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Monday, March 1, 2004

Industry Focus: Commercial

- Dale Smith- Roy Allen- James Careless- Roy Allen - James Careless- James Careless



Timco Heating Up in Arizona


In just a little more than a year the team at Timco Goodyear has taken a facility that was once home to a few seemingly forgotten aircraft and deserted hangars and transformed it into a thriving MRO and aircraft storage business. And it's been done smack in the face of an industry that is seeing other shops being cut back to bare bones.

"It is an amazing transition," said Brian Sauer, vice president and general manager of Timco Goodyear. "We knew this was a diamond in the desert when we took it over in December of 2002. The only movements were the tumbleweeds blowing by in the winds."

But there's a lot of movement there now. The Timco team hit the ground running and in just under 60 days from the day they moved in, the facility received its Part 145 repair station certificate from the FAA. "When we got here there were just 50 airplanes in storage and most were not being maintained at all," he continued. "Today we have more than 130 aircraft in storage, mostly for the large leasing companies. And we've just invested more than five hundred thousand dollars on making additions and improvements to make room for more aircraft."

Storage aircraft are just a piece of Timco's success story in Goodyear, Arizona. Sauer said that the facility currently has two maintenance lines running nose-to-tail for a major operator's 737-400s. The company also has two heavy check lines operating for its leasing company customers as well as any other customers that need inspections and maintenance. "We've also been doing all the A checks for another major U.S. carrier and now that's growing into heavy C checks on their DC-10/MD11 aircraft," he added. "Soon we will have five heavy-check lines in operation 24/7."

It takes a lot of skilled people to get all the work done while maintaining Timco's reputation for exceptional quality. The only item that's gone up faster than the ramp temperature in August has been the facility's head count. "I was the first official employee here in January of 2003," Sauer said. "Now we have more than 500 employees. And our plan is to continue hiring 15 to 20 people a week until we reach 750 or so mechanics and all the necessary support personnel."

Sauer said that Timco needs that size of staff to complete the 120,000 to 140,000 man-hours a month of work expected. And with a facility this size and a company commitment this deep, it's not a stretch to see them reaching that goal, and soon.

So what's the draw to Timco's desert location? "The location is a big thing for us," he said. "We're only 20 miles from Phoenix Sky Harbor, a major international airport, so customers can get in and out easily. That attracts a lot of the storage business."

"The rest is attributed to Timco's reputation for quality and capability," Sauer continued. "We offer every maintenance service you can think of including full aircraft painting. The only thing we are short of is covered storage space for the big aircraft like 747s and 777s. Other than that, if it's bigger than 12,500 pounds, we can service it and service it well."

When asked about the plans for the future his answer was understandably optimistic: "There is no doubt a vision to grow our capabilities, grow our facility, and add a growing array of services in the future."


FLS Retrenches as Losses Top $70M

FLS Industries announced a radical overhaul of its maintenance, repair, and overhaul (MRO) activities in January as losses continue to mount to worrying levels. The U.K. operations will bear the brunt of the cutbacks, with a total of 421 job losses, 272 at the Stansted base and 149 at Manchester. All heavy maintenance work will cease at both bases, to be concentrated instead at the Dublin, Ireland facility where there will be some cutbacks.

FLS Aerospace spokeswoman Mary Mannion explained that as with many others, the company was a casualty of the economy, and it had been decided that in the present market conditions it was impossible to justify the costs associated with running three heavy maintenance operations. Talks were underway to transfer U.K. heavy maintenance work to Dublin.

Once the darling of the independent MRO business fraternity, FLS in the U.K. saw great volumes of business going through its famous diamond-shaped hangar at Stansted Airport in the 1990s, to the degree that United Airlines and Continental among many others were ongoing clients. The company was so buoyant that it took over the MRO operation TEAM Aer Lingus from its parent airline. FLS Industries calculated that the U.K. operation would lose $13 million for 2003, and Mannion explained that U.K. cumulative losses for the past five years had totalled $70 million, with little sign of an upturn in the MRO business climate. Stansted will now concentrate on light maintenance and line maintenance and technical services training. The Man-chester base will continue with its joint venture operation with My Travel Airways, a light maintenance and technical alliance with a subsidiary, My Travel Aircraft Engineering, in which FLS has a 51-percent stake. My Travel Airways is an international charter operator formerly known as Airtours.

The Dublin facility has the size and scope to handle the volumes of maintenance available to FLS Aerospace, including all Boeing models together with Airbus A320s, 330s, and the 340.

The future is far from gloomy, however, as the Dublin operation is looking shortly to return to profitability with the restructuring, and FLS at Stansted has an ongoing program of light maintenance work for clients. Stansted will continue also with its component provision and repair services to airlines, which is profitable.


True AOG Tales!

