is still 100% owned by the carrier and there are no plans for a public offering. "We want it to remain a subsidiary," says THY chief executive and former head of maintenance Temel Kotil. "We separated it because we wanted to make it more efficient. Our cost per maintenance per flight hour has since gone down. Now our third party business is making a profit. I'm very happy."
Source: Flight International
