1. What advantages will Cathay Pacific receive from the Integrated Material Services (IMS) contract?
IMS takes on the airline requirement for a capital investment and the ongoing expenses associated with expendable inventory ownership. It allows the airline to focus on its operational responsibilities while IMS provides materials required for maintenance within a given service level that meets the needs of its schedule. These are competitive advantages when considering the inventory overhead and balance sheet burdens of competitors.
2. Why do airlines such as Cathay choose to outsource materials management?
Airlines want to focus on core business operations of flying people from A to Z. Where the costs make competitive sense, airlines will outsource their noncore activities such as materials management to ensure they can have total availability both where and when they need it. Cathay Pacific has entrusted this to Satair Group in a long-term partnership. In a collaborative effort with Cathay, we will strive to ensure that we meet all of our Cathay performance objectives over many years to come.
3. Will Satair Group look to more airline customers in Asia-Pacific for IMS contracts?
Yes, Satair Group has already established two partnerships with major airlines in the Asia-Pacific region. We see this area as offering great potential for the IMS service offering. In fact, we have so many expressions of strong global interest for IMS that we are now working to ensure that we can perform the services required of us with current customers. To do this, we are moving into these new relationships in a manner that protects the existing customers while we sign up any new customers. We will ramp up the service to a wider group of customers only when we are totally confident each existing and new customer will enjoy service excellence.
4. How will the IMS offering to Cathay Pacific work in conjunction with the Airbus Flight Hour Services (FHS) service the airline signed up for in May?
The IMS contract was signed together with the FHS contract, so that Cathay Pacific will get a total service offering from us. This includes Airbus FHS providing full rotable parts services and components support, while the IMS program and service provides an expendable management solution including logistics, procurement and planning/forecasting.
5. Can the contract be expanded over time to include more aircraft manufacturers?
Yes. Because of our close connections with Airbus we are initially focusing on Airbus aircraft types. To support our new fleet, we have focused on the entry into service of the A350XWB. This allows the airline to focus on new fleet operations and avoid the burdens of expendable inventory management. We then roll out our service to our customers’ legacy Airbus fleets such as the A320 family and the A380. We currently have A350 and A320 programs in operation and are ramping up to cover the rest of the Airbus fleet with both our new and existing customers. In time, we will expand to covering Boeing spares part as well.