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SRT and AerFin spy A340 opportunity

Lower fuel prices and the challenge of residual values on the ageing A340 fleet mean that this is the perfect time to launch a sunset aftercare programme for the four-engined widebody, according to Klaus-Peter Leinauer, VP commercial and product sales engine services at SR Technics.

In an interview with MRO Network yesterday (July 9), Leinauer and Bob James, managing director of AerFin, explained that it was demand from A340 operators and owners wanting a nose-to-tail support programme that encompassed asset management and helped to lower operating costs, that has seen them partner up and launch their “Beyond.Fleet.Services” (BFS) programme.

The new aftermarket service offering is currently focused on A340-200 and -300 aircraft with SRT and AerFin looking to leverage AerFin’s acquisition of 11 A340s from Cathay Pacific as it exits the programme. James confirmed that this will provide the BFS programme with a three year supply of serviceable material – providing the low-cost overhauls that A340 operators are after.

Falling asset values means that capital-strapped operators of the aircraft unable to afford the write-down of selling the aircraft are looking for ways to lower maintenance costs for the remainder of their operational life.

At the same time, according to James, lower fuel prices are driving a growing interest from some new operators in the A340, particularly in Europe from charter carriers looking for long-range, low-cost charter aircraft.

“If you compare the capital cost of a 10-year old A340-300 to that of an A330-300, the difference is absolutely phenomenal,” he says. “Instead of paying $1m a month in rental on the A330, you could be paying $250,000-$300,000 for a very good quality A340.”

Despite this obvious capital cost saving, James says that some operators are still conservative as to extending the life of that product because – with its four engines – they are faced with a higher maintenance cost.

These are the gaps in the market that SR Technics and AerFin are now looking to exploit.

Using the retired Cathay Pacific fleet as the basis for a stable supply of components, the companies are now offering A340 operators an MRO and end-of-life support programme.

Under the scheme, operators have the option to sale and leaseback their A340s, or retain ownership, and receive a package of fixed-rate MRO services cover the engines, airframe and/or components.

“There are companies taking A340s and disassembling them, and there are a lot of aircraft lessors and larger manufacturers which are exposed to residual values on A340s, but they are each operating independently, in isolation,” says James.

“What we are looking to do is to bring the technical services and strength AerFin has in managing assets – from a parts, a material and a component perspective – and combine that with SRT’s MRO services to deliver a bigger picture solution and to effectively keep the aircraft flying.”

Leinaur adds: “The message that we got from the market is that customers are looking for a nose-to-tail solution combining asset management. There are similar products in the marketplace, but they are either focused on the airframe or the engine side.

“At SRT we have the capabilities and experience and on the MRO side, and now through AerFin we also the financial aspects which completes the portfolio. Our approach in the BFS programme of combining the two together is unique.”

The firms are already in talks with clients and are confident that they will be announcing the first BFS contracts with the next three to six months.

And they are not stopping there. The firms say that they are already seeing operators asking them to expand the BFS product to other ageing aircraft programmes.

“All aircraft have a life expectancy and while we’re launching this product on the A340 – based on the existing asset base, our joint competencies and relationship – we’re looking to very much move that into other products,” says James.

“The next move could be, for example, narrowbody focused. The A319 would be another classic example, or potentially A320s or 737NGs. As Boeing and Airbus bring out new generation aircraft, the BFS concept is something that we’re looking to develop and work with SRT into other product lines.”

Read the full interview with Klaus-Peter Leinauer, VP commercial and product sales engine services at SR Technics and Bob James, managing director of AerFin.

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