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Interview: James Stewart, Group CEO, Mubadala Aerospace MRO Network

Hannah Davies caught up with James Stewart, group CEO Mubadala Aerospace MRO network and some of SR Technics' leadership team -  Jean-Marc Lenz, head of aircraft services, Frank Walschot, head of engine services and Roberto Furlan, head of engine engineering - to discuss the MRO's current strategies, its JV with Aigle Azur and its relationship with Mubadala Aerospace.

SR Technics’ announced its joint venture with Aigle Azur in June this year, can you talk to us about how this will benefit you as a company?

JS: As part of the JV we have taken on over 40 employees from Azur Technics, the MRO arm of Aigle Azur. In having a larger team with a wider skill set we are able to handle larger volumes of work for customers and expand our capabilities in the market and service locations. In fact, we are opening up two new line stations – one opened in Marseille in July and one is planned to open in Lyon this September, which will initially support Aigle Azur’s network, but obviously also opens up possibilities for new customers at these airports.

How will it change SR Technics’ line maintenance strategy?

JS: It will not change the overall line maintenance strategy, but is part of our strategy, which is to develop stronger relationships with OEMs and airlines, in order to support our approach to develop a global line maintenance footprint, which is customer focused providing innovative solutions to support their operational and strategic growth plans.

Do you think airframe manufacturers will go the way engine manufacturers have and tie up more of the maintenance themselves? If so, how will you adapt to this?

JS: This is already well in place, as an example Boeing is protecting their B787 support as much as they can. SR Technics is directly talking to customers and also has some contracts in place with the main suppliers which have access to the required information and support SR Technics. It is expected that Airbus will go the same way with the A350.

How will you adapt to the expected longer heavy maintenance intervals for new aircraft and engines?

JL: Aircraft services at SR Technics has for quite some time been introducing other products than the classical heavy maintenance visits, for the simple reason that manpower intensive products are not the main focus of SR Technics due to its cost base. New specialised products like VIP completion and refurbishments as well as interior, IFE major structure and system modifications, partly engineered under SR Technics’ part 21J approval, are in focus and are going to turn slowly into the company’s core competence in aircraft services.

FW: In engine services, the significantly longer intervals between heavy shop visits have been a trend for many years, from JT8D through CFM56-3 to CFM56-7B for instance, but it is also the same with JT9D or CF6-50 compared to the later PW4000 or CF6-80 series. There are more engines operating but it is expected there will be fewer overhaul shops for any of the new engine families, operated, controlled or licensed by OEM. The latter will determine and control global capacity to a greater extent. This means that partnerships with OEMS and operators become more and more important.

In response to the longer maintenance intervals, at SR Technics we have adjusted the organisation and capabilities to support more on-wing and field repairs. We have also developed a strong piece part repair capability, through technology developments to help maintain our competitive advantage.

What is your revenue split between heavy maintenance, line maintenance, and component maintenance?

As a private company, we do not publically provide a breakdown of revenue splits by business area. However, we can say that in 2012 Engine Services was the biggest contributor, followed by component services and then aircraft services.

What is your attitude towards PMA parts over the last decade, have they become more accepted into the industry?

RF: We are watching the market. However, the development of the PMA market has not developed as much as it was predicted to have 10 years ago, due the growing number of lease engines on the market. Lessors have concerns that the use of PMA/DER parts can impact the value of their engine and create equitable liability for faults. Ultimately it is the customer who makes the decision on whether to use PMA parts, and if they make the decision to do so we have systems in place to track and secure the parts for them. From an FAA standpoint PMA parts to deemed legal parts.
 
Has the growth of leased planes affected maintenance contracts?


JM: Maintenance contracts are not at all affected by the increased number of leased aircraft on the market as lessors have little to no leverage to request lessees to take their aircraft to a specific MRO provider. However, what has changed is the amount of maintenance required, which has increased due to the phase out conditions in lease contracts. (E.g. if an aircraft was not be under lease contract no maintenance check would be done at the hand back date. However as the lease return conditions require 12 months free of base maintenance check the aircraft receives a base maintenance check at phase out).

In addition, SR Technics is able to sell leasing companies support for continued airworthiness management under Part M.

How has being owned by Mubadala Aerospace changed things for SR Technics?

JS: To be honest, without Mubadala SR Technics would not be here today, at the time SR Technics was taken over by Mubadala the company was struggling after the collapse of Swiss Air. it provided a lifeline.

How does ADAT, SR Technics and Mubadala work together logistically and what are the key benefits of this partnership?

JS: Today, SR Technics and ADAT work closely together, wherever possible leveraging synergies in areas such as supply chain and commercial to benefit the two companies and their respective customers.

We have seen a benefit from this collaborative working, as an example in the ICS arena where we have grown the business up to 24% annually over the last four years. This is compared to an average industry growth of around 5% per annum.

Will ADAT and SR Technics remain separate or do you think a co-brand is imminent?

JS: There is no reason to and therefore I don’t see the two companies co-branding.

 

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