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Friday, June 1, 2007

Commercial: Lufthansa Technik: Larger Than Life

Jim Clark

Lufthansa Technik launches two new programs, manage/m, a Web-based technical operations management system, and Total Landing Gear Support (TLS), a cradle-to-grave landing gear support system. AM sent writer Jim Clark to Germany to learn about these new programs firsthand and to see Lufthansa Technik in action.

Lufthansa Technik has launched an exciting new Web-based aircraft maintenance information and communications system called manage/m, which will be available, at no cost, to its customers. Manage/m is designed to put all relevant information about the maintenance of a commercial operator’s fleet at the fingertips of the people who need it: the employees of the operator and the mechanics. To access the information, from anywhere in the world, just go to www.manage-m.com; all you need is a laptop, Web service and a password. According to Dr. Zhangzeng Yu, Lufthansa Technik’s director of manage/m, the system enables commercial aircraft operators to manage all core functions of their fleet’s technical operations. Operators can also use manage/m to prove its control and compliance to regulators.

"The launch of manage/m is a milestone in technical operations management, focusing the attention of airlines and MRO providers on what is essential for safe and efficient flight operations" according to Dr. Thomas Stuger, chief executive of product and services of Lufthansa Technik AG. "As manage/m is completely Web-based, no software needs to be installed on the customer’s equipment. This means in effect that manage/m is completely ready to go," added Dr. Yu.

Manage/m is a comprehensive toolbox of Web-based modules. Through these modules, aircraft operators who have contracted some or all of their maintenance, repair and overhaul work to Lufthansa Technik gain access to an array of Web services complimenting every aspect of their technical operations. The modules and Web services available through manage/m are tailored to each customer’s needs.

Automatic Data Capture

Manage/m collects two basic kinds of data: information generated from the aircraft; and information entered by Lufthansa mechanics.

The system automatically captures information transmitted by the plane, via the Aircraft Communication Addressing and Reporting System (ACARS) and relays it to Lufthansa Technik’s computer center. This information includes takeoff data, the plane’s location and mileage, as well as engine reliability data that has been collected by the on-board Central Maintenance Computer (CMC) and the Engine Condition Monitoring System (ECMS). Additionally, while in the air, the pilot can transmit defect reports, accompanied by relevant data, to the system with the push of a button. All this data is available on the system in real time.

Once the plane is on the ground, Lufthansa mechanics enter reports listing all completed maintenance work done on the aircraft. These reports, available on the system, contain details down to each part and serial number.

Central Nervous System

All of this information, which is instantaneously available on the Web site to the carrier and to Lufthansa Technik’s engineers and mechanics, is very useful for planning as well as for documenting proper maintenance. At any time of day or night, with a few key strokes, a carrier’s management can monitor where each of its planes are, how they are performing and what maintenance they have had.

Based on this information, and the system’s knowledge of the maintenance needs of the aircraft, manage/m automatically generates job cards listing tasks that should be done when the aircraft lands.

Manage/m is designed to be a carrier’s central nervous system for maintenance. It carries relevant information from the sensors i.e., the aircraft’s computers and pilots and maintenance crews, and makes them available to the brain function, the carrier’s management. It puts the carrier’s management in control.

Knowing what maintenance is needed for each plane in the fleet, the carrier can better schedule flights. If a pilot signals a problem in the air, the system’s troubleshooter may diagnose the problem while the aircraft is still in the air so that mechanics can prepare to fix it before the aircraft even touches down. With all of this fresh data available, mechanics can perform preventative maintenance before additional damage results from further flights.

According to Francis Pwapwa, manager of maintenance and engineering of Air Namibia, which has been using manage/m for two of its planes for some time, the manage/m tool is "fantastic." Pwapwa finds the automatic job cards to be useful. But the feature of manage/m that he finds most useful is the ability to show local authorities that proper maintenance has been done without having to phone Lufthansa Technik. Pwapwa reported that Air Namibia’s regulators wish that the entire fleet was maintained by Lufthansa Technik using manage/m.

Manage/m is a communication tool that should reduce misunderstandings between the mechanics and the carrier because they both have exactly the same information in the same format. It is completely transparent. Everyone should be singing off on the same page.

On the other hand, manage/m is designed to prevent sharing information with the wrong people. It has state-of-the-art encryption and security systems. Lufthansa Technik also maintains a firewall between customers. That is, Lufthansa Technik does not share one customer’s data with any other customer.

Nevertheless, the mass of information generated by all customers might allow them to detect important patterns in the industry that could be relevant to a customer’s fleet. With this information, which can be sorted in a variety of ways, Lufthansa Technik will be in a good position to spot a pattern of problems with a particular aircraft type. Moreover, Lufthansa Technik will be able to compare a carrier’s performance to the industry average to help diagnose problems, according to Erik Abels, customer support manager for manage/m.

