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AFI KLM E&M, Safran Insource Component-Repair Venture

New joint venture for component repair between AFI KLM E&M and Safran aims at returning outsourced work to France.

Air France Industries KLM E&M (AFI KLM E&M) recently confirmed the formation of a new engine-compressor blade-repair joint venture with Safran, in a move aimed at bringing third-party work subcontracted in Singapore back to France.

The memorandum of understanding, signed in Paris at the end of May, will see the new business start operating toward the end of 2017 at a 15,000-sq.-meter (161,500-sq.-ft.) facility located at the Sars et Rosiere business park in La Porte du Hainaut, around 40 km (25 mi.) southeast of Lille.

The new shop will service three engine types: the CFM56 engines powering Airbus A320 and Boeing 737-family aircraft, the GE90 powering the Boeing 777 and the GP7200 for the Airbus A380.

Speaking to Inside MRO at the airline group’s headquarters at Paris Charles de Gaulle Airport, Franck Terner, Air France-KLM executive vice president of engineering and maintenance, said insourcing component work will allow greater control of its engine compressor blade-repair services, which he said are commonly the most expensive engine part.

“It’ll be a very big flow of parts benefiting the engines repaired in our existing shops,” said Terner, who confirmed the decision to base the new facility in northern France was due to its location between shops in Amsterdam and Paris. “When the joint venture becomes steady around the time of 2019 to 2020, we will have around 200-250 employees ranging from mechanics to engineers.”

Terner said the location of the joint venture, in which the airline group will hold 49% while Safran will take a 51% share, was decided after both companies analyzed the available support structures, including the availability of technical training.

Looking at its location from a regional perspective, Terner said northern France is ideal due to its proximity to existing AFI KLM E&M shops at Paris Charles de Gaulle and Orly airports, along with its Amsterdam facilities and Safran’s plant south of the French capital.

Having recently announced that the engine-test cell it opened at Charles de Gaulle in 2012 had returned on its investment on schedule, Terner said both parties have set a return on investment target of less than three years to recoup their €20 million ($22.6 million) combined investment.

After posting an improved year-on-year operating profit of €214 million in 2015, Terner says he is happy with the group’s performance in a market that has seen growing competition and greater OEM incursion, an issue he describes as a “matter of attention” rather than one of concern from MROs.   

“OEMs have always been active in the aftermarket, but in recent times they’ve been far more aggressive about it,” he says. “But as an airline group, we are different from OEMs, as we know what other carriers need in terms of MRO: They want value-creation and something for their maintenance costs,” says Terner, adding that Asia-Pacific, North America and Europe would remain its key growth regions. 

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