As a large MRO provider with more than 300 airline customers, Lufthansa Technik deals with a lot of AOG (aircraft on ground) emergencies. However, as any MRO technician will tell you, some AOG situations are more challenging than others. Here are two true AOG tales from Lufthansa Technik's files.

AOG in Istanbul, Turkey: It is 15:53 local time at Antalya Airport. On the apron sits a SunExpress Boeing 737-800, scorching in the blazing afternoon. Underneath the 737-800's belly, a couple of technicians are working methodically; at least until they make a startling discovery. While in the process of checking the aircraft's diagnostic systems, the technicians discover that the 737's Digital Electronic Unit (DEU) is not working. Since the DEU's function is to send aircraft status data directly to the pilot during flight, the 737-800 is effectively grounded until the DEU can be replaced. Meanwhile, the clock is ticking, as this SunExpress jet is scheduled to take off in 14 hours. In a panic, the SunExpress supervisor calls the Lufthansa Technik help desk in Hamburg-Fuhlsb�ttel.

At the Lufthansa Technik help desk, R�ddiger Michaelis takes the call at 15:01 local time, then starts searching Lufthansa Technik's database. The DEU isn't available through Lufthansa Technik Logistik's warehouse, nor is it on hand at any Lufthansa Technik maintenance centers. Michaelis then searches warehouses belonging to customers who have a part-sharing agreement with Lufthansa Technik. The good news is that a Luxembourg warehouse has the much-needed DEU in stock. The bad news is the next commercial flight won't arrive at Antalya in time. No problem; at 16:30 Michaelis manages to book a charter Learjet flight out of Luxembourg. By 18:30, the Learjet is airborne. By 21:30, the DEU is on the ground at Antalya and sent for installation, just eight hours after the initial call to Lufthansa Technik. The next day, the SunExpress 737-800 takes off on schedule.

No Tube in New Caledonia: Located east of Australia and north of New Zealand, the island of New Caledonia is not exactly on the beaten track. This meant that a carrier based at New Caledonia's Noumea Airport was in big trouble, as far as access to parts was concerned. The reason? One of the carrier's two 737s was grounded due to a CFM56-3 engine tube problem. Without a replacement tube, the B737 was AOG indefinitely.

A call for help came to Lufthansa Technik's help desk. After scanning its database, LHT found a replacement engine tube in SR Technics's Zurich, Switzerland warehouse. The tube was quickly dispatched to Zurich-Kloten airport, where it was loaded on a Lufthansa flight to Frankfurt. From there, the tube traveled by Lufthansa 747-400 to Singapore and then was transferred to a Qantas flight to Brisbane, Australia.

Notified of the part's arrival, the carrier dispatched its remaining 737 to Brisbane to meet the tube. The tube then headed to Noumea where it was fitted into the disabled 737, and the problem was solved. Not bad, when you consider that the tube flew halfway around the globe to get to the AOG B737


New School for Marshall

Marshall Aerospace has added to its MRO and aircraft conversion training facilities at its Cambridge, U.K, base a new Group Training Centre. Opened by Lord Trefgarne, chairman of the Sector Skills Council for Science, Engineering, and Manufacturing Technologies (SEMTA), the Training Centre will take in 24 apprentices and 24 adult trainees a year, concentrating on airframe and avionics training.The new facility will build on Marshall's long-running apprentice training program, which was originally begun in the 1920s and founded as a formally structured training establishment in 1969.

The centre has achieved ISO 9002 accreditation and is JAR 147 approved.� It operates with SEMTA as the awarding body for the UK's National Vocational Qualification.

"Marshall Aerospace has always been a staunch supporter of the concept of training and development," said Martin Broadhurst, chief executive officer, at the opening ceremony, "and endeavours to attain the highest skill levels in its workforce, to benefit the company, the individuals, and the community. We have our own in-house technical training school conducting specialist courses on ten aircraft types. This year the school will run 34 courses with 164 places."



MROProfile: VARIG Engineering & Maintenance

Since splitting off from VARIG Brazilian Airlines in 2001, VARIG Engineering & Maintenance (VEM) has become the largest maintenance, repair, and overhaul company operating in South America. "Seventy-five years ago we began as VARIG's dedicated MRO facility," said Luis Alberto Correa, VEM's vice president of sales and marketing. "Since going independent, our goal is to treat every single customer with the same care and dedication that we provide to VARIG, which is still our largest client. Our customer base has traditionally come from Latin America," Correa added. "However, our quality and price has allowed us to attract airlines from North America and Europe as well."

Facilities: In Rio de Janeiro, VEM services widebody aircraft inside a 2,045,000-square foot hanger, "the biggest hangar in Latin America," said Correa. Located near Rio de Janeiro International Airport, the VEM hangar can handle five widebody aircraft simultaneously. It is also home to three continuous production lines that provide A, B, C, and D checks, daily checks, plus service bulletin and layover work.

