Lufthansa Technik Contract with Spirit Airlines Signals North American Thrust

Lufthansa Technik has established another outpost in the U.S. maintenance market, having launched a new Total Component Support contract with Spirit Airlines. This contract establishes a components and materials branch for Lufthansa Technik in the U.S., which will allow the company to pursue components contracts with other U.S.-based customers.

"This is an important landmark," said August Henningsen, Lufthansa Technik chairman of the executive board, "expanding from here to other airlines. This is our strategy."

The contract pro-vides for material and component support for Spirit's new fleet of Airbus A321s and A318s. Spirit has committed to a firm purchase for 35 Airbuses and options for another 60.

Spirit Airlines executives initiated negotiations with Lufthansa Technik in July 2004 and finalized the contract in October. The contract term is 15 years.

"Material support is very important for an airline," said Henningsen. The contract covers not only all the components needed to keep Spirit's Airbus fleet flying but materials as well.

Lufthansa Technik has been providing component support services to its European and other customers for more than 10 years, Henningsen noted, and he believes that more U.S. airlines will be interested in adopting a component support business model. "We're going to further develop it," he said. "Sure, there is change in the North American MRO industry. We think it is a natural change, what is happening now in the U.S. A lot of new airlines are coming up and have a different view. This is very similar to what we have seen in Europe and Asia. The whole industry is changing dramatically, and what we see today is part of that. We will develop capability in North America as demand increases."

For Spirit Airlines, the Total Component Support concept makes sense. "We're not going to build more shops when they already exist," said Jacob Schorr, Spirit's chairman of the board, president, and CEO.

Components covered by the contract include avionics and APUs under a maintenance cost per hour or per cycle program. Wheels and brakes are also covered on a per-landing basis, with work to be accomplished by HEICO, of which Lufthansa Technik is a part-owner. Major landing gear and airframe components are not yet being addressed because they won't need much servicing for many years. Kits for A1 through A8 checks will be kept at all Spirit stations. At Fort Lauderdale, Florida, Lufthansa Technik is maintaining a pool of components and materials, enough now for four Airbuses. The remainder of the components are at Lufthansa Technik facilities in Hamburg and Frankfurt, Germany.

Spirit will use its own airplanes to transport components, kits, and materials from base to base, and Lufthansa Logistik will also be used to manage to flow of product between Lufthansa Technik and Spirit.

To keep ownership of materials clear, Lufthansa Technik adopted Twinbins to dispense small hardware items and consumables. Twinbins (www.twinbin.com) are small bins, one stacked on top of the other, separated by a seal. When the materials in the bottom bin are depleted, the parts manager simply pulls a lever and the parts in the top bin drop through the now open seal into the bottom bin. At the same time, a quick scan of the label on the Twinbin transfers ownership of the material from Lufthansa Technik to Spirit and more material is ordered to restock the upper bin. There are Twinbins at each Spirit base.

The contract with Lufthansa Technik, said Schorr, "will dramatically reduce per-mile costs and the use of capital. Even if we had the dollars, it's not a valid use of capital. It dampens out surprises."

Lufthansa Technik will retain ownership of most of the components and materials under the contract, which helps Spirit keep its inventory costs low. "So many [companies] came to us and said `here's what we offer on the Airbus [services],'" Schorr said, "but we want them to share the risk. We view Lufthansa Technik as an integral partner, and it's in our best interest to help each other succeed. It's a perfect situation to see the other partner be successful." -- By Matt Thurber

St. George A&Ps Suffer Legal Setback

The FAA is not giving up on its desire to retest A&P mechanics who received practical tests by St. George Aviation. (Anthony St. George was sentenced to jail for his role in the testing scandal.) Following the Federal District Court's November 2, 2004 granting of a preliminary injunction barring further retesting, the FAA cancelled Handbook Bulletin FSAW 04-10, which discussed retesting protocols, and put on hold any further retesting. But just before the end of the year, the U.S. Department of Justice filed an appeal of that preliminary injunction, so the issue is not resolved.

"Although it is not good news that the government appealed," wrote attorney Michael Moulis in announcing the Justice Department appeal, "it will be some time before the case actually is heard before the 11th Circuit Court of Appeals." Moulis's firm, Moulis Associates PA (www.moulisassociates.com), is working on remaining legal avenues to quash the Justice Department appeal. "The next few legal procedures that we will be exchanging with the Justice Department will have various deadlines that will certainly delay any functional activity for quite some time to come," he noted, adding that "If we prevail at the 11th Circuit Court of Appeals, the FAA has only the United States Supreme Court as a last resort to overturn this ruling."

Meanwhile, the FAA is asking 21 mechanics who re-took and failed their A&P practical tests before the preliminary injunction was issued to re-take their tests again in a letter sent December 20. Moulis is representing three of those mechanics and cautions the remaining 18 (and any other St. George mechanics who receive an FAA letter) that they should consult an attorney before responding to the FAA.

PAMA Launches Membership Campaign

The Professional Aviation Maintenance Association has launched a new Member-Get-a-Member campaign to provide incentives for existing members who help sign up friends and colleagues for PAMA membership.

The campaign began January 1 and runs through March 31, 2005. Those who sign up new PAMA members (including those whose memberships have lapsed a minimum of six months) will receive a Snap-On ratcheting screwdriver for five new members and free one-year PAMA membership and a screwdriver for 10 new members. For 15 new members, the recruiter will receive free registration to the 2006 PAMA Annual Symposium plus the 10-member benefits. Top recruiters will be entered into a drawing to win a symposium registration and three-night hotel stay in Las Vegas.

For more information, see www.pama.org or call 703-683-3171.

AEA Releases Alteration Training CD

The Aircraft Electronics Association has released a training CD-ROM called Architecture of an Alteration. The CD runs on Pentium PC computers running Windows 98 and higher, in a Macromedia Flash environment.

Ric Peri, AEA's vice president of government and industry affairs, narrates the program. The primary thrust of the training program is to clarify for anyone who is involved in installing upgrades and modifications the regulations that apply, how to analyze the major-minor issue, and what constitutes a field approval.

The program is delivered over 56 slides, with audio narration. Users can take a test posted on the AEA website at www.aea.net/alterations and print a certificate of training. Any updates to the material on the CD will also be found on that website. The alteration CD is available free for AEA members, and non-members can purchase it for $135.