The sale of SR Technics to a group of Middle Eastern investors could accelerate the race among the world's largest maintenance companies to expand into key growth markets.
The change of ownership will strengthen SR Technics' presence in the fast-growing Middle Eastern market and help it expand into India and potentially other parts of Asia. SR Technics chairman Frank Turner says the company will retain an earlier plan to open an overhaul shop in Oman and acknowledges a tie-up with Abu Dhabi-based Gulf Aircraft Maintenance (GAMCO) is also possibility.
One of GAMCO's owners, Abu Dhabi government investment arm Mubadala, is one of the three companies acquiring roughly 30% stakes in SR Technics. The other two companies involved in the acquisition are Dubai Aerospace Enterprise (DAE), which was established early this year and was planning to open an aircraft maintenance shop at the new Dubai airport, and United Arab Emirates investment house Istithmar.
Turner says SR Technics will be the only maintenance provider under DAE and will decide later whether to go forward with the plan for a maintenance facility at Dubai. "With growth that is predicted in the Middle East there is a shortage of facilities there," says Turner (pictured below). "We may be at the new airport in Dubai but we can't say definitively at this stage."
Abu Dhabi-based GAMCO is now the only major maintenance provider in the Middle East and also has been looking to expand into Asian growth markets, in particular India. It lost its anchor customer, Gulf Air, overnight in May when the carrier transferred the servicing of its entire fleet to SR Technics. As part of the deal, SR Technics committed to opening a maintenance facility in Oman.
GAMCO and SR Technics have since discussed potential partnerships and common ownership could drive these talks forward. Turner says there are no specific plans for a tie-up with GAMCO and any negotiations would be done at arms length because SR Technics will remain a completely independent company.
"We will not be part of any Middle Eastern airline but will have increased opportunities to service them," he says.
SR Technics now operates 11 maintenance hangars, all of which are located in Europe. "We'll now be based in one of the most dynamic and fastest growing regions in the world," says Turner, adding the new owners will also help the company expand into India and China because they have developed contacts in these countries.
Other larger maintenance companies such as Lufthansa Technik and Singapore Technologies also have been keen to expand into the Middle Eastern and Indian markets. The SR Technics acquisition could prompt them to speed up these growth plans and lead to consolidation in the maintenance sector, which has seen steady growth in recent years driven by airlines relying more on outsourcing as part of efforts to curb costs. The maintenance sector is now poised for more growth driven by rapid fleet expansions at Asian and Middle Eastern carriers.