VEM's narrowbody and regional/corporate facility is located at Porto Alegre's international airport. Its four hangers and shops can repair seven aircraft at the same time, in all aspects both interior and exterior. The Port Alegre shops are also equipped to overhaul Hamilton Sundstrand propellers used on Embraer and Fokker aircraft, and it is an authorized Allison, Pratt & Whitney, and Honeywell APU repair center. Finally, VEM's Sao Paolo facility provides regional and corporate aircraft service and can offer A and B checks.

Total Hanger Space and Bays: more than 5,281,000 million square feet.

MRO Capabilities: VEM services the following aircraft lines: Boeing 727-100/200; Boeing 737-200/300/400/500/600/700/800; Boeing 747-200/300; Boeing 767-200/300 ; Boeing 777-200; McDonnell Douglas DC-10/MD-11; Embraer (various); Fokker (various); Gulfstream G Series

Through a joint venture with General Electric, VEM services selected engines made by Rolls-Royce/Allison, CFM International, GE, and Pratt & Whitney. As well, VEM provides complete service support for avionics, fluid mechanical accessories, aircraft structure and composites, wheels and brakes, propellers, and interiors. VEM recently became a Honeywell authorized avionics service center.

Certifications/Approvals: FAA, JAA, and DAC (Brazil).

Partnerships: Embraer, GE, Gripen, Gulfstream, Hamilton Sundstrand, Honeywell, Lockheed-Martin, Mikoyan, and Northrop Grumman-Litton.

Annual Man-hour Capacity: 4,723 million

Total Staff: 4,400

Total Licensed Engineers: 3,018

Total Licensed Airframe Engineers: 1,452

Total Licensed Engine Engineers: 935

Total Licensed Avionics Engineers: 631

Goals: "Right now VEM has about 0.4 percent of the global MRO market, which is worth about $35 billion annually," said Luis Alberto Correa. "We want to raise our share to one percent."



Wencor/Delta Deal Good News for PMA

The eight-year deal between Delta Air Lines and Wencor is a PMA parts manufacturer's dream. Under the contract-which Wencor said is the largest PMA development deal of its kind-the Springville, Utah PMA firm will supply Delta with more than 850 different kinds of PMA parts. Over that time, Delta expects to save $58 million in reduced component costs and fewer aircraft shop visits. (PMA parts are parts manufactured under FAA approval by an entity other than the original manufacturer.)

"Some of the PMA parts already exist," said Jason Caldwell, Wencor's vice president of sales. "However, many others will be developed as needs arise on the Delta TechOps shop floor. This is why there will be Wencor engineers onsite at Delta's MRO hangars, working side-by-side to identify and create new PMA solutions for the airline."

"Wencor has been selling PMA parts to Delta for years," Caldwell added. "In fact, this is the second PMA development agreement we have with them. The first one we signed three years ago only applied to one of their MRO shops and was due to expire next year. Now the second agreement takes the principles and scope of the first and expands them dramatically." Wencor also has PMA parts deals with United Airlines and Northwest Airlines, and "we are on the verge of signing with two other major carriers," he said. Wencor's sister company, Kitco, provides PMA parts to the military sector, many of which were originally developed for Wencor's airline customers.

For Delta, the partnership with Wencor is all about saving money. "Delta is engaged in innovative arrangements with many of our key suppliers to lower our total cost of ownership," said Mike McHale, Delta's director of supply chain management. "This PMA development agreement will contribute significantly to that goal while improving the competitive landscape for the entire industry."

The savings associated with PMA parts are twofold. First, PMA parts often cost less than OEM parts. Second, PMA parts are often engineered to last longer than the OEM parts, by analyzing the OEM parts' weaknesses and remedying them, according to PMA manufacturers.

"For instance, there's a governor rod that always breaks in the same place," said Caldwell. "To replace it can cost up to $100,000 per repair, given the time and trouble required to access it on the aircraft. If the governor were a bit beefier with a little more girth, it wouldn't break as often. So that's what we did with our PMA version, we made it thicker. Now the actual weight gain due to the increased thickness is minimal. Still, our PMA governor breaks less often, which saves Delta considerable money."

OEMs can't be blamed for viewing Wencor's success with some unease. Those who have decided to fight back are competing with Wencor through cost-per-hour contracts; rather than buy the part outright, operators pay only for the hours that it's in use. "For our customers, it comes down to a simple decision," Caldwell said: "Do I avoid a purchase expense by leasing power by the hour OEM parts, or do I realize long-term savings by buying PMA parts, which last longer and require less change-outs?"

Ironically, some OEMs have opted for the "if you can't lick 'em, join 'em" approach and have asked to manufacture and sell Wencor's PMA designs under license. "This may come to pass, but only if we can do so without losing the savings we offer to our customers," Caldwell said. "We're about increasing value and savings to the airlines."

One thing is certain: if its latest Wencor deal does save Delta $58 million, expect other airlines to be beating down PMA companies' doors in the near future. In this market, any savings are good savings.

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