Anca Mihalache, VP Engine Trading, APOC Aviation APOC Aviation

Fast 5: Anca Mihalache On Setting Up APOC’s Engine Trading Division

Anca Mihalache joined APOC Aviation in the new role of VP engine trading. She is tasked with developing a leasing platform; managing engine sales, trades and sales; and evaluating engines for teardown for The Netherlands based company. She was previously at Vallair, where she led its trading and leasing.

You are developing a new engine trading division for APOC Aviation, focusing on the CFM56 and V2500 powerplants. This is already a crowded, competitive space. How are you going to differentiate it?

There are two ways we can bring added value for the engine and airframe markets. Historically, APOC Aviation has been involved in purchasing airframes for teardowns and selling the parts to airlines, distributors or MROs. APOC noticed it has been losing airframes because it wasn’t also bidding on engines. By adding an engine division, APOC will bring in more airframes to the existing business and it will bring more turnover and margins from engines.

It is indeed very crowded, but it also is a fruitful market. We are focusing on green time leases and part outs—so we would not buy an engine fresh from the shop. This lowers our risk because we are targeting a shorter time for the engine’s life—about 3,000 cycles, so in about 1-1.5 years, the engine’s time will run out. This market should be steady for at least the next couple of years.

The other distinction is that APOC developed proprietary software called Alicanto for estimating the sales price and value for airframes and engines.

How are you developing the leasing platform from scratch?

The IT team is ingenious and helps me develop it, and of course, I’ve previously worked with other leasing platforms so I know the information that I have to get to be able to follow the life of engines, both technically and commercially. We are still working on the platform.

When will the division be ready?

We already signed our first letter of intent (LOI) for a CFM56-7B engine. We are bidding weekly for a lot of engines. As you mentioned, it’s a crowded market, so we are losing. I don’t want to take risks at the beginning. Therefore, we have a target of three CFM56 engines this year.

Why start with just three engines?

We had a turnover last year of $18 million, for airframes. We hope to reach $100 million in three years: we want healthy growth. We could jump directly to $100 million faster, but at the same time, I need to build a team, implement the leasing platform and the part-out platform, so it’s more than just buying and trading engines. We’re also moving into a new office with a bigger warehouse, which allows us to add the engine parts. Three engines is minimum but I think three is good for a start.

What are your growth plans for the next few years?

Next year we plan to buy six engines—for lease, part out or trade—then about nine in two years. We plan to retire them pretty fast, so most will be part-out candidates. We are very adaptable and have friendly investors, who trust APOC because of its history and because it has good relationships with big banks, such as AMRO, the Dutch bank. Most of the investors up until now have been Dutch. Our growth rate is not a matter of not having the finances—it’s about cutting the risk as much as we can to deliver the numbers we promise.

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