The labor shortage that hit Hong Kong Aircraft Engineering Co. (Haeco) hard in 2013 appears to have subsided, but the time needed to train newly hired staff will help hold heavy maintenance capacity flat in the second half of 2014, the company says.
Faced with rising demand in its Hong Kong-based line maintenance business last year, the company shifted staff from its heavy maintenance services and lost more through attrition. The moves helped drive total maintenance hours down 18% in first half of 2013. Hours were down again through the first six months of this year, but only by 4.5%, to 1.3 million.
"In Hong Kong, improvements in remuneration, career development opportunities and training have resulted in more staff joining and fewer leaving, such that the overall manpower level has stabilized in the first half of 2014,” the company reports. "However, it still takes considerable time to train new staff to reach required skill and experience levels.”
The combined group sold 4.96 million airframe maintenance man-hours in the first six months of the year. Taikoo (Xiamen) Aircraft Engineering Company Ltd. (Taeco) boosted hours 1% to two million. The new Timco unit reported 1.7 million hours sold. Haeco did not report a year-earlier comparable for its new subsidiary.
Haeco ended the quarter with 5,529 employees, up slightly from the year-earlier total of 5,492. Group-wide, Haeco and its subsidiaries employed 16,187 workers, a 19.1% jump over the same period in the previous year. The integration of Timco, which Haeco completed in February, added 2,930 jobs.
Hong Kong-based line maintenance was flat, at 327 aircraft handled per day.
Haeco’s Hong Kong component repair business saw man-hours fall 21.4% as Boeing 747 retirements slowed inbound work.
Engine overhaul shop Hong Kong Aero Engine Services (Haesl), the Haeco/Rolls-Royce/SIA Engineering Company joint venture, was hit hard by lower Trent 700 overhaul demand and retirements of RB211s and Trent 500s. The shop handled 68 engines in the first half, down from 108 a year ago.
Texl, the Xiamen-based overhaul shop specializing in GE90 work, reported more demand. It completed 14 quick-turn repairs and 15 performance restorations, compared with 17 quick turn repairs and five performance restorations in the first half of 2013. Content per engine shop visit increased year-over-year.
Looking ahead to the rest of 2014, Hong Kong-based operations expect continued constraint in airframe maintenance capacity, stability in line maintenance demand, and continued soft component repair demand. Taeco also will suffer from weak airframe demand, while Timco’s airframe business will be hit because of seasonal variations, Haeco group says.
Softening demand for RB211 and Trent 500 work due to retirements "and the reduction in the required frequency of scheduled maintenance of Trent 700 engines" will be a drag at Haesl "for the next two years,” says Haeco. "Things are likely to improve once Haesl becomes capable of overhauling Trent XWB engines and there is demand for such overhaul” starting in 2017, it adds.
Haeco group reported a first-half net profit of HK$283 million ($36.5 million), down 21% compared with a net profit of HK$359 million in the prior year. First-half revenue increased 66% to HK$5.34 billion, with Timco’s business accounting for 62% of the increase.