Iberia Maintenance Focuses On Profitability Through Efficiency

Iberia’s maintenance unit now an important part of IAG’s improved financial results

Creating harmonious maintenance operations between two flag carriers and a budget airline—from two separate countries—was never going to be easy. Yet after dragging parent group IAG into loss in 2012, Iberia has now been acknowledged as being instrumental to the group posting its strongest second-quarter operating profit since 2007: $488.8 million; $173.6 million higher than a year earlier.

It hasn’t been a smooth ride. In July of this year Iberia’s unions approved 1,427 voluntary redundancies from pilots and ground staff. This includes maintenance, but the exact number of staff the division will lose is not yet known. This is on top of a previously agreed 3,100 job cuts, to be made by 2015, a wage freeze until then, and the introduction of maintenance multi-tasking to create greater “flexibility.”

Nonetheless, the drastic cuts have been successful. Continued consolidation of operations has increasingly led to Iberia Maintenance’s skills being in demand, sought after by its internal and third-party customers. 

“The market doesn’t seem to require additional capacity, so we’re going to focus on becoming as competitive as possible in relation to continuing market evolution in Europe and other regions. That means really focusing on profitability through efficiency rather than growth,” says Jose Luis Quiros, technical executive vice president at Iberia.

“Obviously, we have to be able to support the evolution of Iberia, but we will still be looking at ways to optimize our processes and consolidate our position in the near future. Fortunately, our facilities are still capable of absorbing short-term future demands, but it requires us to keep on modernizing and upgrading our equipment regardless.”

This year Iberia Maintenance’s most significant technical achievement was Pratt & Whitney certifying it to test the IAE V2500, says Quiros. It gained repair certification in March, and was scheduled to carry out the first bench test of this engine in September.

Earlier this year, it also joined the Airbus network of approved service providers—Iberia’s first contract with an aircraft manufacturer. This allows Iberia Maintenance to provide maintenance on components of A320s and A330s covered by OEM support agreements, such as Flight Hour Services.

Quiros adds that there also has been significant momentum on cabin reconfiguration programs and aircraft redeliveries, and that the division has just finalized plans for a new employee training program.

“We focused on doing these projects very well, rather than over-stretching ourselves with too many. That has meant that the level of expertise we accumulated is really helping us to manage their processes in a far more efficient manner. That has had a knock-on benefit for the operators and lessors, which get reduced costs and ground time,” he says.

For the rest of the year and into 2015, Quiros says the main goal will be to allow these projects to “settle.” To cement this process, he said, there will have to be significant training to ensure the changes are embedded into the organization’s culture, rather than focusing only on upgrading employees’ personal competencies.

Despite not launching any new large-scale projects, Quiros says the division will still have a lot of work to do in 2015 and beyond.

“Apart from determining the maintenance model of next-generation aircraft, the biggest challenge ahead of us is what role OEMs and MROs will play in the future. Dealing with other players—OEM, customers, lessors, subcontractors—is always critical, but when a project affects people, devoting enough time to find a common ground, by understanding everyone’s expectations and needs, is also important,” he notes.  

A version of this article appears in the October 6 issue of Aviation Week & Space Technology.

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