CFM56 Overhaul Demand Bolsters AFI Backlog

The MRO provider revealed its annual results on Feb. 16.

Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) performed solidly in 2017 despite concerns about OEM supply chain pressure and increasing competition in the components aftermarket.

The Franco-Dutch MRO provider reported sales of €4.2 billion ($5.2 billion), of which €1.8 billion was from sales outside its parent group. Both figures were comparable to 2016 revenues.

It also reported an operating profit of €215 million, which was roughly 10% lower than its 2016 result.

However, the business appears in good shape thanks to a 17% increase in its orderbook, which has risen from $8.9 billion to $10.4 billion.

AFI KLM E&M says the bigger backlog is down to higher demand for engine overhauls, particularly the CFM56, and for work on various “Next Gen” components.

To capitalize on this demand, in February 2018 AFI KLM E&M inaugurated a new component workshop in Singapore.

Singapore Component solutions is a joint venture with Sabena Technics based in Singapore’s Seletar Aviation Cluster. Focusing on A320 and ATR components, repair capabilities will cover avionics and mechanical, hydraulic and pneumatic parts, as well as structural parts along with cabin and safety equipment.

In October, Fabrice Defrance, SVP commercial at AFI KLM E&M, told MRO Network that CFM56-5 and -7 overhaul demand were “key markets” for his company.

“For the CFM56-5 market, Air France Industries has been focusing more on the expanding -5B in recent times as demand for -5A and -5C services have lowered by the year,” he added.

In its recent results the company also warned of eroding margins in the component aftermarket due to competitive pressurse. AFI KLM E&M’s operating margin for the year fell by 0.6 percentage points to 5.1%, a reminder that not only airlines have to contend with thin margins in the aviation sector.

The company also flagged up price escalation in the engine business as a pressure.

TAGS: Europe
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