All Modules Available in 2008

Lufthansa Technology has tested the manage/m system with airline customers. More than 250 internal and external customers are already using the system. The manage/m system has been in development for more than three years. At present, about 80 percent of system’s modules are complete. According to Abels, the remaining modules will be available by early 2008.

Total Landing Gear Support

The company has also launched a new T-product to add to their family of Total Support Services: Total Landing Gear Support (TLS). Under TLS, Lufthansa Technik assumes total responsibility for a customer’s landing gear from the moment the aircraft is purchased. Lufthansa Technik handles everything, including monitoring time in operation, AOG support, overhaul, exchanging gear, leasing and loans, right through to resale.

To save time, landing gear overhauls are almost always done by exchanging an overhauled landing gear for a worn-out landing gear, rather than holding the plane on the ground until the MRO completes the landing gear overhaul. Only three to five days of ground time are needed for an exchange. On the other hand, overhauling a landing gear usually takes longer than completing a D-check of an aircraft. A Boeing 747 landing gear overhaul takes five to six weeks, while narrow- body aircraft take three to four weeks for an overhaul. The overhaul typically costs more than $250,000.

Buddy Can You Spare a Gear?

By taking over complete responsibility for the landing gear, Lufthansa Technik believes that it can save money in a number of ways and pass that savings on to the customer.

First, with complete control over customers’ landing gear, Lufthansa Technik’s landing gear specialists should be better able to monitor, maintain and schedule overhauls to reduce the cost of overhauls.

Second, the company can save customers money by providing needed spare landing gear for all of its customers from its large, portfolio of spare landing gear; Lufthansa Technik currently keeps 197 exchange legs on hand. That way, its customers don’t have to keep costly spare landing gear in stock. An airliner’s landing gear typically costs between $3 million and $7 million.

Third, like Henry Ford did with automobiles, the airline can achieve quality control, economies of scale, and economies of specialization by maintaining four large, specialized, high-volume, overhaul centers with efficient industrial operations.

Dedicated Overhaul Plants

In 2006, Lufthansa Technik set up a dedicated landing gear services product division with four locations around the world: facilities in Hamburg; Lufthansa Technik partner Hawker Pacific Aerospace has facilities in Los Angeles and London; while its partner Ameco has facilities in Beijing. With these large landing gear overhaul centers, the Lufthansa Technik Group believes that it can provide landing gear services to the entire global market.

In 2006, these four facilities have overhauled more than 900 legs. "With our 100 percent in-house process capability, we have the technology and the resources to respond quickly and flexibly to all requirements of the overhaul process and to bring down cost tremendously," stated Klaus Koster, who is the head of the company’s landing gear services business and president of Hawker Pacific Aerospace.

There are 140 Lufthansa employees in Hamburg specializing in overhauling the complete MRO portfolio for Airbus landing gear, as well as Boeing 737 NG and AVRO/Bai 146 RJ landing gear. The Hamburg facility overhauls 300-340 legs per year.

The 530 employees at Hawker Pacific in England and the United States concentrate on the Boeing portfolio (including DC10, MD-11, MD-80, and MD-90) and certain Airbus landing gear. The Sun Valley, California, Hawker Pacific plant overhauls 280-320 legs per year, while Hawker Pacific London overhauls 300-340 legs per year.

AMECO Beijing, which has 80 landing gear overhaul employees, works on Boeing and Airbus (A320) landing gear, overhauling 110-130 legs per year.

To take advantage of economies of scale and to industrialize landing gear overhaul, all of Lufthansa Technik’s landing gear services workshops use the same system. Under this system, the landing gear leg proceeds through a sequence of stages, from disassembly to stripping, damage assessment, electroplating and beyond. On the other hand, this assessment sometimes brings some surprises to light. For instance, corrosion or other hidden defects may require a component to be extensively repaired or replaced. Through improved maintenance processes and cooperation with the line maintenance department, Lufthansa Technik attempts to control costs by reducing the need for such costly repairs.

Who Is Buying TLS?

Lufthansa Technik offers Total Landing Gear Support TLS for the following aircraft:

  • Airbus A300-600, A310, A318, A319, A320, A321, A330, A340, and A380.

  • Boeing 737, 747, 757, 767, 777, 787; MD-11, MD-80, DC-9, DC-10.

  • Regional Jets ERJ, AVRO / BAE 146.

  • Business Jets Raytheon Hawker 800, Gulfstream.

The TLS package is especially cost-effective for smaller fleets and start-up airlines, according to Koster.

