Daniel Hoffman Fast 5 Lufthansa Technik

Fast 5: Strategy Behind Lufthansa Technik’s Sofia Growth Plans

Daniel Hoffmann, Lufthansa Technik Sofia CEO, talks with Lee Ann Shay in Bulgaria about the MRO’s new hangar and expansion of consolidated services for the group—with an eye towards Asia.

Why did Lufthansa Technik decide to open a joint-venture facility with the Bulgarian Aviation Group in Sofia in 2008?

There are four main reasons why we decided to go to Bulgaria. The first reason is that Bulgaria has a very long aviation history, and it’s more than 100 years old. In the communist times, Balkan Airlines used to be the second biggest aviation group after Aeroflot in the Eastern European region. So aviation has always been very important in Bulgarian society and it was therefore quite easy to have access and to find skilled mechanics and skilled workforce. Another reason was that we could take many Bulgarians who have been living and working in our LHT network, like in Budapest, Shannon and Malta, and bring them back to Bulgaria with the experience they’ve gained in other LHT facilities to build up the company here. The Bulgarian workforce is very performance-oriented and efficient—and we also have a cost advantage. The third reason is the geographic location because being located in Southeastern Europe, we have a very big catchment area so customers would be willing to fly a narrowbody aircraft for base maintenance of around 5,000 km. So we’re a catchment for the whole European market, plus Russia and Caucasus countries, the Arabian peninsula and the North African customers, so it’s a huge market that we cover from Sofia. Last but not least, from day one, we have been very much welcomed. There is a very long tradition of cooperation between Bulgaria and Germany. We have been granted full support from the local aviation community and the local government institution.

How many man-hours are completed here at Lufthansa Sofia on an annual basis?

On an annual basis, we are producing around 700,000 man-hours per year. That is including base and line maintenance services with a split of about 620,000 man-hours on base maintenance and 80,000 man-hours on line maintenance. With an upcoming expansion [a new hangar planned to open later this year, see below], we are planning to add another 300,000 man-hours to that, so that we will be able to reach and hopefully surpass the 1,000,0000 man-hour mark next year.

How will the Hamburg base maintenance closure affect this facility?

The Hamburg base maintenance closure will not directly affect this facility because Hamburg has not been maintaining the same aircraft types. Hamburg has always specialized on widebody aircraft, the Airbus A330, A340 and the Boeing 747. Last autumn, they started the full line of the A380 base maintenance events. So there’s no interaction between the Sofia facility and the Hamburg facility.

The consolidation services approach seems to be working well, which are based here. Would you consider expanding them to LHT Philippines or some of the group’s other facilities?

Yes, this would happen for sure. So the so-called central services, which are mainly consisting but not limited to planning and engineering services, material management services, transportation management, as well as tooling and equipment. These services are allocated here in Sofia, and they are serving the worldwide base maintenance network of LHT. We plan each check. We are doing the material supply for each check, and we are defining the tool requirements for each check for the facilities at Malta, Budapest, Shannon, Puerto Rico, and Sofia. And soon we will be integrating the Philippines. The decision is already made that the Philippines will be part of this standardized base maintenance network. We are undergoing a change of the management structure at LHT, and the new person in charge for base maintenance in Asia, Elmer Lutter, has the tasks to integrate Philippines into this network. One option could be an extension of the staff here in Sofia, but due to the time zone coverage, the decision might be made to split the central services and have a post in the Philippines. The concepts are currently being prepared.

Is there space for more hangars? Is another expansion plan in the works---either imminently or as a placeholder?

If you’re looking on the north side of the airport, there’s still a lot of land there, which would allow us more space adjacent the facility. We also have an option on the eastern part of this facility to build a hangar of a similar size. The strategy of LHT in general is to grow faster than the market. So, that is why the focus is to grow directly in other markets and to look for further expansion in the Americas region and in the Asian region. So, I doubt that in the next 2-3 years a decision will be made to expand with another hangar at the Sofia facility.

TAGS: Europe
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