HAECO Profits Down While Revenues Soar

Full-year profits at Hong Kong Aircraft Engineering Company (HAECO) fell five per cent in 2014 to HK$659m ($84.8m) from HK$696m ($89.6m) in 2013.

Full-year profits at Hong Kong Aircraft Engineering Company (HAECO) fell five per cent in 2014 to HK$659m ($84.8m) from HK$696m ($89.6m) in 2013.
 
The group’s revenue on the other hand increased 61 per cent year on year to HK$11.9bn ($1.5bn).
 
TIMCO Aviation Services, which HAECO purchased in February 2014, accounted for HK$2.9bn ($370m) of the increase in revenue, however, the US-based MRO firm failed to make a profit in 2014, posting a loss of HK$45m ($5.8m).
 
HAECO’s joint venture with Rolls-Royce and SIA Engineering, HAESL, meanwhile, reported 47 per cent loss in profits, with the company citing the retirement of A340 and 747-400 aircraft as a key cause.  
 
Results were more positive at engine overhaul subsidiary TEXL, where profits quadrupled in 2014 to HK$166m ($21m) from HK$39m ($5m) in 2013.
 
HAECO Hong Kong, which provides airframe maintenance, also saw profits rise (up 71 per cent) despite completing fewer manhours of work.
 
Looking ahead to 2015, HAECO chairman John Slosar stated that training of new recruits this year would see airframe maintenance capacity increase, with Xiamen in particular seeing more MRO work.
 
However, He acknowledged that demand for line services at HAECO Hong Kong will fall as it completes work for a “significant customer”
 
And that airframe maintenance services at HAECO Americas (formerly TIMCO) are also expected to drop.
 
HAECO Hong Kong
Profits at HAECO Hong Kong jumped 71 per cent in 2014 to HK$103 ($13m) despite it performing fewer airframe services. Slosar blamed the fall in productivity in part to a lack of trained staff. Airframe manhours were down to 2.46 million in 2014 compared with 2.56 million the previous year. Component service manhours were also down, but line service increased by 2.4 per cent.
 
HAECO Americas’
HAECO Americas’ (formerly TIMCO) reported revenue of HK$2.9bn ($370m) along with a loss of HK$45m ($5.8m). Slosar stated the loss reflects the costs of reducing the size of a seat manufacturing facility in California. 
 
HAECO Xiamen
The Xiamen site performed less airframe work on commercial aircraft in 2014, but saw an increase in private jet work. The site performed four passenger-to-freighter conversions on narrowbody aircraft, however, none on widebody aircraft. The firm stated that the outlook for such conversions also looks “poor”.
 
TEXL
Engine overhaul facility TEXL reported strong results for 2014 following an increase in overhaul work. HAECO stated that the positive results were due to older GE90-110 and GE90-115 engines needing more servicing. 
 
HAESL
The joint venture reported a 47 per cent fall in profit in 2014. HAECO stated the drop was due to the retirement of A340 and 747-400 aircraft and the reduction in scheduled maintenance for RB211-524, Trent 500, Trent 700 engines. Slosar acknowledged that this shift in the fleet will continually affect HAESL’s profits. 
TAGS: Asia Pacific
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