Lufthansa Technik has recently signed landing gear support contracts with Virgin Blue in Australia for its fleet of Boeing 737NGs; Condor Berlin for its fleet of Boeing 777s and 767-300s and A340 growth aircraft; Air China for its Boeing 777s, 767-300s and A340 growth aircraft; Swiss Air for its A330s and AVROs; Unite Arab Emirates for its Boeing 777s; Air Europa, of Spain, for its Boeing 737NGs; and Croatia Airlines for its A320s.

Oil Smell Detection

Lufthansa Technik has a unique oil smell detection kit. It was developed to pinpoint the source of an oil smell in the cabin and reduce the number of incorrect engine removals. In the case of an oil smell, "troubleshooting won’t tell you which engine or APU [auxiliary power unit] needs repair," said a Lufthansa Technik official. The company has determined that a fleet of 100 aircraft could be affected by up to 20 oil smell events a year, and this could lead to three or four incorrect engine removals at a cost of $350,000 each.

The detection device, essentially a borescope with a sensor on the end, is connected to the compressor of the engine in which a fault is suspected. Using a laptop with highly complex algorithms, the device analyzes the bleed air and compares the results with a database. The process, which takes about an half hour to complete, is done while the engine is running. The software and adapters to sample bleed air currently are available to support the CFM56-5A/B and IAE V2500-A1/5 engines and the Hamilton APS3200 APU; however, Lufthansa Technik plans to develop kits for other engine and APU types. — By Dave Jensen

Lufthansa’s Expanding Market Share

In addition to benefiting from growth in the global MRO market, Lufthansa Technik Group increased its market share in 2006. The Group also increased its pre-tax earnings to €242 million ($326 million), an increase of eight percent. While revenues from servicing the Lufthansa Group, such as Lufthansa Airlines, rose slightly, external revenues increased by 12.5 percent, outpacing the overall MRO market’s 5.9 percent growth in demand. In 2006, 60 percent of the Group’s total revenues came from external customers. "In view of rising passenger numbers and growing fleets, but also with regard to continuing price pressure from the airlines, Lufthansa Technik was very successful in 2006," said August Wilhelm Henningsen, chairman of the executive board of Lufthansa Technik AG. "Lufthansa Technik grew faster than the international market and we have further consolidated our position in the MRO business." He attributed the growth to its range of modern products, its international presence and successful cost management.

On the other hand, Lufthansa Technik faces increasingly stiff price competition in bidding for major contracts in light of new competitors and a growing tendency for competitors to pool MRO expertise as partners, the way KLM is cooperating with Air France. Additionally, airlines whose profits have been low (U.S. carriers have lost money), are exerting pressure on MROs to reduce prices.

In addition to its strong presence in Germany, Lufthansa Technik’s international network is also crucial in expanding its position. This network includes 27 production facilities and a workforce of more than 25,000 worldwide.

Lufthansa Technik increased its worldwide customer base by 8.6 percent to 583 in 2006. With 406 new contracts worth €1.9 billion ($2.56 billion) — €447 million ($602 million) in the past fiscal year alone — Lufthansa Technik has increased both revenues and acquisitions. Those new contracts included a maintenance contract with Chinese start-up carrier Jade Cargo and a contract with Air Deccan, India’s first low-cost airline, which projects increasing its fleet of A320s to 60 during the next 10 years. Additionally, BizJet International, a U.S. subsidiary of Lufthansa Technik, has established a network with five partners serving business aircraft operators in North America.

A broad product range, especially for start-ups and low-costs carriers, together with the development of new repair processes and increased support for customers’ technical operations through Internet-based IT systems, all contributed to the company’s performance.

One new product system that could affect future performance is the manage/m system, a Web-based information and communication system (see page 16) that makes maintenance information available to the operator’s management and to mechanics. Another new product is Total Landing Gear Support TLS (see page 19), under which Lufthansa Technik will assume total responsibility for the customers’ landing gear, from cradle to grave.

Lufthansa Technik plans several new initiatives in 2007 including:

  • In Germany, the company plans to hire more than 400 university graduates by 2009, 80 percent of which will be engineers.

  • The engine joint venture with Rolls-Royce, N3 Engine Overhaul Services in Arnstadt, Thuringia, will begin servicing Trent engines for Airbus long-haul aircraft in the second quarter of 2007.

  • Lufthansa Technik will increase the capacity of its C-check facility in Malta to service Airbus A330s and A340s.

  • In Frankfurt, the company is building a new hangar that will accommodate four wide-body aircraft, including the A380.

  • In a joint venture with Air China, Lufthansa Technik is building a new A380 hanger at Ameco Beijing, which should open by 2008, before the Olympics.

  • Lufthansa Technik Philippines in Manila is planning to expand.

  • Airfoil Services, a Malaysian engine repair joint venture with MTU Aero Engines, is planning to add new products and 250 new jobs.

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