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Thursday, May 1, 2003

BAE RJs Live on in Aftermarket

Roy Allen, Contributing Editor

When BAE Systems stopped making complete civil aircraft, it pondered how to stay in the business. Supporting its large family of regional aircraft was the answer.

When BAE Systems announced in November 2001 that it was closing the production lines for its RJ and RJX series because of the uncertain outlook for these regional jets, this meant the complete termination of the successful BAe 146/RJ program (390 aircraft sold). As it happened, it also meant the end of civil airliner production in the U.K. by an individual manufacturer after some 80 years.

But BAE is hardly short of work. It employs 100,000 people and has annual sales of around $21 billion. In the military aircraft sector, it makes the Eurofighter, Tornado, Nimrod, and Hawk with partners and is a part of the U.S. F-35 Joint Strike Fighter program. It is into shipbuilding, guided weapons, electronics of all kinds, space systems, and communications.

The question for the company in 2001 was how to best stay involved in the civil aircraft sector and bring to bear its expertise in the field. The initial and obvious answer was to enhance regional aircraft customer support. There are some 1,200 aircraft of different types operating for which BAE Systems is responsible that need parts and customer support. These include the 146 and RJs, BAe 748 and ATP, Jetstream 31, 32, and 41, and what is now the Raytheon Hawker 800 and 1000. Most of these had come from the production lines of British Aerospace. When BAE took stock of the situation, it quickly concluded it could do a whole lot more than just meet its obligations with spares.

For example, great provision had been made for parts for the aforementioned range of aircraft in the production process. These parts had all been retained, leaving the company’s Logistics Center at Weybridge with a great stock of items, ranging from flying control parts to undercarriages, many of them in original boxes. This treasure trove precluded the need for special manufacturing of various items and now contributes towards the 225,000 different parts held.

With this happy situation on the spares front, strong expertise in customer support, and the ability to respond to an AOG situation in 73 minutes from receipt of order to dispatch from the Logistics Center, BAE Systems decided there was much to commend development of this business.

In answer to the question, "Is BAE still involved in the civil aircraft sector?," the answer is yes, or as we would say in England, most decidedly.

Because of the nature of its various work programs, BAE Systems has factories or warehouses in many different parts of the U.K., some of which were inherited as a result of amalgamation of old companies. Where spares and components are concerned, the head office for parts management and control is located at Prestwick, Scotland, one-time home of Jetstream manufacture. Hatfield is now the home of Asset Management, that is, the resale and leasing of BAE regional aircraft types, while the principal hub of spares storage and distribution is at Weybridge, home of the European Logistics Center, where Steve Butcher, head of inventory, explained the present position and future hopes.

"Right now, the Center holds an inventory worth $400 million," he said. "Business is stable and one side of it is growing by 15 percent a year. The regional aircraft spares business is profitable, and 2002 saw a turnover figure of $144 million."

With strong demand for supporting the worldwide fleet of BAE regional aircraft, a fair proportion of this fleet operates in North America. To meet the need, BAE Systems now has two facilities with which Steve Butcher is in regular contact. There is a parts warehouse outside of Dulles Airport, near Washington D.C., and a repair and overhaul center at Cincinnati Airport in Ohio, where the company recently took over a former Mesaba Airlines base. The Washington center provides a unit exchange service, like Weybridge.

One of the main support operations carries the name Jetspares (a maintenance-cost-per-hour program), which is an individual customized support program designed to allow an airline to concentrate on its operations while BAE Systems takes care of spares inventory, logistics, and repairs. The objective of the service is to keep a company’s business running smoothly by providing a first-class spares support service with fixed monthly costs.

Jetspares work now represents 50 percent of the support business with over 100 BAe 146/RJ aircraft served by the program. A $29-million contract was won recently from the U.K. operator FlyBE, as an extension of its spares support deal with BAE for its 15 146 regional jets. Formerly known as British European, FlyBE operates over an extensive network of routes across the U.K. and Europe. The new deal now includes support for the 146s’ Honeywell GTCP36-150 auxiliary power units.

A new $30-million Jetspares contract was signed in February with U.K. airline British Airways CitiExpress for the spares support of its 16 Avro (BAe) RJs. As with FlyBE (British European), the CitiExpress contract will extend the existing contract for five of these aircraft. CitiExpress operates services from 26 airports in the U.K. and Ireland.

As noted earlier, the careful retention of a great range of spare parts served the company well when rationalization of the old BAe took place and production lines of several aircraft were closed. The result of this has been that few structural parts of regional aircraft are even required, but if they are, BAE Systems’s own company, Aerostructures, might make them. Aerostructures has two manufacturing facilities, at Chadderton, near Manchester, and Prestwick, home also of quality control.

In the case of rotables, these are supplied by a range of some 70 brand-name vendors of international reputation but who are all, nevertheless, satisfactory to, and work with, BAE Systems. Strict control over manufactured parts is maintained as BAE practices careful scrutiny of every item that is made for the company. The end point of this to ensure where possible total exclusion of non-approved parts in operational aircraft, an exacting task in a fleet ranging over the globe. "We’ve scrapped parts before now which did not have the right qualities and meet the standards," said Steve Butcher.

In the case of spare parts, BAE Systems thus maintains oversight, which is fair enough as the company has worked with the U.K. CAA to ensure specifications meet JAR-21 and -145 standards. Careful monitoring of part numbers is one way that this control is ensured, while much can be learned from the style and nature of packaging of manufactured items.

That said, few problems of the above-mentioned nature have ever been encountered in the spares operation, which involves millions of numbered items in a period, and which is buoyant to the degree that BAE generally and Steve Butcher in particular are looking at other areas of potential growth for the parts and support business.

Amongst the latest aircraft the company is supporting is the Embraer 135, which is taking its place neatly among the regional jets, and which, of course, is a non-BAE product. Butcher is sure more such types could be provided for with parts and aftermarket programs. Synergy with other warehouses is sought also by Butcher, with improved coordination between them. Greater involvement in the shipping of parts, that is, the dispatch and movement, is also under discussion, and the overall management of repair work for clients, or taking more of the strain, perhaps.

BAE Systems
Weybridge, U.K.
Phone: +33 (0) 5-34-60-7222
Fax: +33 (0) 5-34-60-7160

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