20171010_MSN7917_HawaiianAir_A321neo_Still_HR_023.jpg Airbus

Better Deals

Hawaiian finds savings via new aftermarket supplier agreements for aircraft such as the Airbus A321neo.

Hawaiian Airlines has been out of its most recent bankruptcy for 12 years, but the carrier is still seeing new benefits of financially advantageous deals with vendors that don't view the airline as a financial risk.

"We're a fundamentally different carrier today than we were when [we were] bringing the company out of bankruptcy," COO Jonathan D. Snook said at the airline's recent investor day. "We had to settle for contracts with vendors that were suboptimal."

On the MRO side, the recent introduction of the Airbus A321neo gave Hawaiian a chance to go to market and get real-world data points on major MRO deals. Armed with the knowledge and a decade of steady financial bona fides, it is reworking existing deals—and reaping rewards.

"We've been able to get a new benchmark in the industry because we were out soliciting bids for the A321neo," Snook says. "We were able to apply that knowledge to existing contracts for our existing fleet types in renegotiation and we concluded those agreements, and those agreements  are yielding about $15 million a year annually for existing fleet types through those renegotiated contracts."

There's more to come: an about-to-be-completed deal will yield nearly $50 million over its contract life, he adds.

The savings go on top of efficiencies that Hawaiian has gained by moving into its new maintenance hangar, which helps it in-source work and implement more efficient processes than were possible in its previous facility, in use since 1962.

Hawaiian also revamped its 717 maintenance program. The carrier which conducts 717 A and C checks in-house, found that mechanics were spending too much time away from the aircraft tracking down tools, or sitting idle while waiting for parts. Among the changes: move tools and parts from central areas to point-of-use carts and designated drop-off bins, putting materials closer to where mechanics need them. The effort, combined with changes to aging aircraft inspection programs made in consultation with Boeing, are expected to save $2 million annually.

Big-picture, the effort appears to be paying off. Hawaiian cut maintenance expenditures 3% in the first nine months of 2017 compared to last year. This despite having added two aircraft to its fleet, for a total of 58.

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