The world’s largest independent MRO has been expanding on its own for several years. Now, with the strong support of its new owners in the Middle East, it’s poised for even greater growth.

SR Technics has been a company on the move and shows no sign of slowing its pace. The maintenance, repair and overhaul (MRO) firm’s acquisition by a consortium from the United Arab Emirates capped a series of advancements during recent years, which include:

• The June 2004 acquisition of the aircraft maintenance provider, FLS Aerospace, from a Danish conglomerate;

• A March 2005 agreement with Airbus to become a member of the manufacturer’s MRO network;

• The 2005 full-support contract with easyJet;

• The May 2006 acquisition of the SIFCO turbine component repair business in Mahon, Cork, Ireland;

• The 2006 launch of Shanghai SR Aircraft Technics Co., a joint venture between SR Technics and the Shanghai Foreign Aviation Service Corp. (FASCO);

• Boeing’s July 2006 decision to name SR Technics as its first GoldCare partner for supporting the B787 Dreamliner;

• The 2006 sale of the company to a consortium of the United Arab Emirates; and

• The November 2006 reorganization (by business processes).

With the growth resulting from the FLS Aerospace acquisition, SR Technics is now the world’s largest independent supplier of airline support services, with annual revenue of about 1.4 billion Swiss francs ($1.15 billion) in 2005. Supporting some 750 aircraft for more than 650 customers worldwide, it plans to maintain its strong presence in Europe and expand in Asia and the Middle East. Although it does not preclude growth in other parts of the world, SR Technics’ focus clearly is eastward. It announced in January, for instance, that it would not pursue the option it had with Israel Aircraft Industries to acquire 60 percent share of Empire Aero Center, in Rome, N.Y., and have IAI retain 40 percent share.

"The U.S. is a tough market," said Declan O’Shea, executive VP of sales, marketing and business integration at SR Technics. "SR Technics has gained extensive experience there in the past with our partners FedEx and Boeing on the MD10 project in California prior to 9/11. However, it would not be prudent to launch into the U.S. in a big way before significant analysis of the market opportunity without a compelling business case. However, the U.S. market is the world’s largest and most developed and SR Technics continues to be interested in it. If interesting opportunities arise in the future, we will have a look at them. We came to the conclusion that in the short term, we will focus the available capital and management resources on high-growth opportunities in Asia and the Middle East."

Mideast Encouragement

Several events spotlight SR Technics’ expansion in Asia. In the Middle East, it gained a $750-million, five-year contract with Bahrain-based Gulf Air to provide total technical management for the carrier’s fleet of 34 aircraft, and another five-year contract with SAMA, a new low-cost carrier in Saudi Arabia, to support its fleet of four B737-300s.

The MRO also signed in March 2006 a memorandum of understanding (MOU) for a maintenance venture in Oman, with the intent of establishing a heavy maintenance facility in the capital city of Muscat to support Gulf Air and third-party customers. The $50-million, three-bay hangar in Oman will house aircraft and component services, technical training, logistics, engineering and on-wing and light engine services. The new facility complements Gulf Air’s new two-hub model and is 10 percent owned by the carrier.

Farther east in Asia, SR Technics opened a sales office in Mumbai, to try and take advantage of India’s growing commercial aviation market. That office opened February 1.

Perhaps the biggest encouragement to expand in Asia comes because of the location of its new owners, which provide "their contacts in the industry and their financial power," according to O’Shea. The owners are Mubadala Development Co. PJSC, a wholly owned investment vehicle of the government of the Emirate of Abu Dhabi; Dubai Aerospace Enterprise Ltd. (DAE), and Istithmar PJSC. DAE, established in February 2006, plans to build an integrated, global aerospace business through acquisition and partnerships, and Istithmar, established in 2003, is an investment firm based in the United Arab Emirates.

Such "financial power" will be used to achieve both organic growth and future acquisitions, joint ventures and other business agreements. The company’s intent, according to O’Shea, is to provide technical services up to total technical management of commercial aircraft and take advantage of the trend among airlines to outsource their maintenance. Though it is not prepared to offer specifics, SR Technics is also gearing up technically to support aircraft such as the Boeing 787, Airbus A380 and A350, which follow different maintenance philosophies and greatly utilize composite materials.

In January 2006, SR Technics signed a MOU with Qantas Airways to establish a joint venture company providing component support for the Airbus A380 in the Asia-Pacific region. Delays in the jumbo airliner’s deliveries have impacted the joint venture company’s time scale but not its intent. The two companies continue to work on the operational details

Meanwhile, SR Technics is a member of the Airbus MRO Network. This involves cooperation in terms of customer surveys to mutual customers in order to improve service, exchange of data in relation to reliability of components and aircraft, provision of maintenance proposals in support of Airbus sales campaigns and, in general, looking at ways to serve airlines better. O’Shea said several initiatives in this area are "in the works" and will be announced by Airbus and the Network members.

