ANALYSIS: American and US Airways prepare to merge maintenance

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Now that American Airlines and US Airways have received a bankruptcy court's approval to go forward with a merger to create the world's largest airline, the two carriers have taken the first steps towards becoming a combined airline.

The carriers received court approval for the merger on 27 March, allowing American to incorporate the transaction into its reorganisation plan. The carriers are preparing to begin the integration process, including receiving a single operating certificate for a combined fleet of more than 900 aircraft, as they wait for regulatory approval. Many details about how the carriers will transition their maintenance operations still remain to be seen, but the complementary capabilities of each airline's existing maintenance shops position the merged carrier to have a comprehensive MRO offering going forward.

American has traditionally been more of a heavy maintenance shop, but last year negotiated a contract with its Transport Workers Union-represented mechanics that allowed it to outsource some maintenance for specific aircraft types. On the other hand, US Airways keeps two primarily heavy maintenance facilities full and then outsources maintenance to cover its peaks.

American Airlines has generally chosen Boeing models in the past, while US Airways has opted for Airbus models. American flies 608 aircraft and US Airways has about 346 aircraft.

Data from Flightglobal's ACAS database forecasts that American's checks usually stay close to 500 per year, while US Airways' C checks are expected to peak at 263 in 2018 after a low point in the cycle of just shy of 200 aircraft in 2013.

As for the heaviest checks, data shows that American should expect to see a peak in the cycle in 2014 that tapers off by 2017. US Airways' heavy checks will start diminishing in 2015 and 2016.

resize of aa-us heavy check forecast

aa-us heavy checks 2013 to 2018

Source: Flightglobal's ACAS database

The ACAS data is compiled by taking fleet growth, orders and retirements into account along with the maintenance intervals of each aircraft. While the carriers operate two vastly different fleets with several engine types, the maintenance integration may not be as complicated as it initially seems despite the significant amounts of work that merging two carriers inherently requires.

"It's going to be a long, huge difficult job to put these fleets and maintenance programmes together," says Subodh Karnik, vice-president at consultancy ICF SH&E and former chief executive of Global Aero Logistics, parent of World Airways, North American Airlines and ATA. However, due to the fact that most of the fleets within the merged carrier will be isolated within either American or US Airways and that all of the subtypes are relatively large, the transition overall will be "absolutely manageable," he says.

There will be costs associated with transitioning the fleets to a common interior scheme, receiving a single certificate and merging the maintenance planning and operations, Karnik points out. Those costs can be offset by pooling inventory, managing irregular operations, managing supply chain successfully and being able to use any spare capacity that may exist at American's Tulsa maintenance facility.

"As long as they don't take unnecessary economic risks, chase the revenue-generating priorities quickly - such as configuration commonality, and keep a look out for low-hanging fruit opportunities - such as maximising utilisation and Tulsa and the rest of their facilities...they will be in good shape," says Karnik.

Under agreements ratified with its Transportation Workers Union-represented mechanics and related employees that came effective in September 2012, American must perform at least 65% of its own maintenance work in house.

Therefore, a majority of maintenance work on the Fort Worth-based carrier's fleet will continue to be performed at its 3.3 million ft2 (306,580 m2) flagship maintenance base at Tulsa International airport. The facility specialises in heavy maintenance for American's Boeing MD-80, 757, 777 and 737 aircraft, as well as the Pratt & Whitney JT8 and General Electric CF6-80 and CFMI CFM56 engines. It also has several specialised capabilities, such as interior modifications, composites and engineering. American has also performed heavy maintenance work for third parties at the facility.

As part of its business plan to emerge from bankruptcy, American chose to outsource a portion of its heavy maintenance work and close its maintenance base at Fort Worth Alliance airport. That facility specialised in 737 maintenance with room for six widebody aircraft. In December, the last aircraft left the 781,000 ft2 facility for a maintenance check. Maintenance crews are still performing some minimal work at the facility, but that work is on track to be moved completely within the next few months.

At least 500 employees represented by the TWU are still working at Texas Aero Engine Services (TAESL), a joint venture with Rolls-Royce. That facility performs work on the Rolls-Royce RB211 engine, which powers the 757 fleet, and the Trent 800 engine for American's 777s. That facility will continue to operate despite the shutdown of the heavy maintenance facility at Alliance. American also has 77 line maintenance stations throughout the world.

American's decision to outsource maintenance came under scrutiny in October when the airline pulled 48 Boeing 757s from service after two incidents of seats coming loose while inflight after undergoing maintenance from a third-party provider.

The carrier has said that its decision to pursue contract maintenance agreements for its 757, 767 and 777 fleets allows it to be competitive in the future. A majority of its contract maintenance work is performed within the USA.

US Airways, on the other hand, has two heavy maintenance facilities in Charlotte and Pittsburgh that provide a maximum of six to eight heavy maintenance lines, depending on its maintenance needs. It fills those facilities with work for its own aircraft, and then outsources to fill peaks in heavy maintenance. The carrier preforms all of its scheduled line maintenance in house.

US Airways performs most of its engine maintenance under contracts with OEM partners, including General Electric, Rolls-Royce, International Aero Engines and Pratt & Whitney, vice-president David Seymour told Flightglobal in September 2012. These contracts include classic power-by-the-hour contracts (PBH) and hybrid PBH contracts, which involves paying the engine overhauler on an accumulated hour basis.

Seymour said last year that US Airways' nine Airbus A330-300s had just finished a major maintenance cycle, and its older 737s will be phased out of the fleet by 2014, leading to less of a need for contract maintenance in the coming months and years. The carrier was at a peak in its maintenance cycle during the third quarter of last year due to fleet requirements, but Seymour expected that towards the end of 2013 those maintenance requirements will die down and there will be significantly less outsourcing needed for the US Airways fleet.