“Airframe maintenance activities continued to be adversely affected by capacity constraints caused by the lead time to train new staff,” wrote John Slosar, chairman of HAECO, as he explained a 21 per cent slump in profit, down to $37m, at the Hong Kong-based MRO.
HAECO complained of similar shortages last year, and reports from the region suggest that it has been losing staff, and potential new recruits, to Hong Kong’s Mass Transit Railway.
The lack of technicians meant that HAECO’s airframe man hours output for the six months to June 30 was 4.5 per cent lower than the previous year.
Capacity isn’t expected to improve in the near term, although Slosar notes that “improvements in remuneration, career development opportunities and training have resulted in more staff joining and fewer leaving”.
The MRO also expects heavy maintenance demand to slacken in the latter half of 2014.
Thankfully for HAECO, it derives the greater share of its airframe profit from TAECO, its facility in Xiamen, China. Even there, though, the balance sheet has been worsening as labour costs creep up.
However, TAECO’s engine maintenance arm – TEXL – swung from a massive loss in Q1 2013 to a $9m profit this year.
Encouraging as that was, though, HAECO’s biggest money-spinners – its minority shares in the HAESL and SAESL engine overhaul shops – are in trouble, with profits down almost 50 per cent.
This was down to improved reliability for the Trent 700 and the ongoing retirement of aircraft flying RB211-524 and Trent 500 engines. As a result, HAESL has overhauled significantly fewer engines this year and HAECO doesn’t expect its revenues to improve until the Trent XWB enters service in 2016.
In reality, though, the company will have to wait even longer before those engines require full overhauls.
Searching for new revenue streams, HAECO acquired North Carolina-based TIMCO – now called HAECO USA – in February, but as yet has only seen a small loss from the airframe maintenance provider.