On Boeing’s 787 support network, titled GoldCare and linked within a sophisticated e-enabled environment, SR Technics will be joined by two more MROs, in Asia and North America, as well as by sub-regional partners and the key component suppliers for the 787. GoldCare is unique in that aircraft flying throughout the world will be managed at one location, in Seattle by Boeing. SR Technics said preparations with Boeing are ongoing but did not comment yet on specifics.

SR Technics, therefore, will not always be working on European-based aircraft but on B787s that need repair and happen to be in the European region at the time. However, the company has formed a closer link with Boeing. In December 2006, the OEM selected SR Technics as a preferred supplier of repair and overhaul services for the B737NG. Work will take place in SR Technics landing gear facilities at Dublin Airport.

Taking the Next Steps

Although it has already decided to reorganize its business by services instead of by geographic location, SR Technics is still fine tuning its reorganization plans. Its officials provide few details of the effort — they call this the "quiet period" following the high visibility they received when being acquired — but they will say they are looking at deepening the integration of the process landscapes among SR Technics’ three main service centers, at Zurich Airport in Switzerland, Dublin Airport in Ireland and London-Stansted Airport in the UK. All three facilities have EASA Parts 21, 145 and 147 authorization and are FAR 145 and ISO 9001/2000 approved.

Zurich remains the headquarters and main maintenance facility, the result of its transformation in 2002 from being a Swissair service provider to being an independent company following the carrier’s financial collapse. The Zurich center focuses on Airbus and McDonnell Douglas (now Boeing) aircraft, engines and components.

The former FLS Aerospace facility at Dublin airport largely supports Boeing aircraft, and the company’s facility at London-Stansted primarily focuses on component services and Boeing aircraft.

As a result of its acquisition of SIFCO’s Large Aero Turbine Component Repair business, SR Technics also has a facility in Cork, Ireland, specializing in engine component support. It overhauls turbine hot-section component (blades and vanes) for GE, CFMI, Snecma, Pratt & Whitney and Rolls-Royce large commercial airline engines, and is key to SR Technics’ integrated engine solutions offering to airlines.

SR Technics’ joint venture activity includes a component repair facility — working largely on wheels, brakes and galley equipment — in Palma, Spain, in collaboration with Air Europa, and a joint business with Shanghai Foreign Aviation Service Corp. to provide line maintenance, technical training and consulting services. Malaysia-based Transmile Air Services was the initial customer for Shanghai SR Aircraft Technics Co., which will provide line maintenance for the freight carrier’s MD11 fleet at its facility on Pudong International Airport. Air New Zealand (B777, B747) and Asiana (A320, A330) have joined since and additional customer negotiations are going on.

Areas of Growth

SR Technics’ intent in maintaining a complete array of maintenance services buttresses its belief that airlines will continue outsourcing their aircraft support. "Outsourcing of maintenance services grew with the entry into the arena of more start-up low-cost airlines without their own maintenance facilities. This is the most important development for SR Technics’ business and will continue to be a major growth driver" said O’Shea.

"One of the pioneers in maintenance outsourcing, easyJet, is an important SR Technics customer. But, we also see airlines with extensive in-house capabilities outsourcing maintenance work that is too expensive to be performed in-house." SR Technics currently serves more than 30 low-cost carriers under different contracts.

"On the other hand, many traditional carriers are continuing to rationalise their maintenance, and seek an economically sensible balance of in-house and third-party services. Whatever our customers’ precise stage of development, it is our aim to find the accurate solution to satisfy their needs. The joint development in close cooperation with each customer is the key to establishing and maintaining an efficient and effective partnership."

Anticipating the need for integrated support solutions for carriers, SR Technics offers three programs:

• Integrated Airline Solutions (IAS) can combine all services (in-house or in combination with partners), including maintenance on aircraft, engines and components, logistics, pooling, training, troubleshooting, engineering and all associated technical activities, into one tailor-made solution

• Integrated Component Solutions (ICS) bring together all of the company’s expertise in inventory management, global procurement and logistics, and component maintenance in a single, customer-focused service organization

• Integrated Engine Solutions (IES), providing engine maintenance, management, financing and logistics.

SR Technics believes these integrated programs represent a substantial part of the future in aircraft support and claims they have drawn more than 100 customers so far. "Our solution packages help airlines to control and reduce their maintenance spend," O’Shea said. "In this way they can benefit from scale effects. Especially new technologies, which would require airlines to invest heavily in new tooling, will be uneconomical for many small- and middle-size carriers."

SR Technics is especially optimistic about its ICS program, seeing a prohibitive expense among small carriers to have in-house component management. "Parts are becoming more sophisticated and special equipment is needed to test the parts," O’Shea explains. The financial challenge includes logistics, finding the lowest cost component provider, getting the best turn-around time and managing a warehouse.

"Several dozen" customers have signed on to the ICS program, according to O’Shea.

However, the integrated solutions market is still developing, and the company admits airlines often first subscribe to a smaller service before giving more responsibility to a single maintenance provider.

