You mentioned that Mexicana MRO’s largest customer contributes 18% volume of sales. Would you allow this figure to grow?
The sales volume is shared by at least 20 different customers, each with more or less the same share of sales. That gives us a good balance—and mitigates us having a problem because of one airline or a country’s political crisis. Ideally, each customer would only contribute 10-12% of sales.
Mexicana MRO offers narrowbody and widebody maintenance, line maintenance and passenger to freighter conversions. What is your business mix between them?
Heavy maintenance for narrowbody and widebody aircraft equates to 63%, two-thirds of which comes from narrowvbodies and one-third from widebodies. Line maintenance accounts for about 25% and passenger to freighter conversions for 10%, with the rest from other maintenance. However, that 10% for conversion was achieved only by 767 conversions but now we have an additional contract with IAI to convert 737NGs. We will start the first by the end of this month, after we receive the first aircraft in late January.
With this additional line of business, we expect to move the cargo conversion figure to double what it is now, so 20%. We expect each 767 conversion to take 110 days. The 737NGs should each take around 90 days to convert.
Is Mexicana MRO planning other new capabilities?
We are trying to expand component repair. Before its bankruptcy, Mexicana Airlines was a maintenance organization able to support 100 aircraft. The maintenance base is equipped with all of the test bench equipment for fuel, pneumatics and hydraulics components. Now it’s in a very low utilization state. Our next challenge is to mobilize that area of the business. The main challenge to do that is knowing what the government will decide related to the existing Mexico City Airport. The existing airport should last several more years, but we need to know what the government is thinking about doing with the existing airport (after deciding to cease building the new Mexico City airport in late 2018). There is very little room for more flights.
With MRO capacity tight, are customers signing longer term contracts? How far out must they book slots?
MRO capacity is limited but every year customers look for the best offer and the best opportunity. Some you still have to win each year. It’s important to work with partners. If they are comfortable with the shop, they continue working with you for years.
When will we stop talking about a workforce shortage because it’s been solved?
The speed at which airlines are buying aircraft opposed to the quantity of aeronautical technicians that schools are graduating is higher, and the difference won’t change over the next 10 years. This is happening all over the world. Fortunately, in Mexico, the interest of students in aviation is high. The question is getting them trained and experienced. One interesting thing is that eight years ago there was one aeronautical university and now there are 30. That is because the number of aerospace countries in Mexico has grown from zero to 300 over that time. The aerospace industry is growing 15% per year. That’s a real success!