Ameco Beijing looks to line up second US major

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Chinese MRO firm Ameco Beijing plans to dedicate at least one heavy airframe maintenance line to its new contract with United Airlines and is confident of securing work from a second US major carrier.

Ameco Beijing earlier this year won a five-year contract from United covering the Star Alliance carrier's Boeing 777 and 747-400 fleets. Ameco Beijing executive director Christian Reck says the Air China-Lufthansa joint venture company will dedicate one of its widebody maintenance lines to the contract starting next month and a second line could be used for United aircraft during certain periods.

"It's definitely one line dedicated to them. We are in discussions with United on whether we need to open a second line relative to their requirement," Reck said in a recent interview with ATI.

Ameco Beijing will start overhauling the first 777 under the new United contract in June. Work on the first 747-400 will begin in October.

The 777 portion of the contract represents repeat business for Ameco Beijing while the 747 work represents an expanded relationship between the two companies. Ameco Beijing had an earlier five-year 777 deal with United which ended last August. Reck says United did not have to re-contract out the work immediately as it had a nine-month gap before its next 777 heavy check.

"There was a re-tender process and we had to prove in a competition that it is worthwhile continuing with us, which in the end was the decision of United," Reck explains. "They even extended our business with them."

Reck adds that due to the addition of United's 24-aircraft 747 fleet "we expect the contract to be a little bit busier" than the last contract. Ameco Beijing may also install some cabin upgrades while it is carrying out the heavy checks on the 777s, which would further add to the work this time around.

United is planning to install new business and economy cabins on 46 of its 777s although the majority of these installations are expected be done at the carrier's San Francisco facility outside the normal heavy maintenance schedule. Reck declined to say how many, if any, 777s will be retrofitted in Beijing.

Reck says United is now the only US major airline in Ameco Beijing's portfolio of customers but the maintenance company is currently "in discussions" with other US majors looking to outsource widebody heavy maintenance work. He says the US is already one of Ameco Beijing's most significant markets as it currently overhauls components and engines for several non-major US airlines.

About 40% of Ameco's Bejing's revenues are now generated outside China. Reck says the US and Europe are the company's two biggest international markets. Both are roughly of the same magnitude and are bigger than Ameco Beijing's non-Chinese Asian business. The new United contract could help Ameco Beijing further grow its North American and European business.

"It's good for any discussion with any customer that we can now say that United entrusted us for work for the years to come. It's an augmentation but it's not an opener. It had been an opener five years ago," Reck says, referring to the original United-Ameco Beijing deal that was forged in 2005.

While Ameco Beijing still has some unsold airframe maintenance slots for the remainder of 2010, Reck says market conditions are significantly better than last year and several airlines are now in the process of tendering new packages.

"Our capacities in the engine overhaul business and in the component business are pretty much used [for 2010]. For airframe overhaul we still have some slots, but I'm very confident we can utilise most of them," Reck says.

He adds: "I think the market is coming back a little bit and the long-term customers we are dealing with, like United, have decided to continue to do business with us. So we're in a very good position."