SR Technics also has enjoyed growth in line maintenance thanks in part to an increase in worldwide aircraft movements and because the service can be part of the company’s total care package, which is drawing more customers. Its line maintenance service ranges from on-call service to A-checks (light maintenance checks performed every eight to 12 weeks) and includes complete line maintenance for aircraft based at one of the company’s 20 line stations (see sidebar). Serving more than 100 airline customers at these facilities, SR Technics claims line maintenance represents about 25 percent of aircraft services business.

SR Technics’ 19th station, at Paris Orly Airport, received its initial customer, Air Caraibes, in December 2006 and is set to provide technical services for the Airbus A320, A330 and A340, and the Boeing 737. Its newest line maintenance station is at Madrid Barajas International Airport in Spain’s capital, opened in February. easyJet, which operates A319s from the airport, is the station’s first customer. SR Technics’ main facility supporting easyJet, however, is at London-Luton airport and is the result of a joint venture with the carrier, called easyTech. Like Paris Orly, the Madrid station provides technical service for A320/330/340 aircraft, in addition to on-call maintenance, preflight, daily, weekly and extended twin-engine operations (ETOPS) checks and repairs, including component replacement and borescope inspections.

More than a third of SR Technics business is engine maintenance and overhaul, and the company sees growth especially in servicing CFMI’s CFM56-5B and Pratt & Whitney’s PW4000-100. Currently, the company performs between 50 and 60 shop visits on CFM56-5B and between 30 and 40 shop visits on PW4000-100 per year. "The PW4000-100 is used on many passenger aircraft, which likely will be modified to freighter, such as the MD11, B747, A300/310 and B767," O’Shea said. "We see a stable demand for maintenance of these engines until the aircraft are retired."

SR Technics also envisions growth in cabin modifications, "especially now that airlines are making money and with newer in-flight entertainment systems becoming available," O’Shea said. In November 2006, Virgin Atlantic Airways selected them to reconfigure five of its B747-400s. At its Dublin, Ireland design service center, it is expanding the carrier’s upper-class cabin area with new premium economy seats and storage area.

SR Technics also anticipates growth in technician training and has instructors leading courses at all three main facilities. It offers basic maintenance training for both fixed-wing and rotary-wing aircraft, turbine and piston and will soon be able to offer all EASA modules Web-based. On aircraft type training they teach Airbus, Boeing (MD) and Fokker aircraft, and on specialized training, for example, human factors, borescope use, engines, ETOPs, pre-flight training for pilots, etc. The company is also looking into new courses like composite repair, new aircraft technology, cabin maintenance and cabin entertainment. At the end of 2006, SR Technics signed an MOU with Airbus regarding joining the to-be-established Airbus training network. The talks are well advanced and an announcement is expected soon.

SR Technics Line Maintenance Stations

Belfast (BFS), Northern Ireland

Bristol (BRS), UK

Copenhagen (CPH), Denmark

Dublin (DUB), Ireland

East Midlands (EMA), UK

Edinburgh (EDI), Scotland

Geneva (GVA), Switzerland

Glasgow (GLA), Scotland

Gothenburg (GOT), Sweden

London-Gatwick (LGW), UK

London-Stansted (STN), UK

Madrid Barajas (MAD), Spain

Malmo (MMX), Sweden

Manchester (MAN), UK

Newcastle (NCL), UK

Oslo (OSL), Norway

Paris Orly (ORY), France

Shanghai (PVG), China

Stockholm-Arlanda (ARN), Sweden

Zurich (ZRH), Switzerland

SR Technics’ Three Main Bases

Although it is establishing a presence throughout the world, SR Technics maintains its three main facilities in Europe. Its headquarters and main facility is in Zurich, Switzerland, and it also has large hangar space in Dublin (as a result of acquiring FLS Aerospace) and at London-Stansted Airport. Here are details of each facility:

Facility	Zurich	Dublin	London-Stansted
Size	330,000 m 2	77,877 m 2	24,672 m 2
Hangars	4	6	1
Test Cells	1 engine	1 APU	None
Bays	7 narrowbody	9 narrowbody	2 nb (A checks)
	6 widebody	4 widebody	4 nb (casualty)
Employees	2,700	1,100	800
	Services at Zurich: Airbus: A300-600, A320 family, A330, A340, Boeing: 737, 747, 757, 767, 777, Fokker 100, DC-10, MD11. Engines: PW4000, CFM 56-3, -5A, -5B, -5C, -7, CF6-50C And components largely in Airbus and McDonnell Douglas (now Boeing) aircraft. Technical training.	Services for Dublin: Boeing: 737 CL, 737NG, 747, 757, 767, Airbus: A320 family, A330, A340 and various regional aircraft. Overhaul/repair of components, including landing gear, wheels, brakes and APUs. Technical training.	Services at London-Stansted: Boeing (B707, B727, B737 Classic and NG, B747, B757, B767) and various regional aircraft. Component repair for Boeing aircraft. Technical training.