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Fast 5: OEMServices Buoyant on A350 Aftermarket

Didier Granger, president and CEO of OEMServices, talks about its focus on the A350 parts market while updating on the progress of the OEMServices Americas business it established in 2017.

So far this year, OEMServices has signed parts distribution agreements with Kelstrom and Triumph Actuation Services -further building links to OEMs. What is the reasoning behind these partnerships and are they something you are always actively looking for?

Absolutely. Having originally been founded by four OEM shareholders (Diehl, Liebherr, Thales and Zodiac), a key element of our success has been growing partnerships with other parties. We have the ambition to be a second option for OEMs to address areas of the aftermarket where they don’t have the ability to address themselves. For our component service contracts today, we are addressing nose-to-tail airline needs--discounting engines and landing gears which are contracted separately. In this particular area, we’ve targeted newer aircraft such as the Airbus A350. In terms of our logistics services, we are proposing our services to the entire OEM community meaning that when they are contracted with us, be it a supplier or customer contract, they are signing synergies. It happens that some OEMs, particularly medium-sized ones rather than larger ones, have requirements to complement their network. Agreements like the ones mentioned are signed to complete an OEM’s network and get support where they feel OEMServices has an interesting footprint to be a good partner.

OEMServices is characterized by three divisions: components, logistics and parts trading. What's the breakdown of these three divisions in terms of revenue share to the business?

The majority of this comes from component services, but the business model differs across the three parts of the company. It is complicated for OEMServices to totally segregate the activities: when the OEMs are working with us it's all about synergies so the services become very mixed at a certain point. Around 25% of turnover comes from the logistics side of the business.

Two years ago, OEMServices opened its OEMServices Americas division based out of Atlanta. Since then, how has the business taken off and what have been some interesting market trends you've witnessed?

The first two years were about implementing the first logistics contracts and the facility. It took a while to stabilize and grow to a sustainable performance level. Two years on, we're very satisified with what's been achieved. As of now, we have around 65 working for the Americas business. The next step will be to develop all the range of services that have already been developed in other regions into the Americas business. This will mostly center on component services, which we haven't prioritized--focusing instead of performance levels--so far so this will be the next step. The market is competitive and nobody was sitting around waiting for us. The A350 market could have been a good advantage for OEMServices, considering we are one of the main market providers for the program. While we are participating, the market maybe hasn't been as buoyant as predicted in countries like the U.S., due to factors such as order cancellations.

OEMServices has a global reach but when setting up in a region like the Americas, with its established players making for a competitive environment, how has the company looked to set itself apart to gain a competitive edge?

I do believe we have to bring something a bit different in terms of offerings and can't just offer similar services to our competitors with a lack of identification. There are different realities across certain parts of the Americas region - the needs of operators in Central America will likely differ from those based in North America and we need to be aware of this. We don't have the ambition to cover all aircraft types - particularly older variants already addressed by service providers. But for new aircraft types, through key partnerships with OEMs and airlines, we will have a major role to play. This also extends to narrowbody aircraft - we can't ignore nearly 50% of the market. While our market share on the A320 isn't anywhere near what it is for the A350, it'll continue to be important.

OEMServices currently has five service centers located across the world with dozens of line station locations at airports. Do you foresee an expansion to the service center network in future?

Yes. Any potential growth would be in service centers. We've been looking at China - it wouldn't be the first region we've expanded into and it has remained an interesting location for any MRO provider. South America also offers a lot of opportunities for us - it's a different market with different customs constraints. Finally, another key country is Russia and we expect expansion there in the future. 

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