ANALYSIS: BA Engineering hones third-party MRO strategy

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British Airways' engineering arm is following a twofold maintenance strategy, conducting airframe checks only for its parent airline, but marketing line and component support capabilities to third parties.

BA Engineering has always offered its services to other carriers. This continued, albeit on a smaller scale, when the parent decided to focus on airline operations and cut back its maintenance, repair and overhaul activities, selling facilities such as the engine and landing gear shops in the 1990s. However, from 2011, when BA merged with Iberia - a prominent third-party MRO player - BA Engineering stepped up marketing of its capabilities.

While other European operators have shifted airframe heavy maintenance to the fringes of the continent or further afield, BA Engineering has continued undertaking even labour-intensive checks in the UK. The parent's Boeing 747s and 777s are serviced at a base maintenance facility in Cardiff, while the Airbus A320 fleet is supported at a narrowbody centre in Glasgow. Flightglobal's Ascend Online fleet shows BA's active fleet to include 52 747s, 49 777s, 111 A320-family aircraft. It has nine additional A320s on order.

Maintenance of BA's 18 legacy 737-400s has been contracted out to external MRO providers.

The Heathrow facility is utilised flexibly to accommodate light but frequent checks and unscheduled events at the airline's main base. Heavy maintenance is only conducted for fleets that are either reducing in size, such as the 767, or new aircraft types like the 787 and A380. BA flies 10 767s, two 787s and one A380. It has a further 22 Dreamliners and 11 superjumbos on order.

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The UK-centric set-up will remain in place as part of BA's long-term strategic plan, says engineering director Andy Kerswill. The airline is benchmarking its MRO sites against alternative locations with lower labour costs. But Kerswill says that any cost differentials are "relatively insignificant" when considering the "market-leading" aircraft downtimes, quality and reliability of BA's facilities.

BA Engineering is targeting commercial benefits through partnership with Iberia Maintenance. The corporate siblings are co-ordinating and jointly marketing their respective capabilities to external clients. Inventory and line maintenance stations have been shared too. But pooling heavy airframe work - such as a potential A320 check-line for both the BA and Iberia fleets - appears not to be on the agenda for now. Kerswill does not rule out closer co-operation in future, but he insists that the two MRO providers remain separate, independently acting entities focused on their respective customers: "At this point, we have not got anymore [planned] than what we committed to with that [initial IAG] relationship."

Lean manufacturing initiatives have been implemented at BA Engineering's facilities, and last year the organisation engaged industrial consultants from carmaker Porsche to seek further efficiency gains. But this is only to optimise the existing sites for parent-fleet support. Significant third-party airframe business is not expected.

Component repair is an area, however, where BA Engineering intends to grow its capabilities and third-party activities. The organisation has a composite workshop at its Heathrow campus and a mechanical equipment repair facility in nearby Hayes. In the Cardiff area, it operates an interiors equipment workshop and repair shop for avionics and in-flight entertainment systems.

Supporting 787 components is to become a central product line. BA Engineering has formed a partnership with UK spare parts specialist AJ Walter Aviation and recruited Azerbaijan Airlines as a first customer. AJW is to supply spares through its distribution network, while BA Engineering will repair the equipment in its workshops. The maintenance provider wants to develop the necessary technical know-how for its parent's 787s, and the global Dreamliner fleet offers lucrative third-party MRO potential.

Despite the OEMs' growing aftermarket involvement and technological progress to more software-controlled components - for which access to increasingly guarded technical documentation is crucial - BA Engineering is confident it can still establish repair capabilities for Dreamliner components. "Certainly for aircraft like the 787, we fully intend to be in that [component MRO] market for the life of those products," says Kerswill. He adds that the parent airline's operational experience should give BA Engineering a competitive edge not only for new-generation equipment - for which competition with OEMs is particularly fierce - but also when the respective aircraft types mature later on.

The large 787 backlog - Boeing had 858 unfilled orders at 31 July, after 73 deliveries - is the main reason for that third-party MRO strategy. Due to the limited number of A380 operators and potential MRO customers - at 31 July, a total of 20 customers had between them ordered 262 superjumbos, of which 106 had been delivered - BA Engineering is following a different approach for the double-deck aircraft, however. The maintenance provider is servicing certain components that require regular checks, such as safety equipment. However, line-replaceable units are covered by a 15-year contract under which the airline enrolled in Airbus's Flight Hour Services (FHS) aftermarket support programme.

Kerswill says that the OEM arrangement works "really well at the moment" and any capability expansion would depend on the A380's future market development. In other words, the existing fleet and order numbers for the type do not offer sufficient economy of scale to build up more repair capabilities in-house. This is why established MRO providers Air France Industries KLM Engineering & Maintenance and Lufthansa Technik have pooled their A380 component repair capabilities and inventory in their Spairliners support joint venture.

BA Engineering has teamed up with Boeing in the manufacturer's GoldCare MRO scheme. The airframer's current accreditation covers only line maintenance, says Kerswill. It appears that Boeing was especially keen for BA to get on board with its operational experience and large international line station network. "GoldCare has some real strengths. But one of the challenges is to convince the airlines that the line maintenance area has the [required] robustness to deliver [that service]," he says. "We can give that some assurance."

Many carriers that have outsourced heavy checks still conduct line maintenance in-house, because it is closely intertwined with the airline operations and provides closer control. It is therefore important for a manufacturer's programme such as GoldCare to demonstrate sufficient operational experience.

Maintenance IT is an additional area where BA Engineering wants to create third-party revenue. The division developed a software package, dubbed Swift MRO, which feeds real-time technical data transmissions from aircraft into BA's existing IT infrastructure. The system also delivers line maintenance information - such as job tasks, technical documentation and inventory order functions - directly to the technician on the ramp via smartphones or tablet computers.

BA Engineering wants to roll out the system across its Heathrow and Gatwick hubs by year-end, and potentially expand it to large overseas hubs such Paris or New York. But the organisation has also teamed up with Indian IT developers Tata Consultancy Services to market the software package to other airlines.