ANALYSIS: BAE aftermarket arm reaches beyond legacy

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BAE Systems Regional Aircraft, the aftermarket support division for the UK manufacturer's out-of-production passenger types, is planning to expand its services to other airframers' models such as Airbus A320 narrowbodies and Bombardier CRJ700s/900 regional jets.

The Prestwick-based outfit is the type certificate holder for 146/Avro regional jets and Jetstream, 748 and ATP turboprops. In total, that ageing fleet comprises about 500 aircraft with 160 operators in 80 countries, for which the division will provide continued airworthiness and other technical support activities - such as the development of life-extension and modification programmes - until all active aircraft have been retired. However, it also offers operators component support agreements through a network of external repair shops and spare-part suppliers.

Some 350 staff members are employed across the headquarters-cum-engineering centre near Glasgow and a spares warehouse in Weybridge, on London's southwestern fringes. Turnover totals about £60 million ($95 million) per annum, says Sean McGovern, business director for BAE Systems' support segment. But new revenue streams need to be developed to maintain current business volume, as the European Avro fleet is migrating to other regions.

Swiss International Air Lines and Sweden's Braathens Aviation Group, for example, want to replace their Avros with Bombardier CSeries aircraft by 2016. Swiss and Braathens subsidiary Malmö Aviation are two of Europe's largest Avro operators, with fleets of 20 and 12 aircraft respectively. BAE Systems has flight hour-based component support contracts with the two carriers for the remaining operational period of the four-engined regional jets. McGovern says part of the deal is to arrange the retirement in a "managed fashion".

The type can "easily" remain in service for another decade from a technical standpoint, thanks to a life-extension programme, he adds. But it will take over more niche roles, such as a VIP, military transport or firefighting, within small, fragmented fleets. "We are looking at the market very carefully over the next four to five years as to whether our current [business] model is sustainable or not," he says. "If we were to depend on the [Avro] RJs specifically, that clearly has some life limitations to it."

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BAE Systems is thus exploring support of other manufacturers' aircraft, among a number of other business avenues. In recent years, it says, flight hour-based component support agreements have become popular with operators, and about 190 of its aircraft are served through such contracts. BAE Systems has no in-house repair and overhaul capabilities for the equipment, but handles that work through external suppliers. The key to that business is managing the vendor network to ensure supply-chain criteria - such as turnaround time and up-to-date modification statuses for the equipment - while generating economies of scale for favourable pricing.

This know-how could be transferred to other aircraft models. "There is no reason why we cannot do repair and overhaul of other types' components given the vendor relationships we have," says McGovern. "We are in the middle of brokering some pretty substantial deals with a number of European operators on the [Boeing] 737 Classics and 757. And we would like to develop the business into the ATRs and Embraers [early 170 and 190 models]."

In May, BAE Systems also expanded its European Part 21 design and production organisation approvals to be able to work on aircraft other than its own models. This allows the development of changes and modifications via service bulletins and supplementary type certificates.

Support for mid-life aircraft - including A320s and CRJ700/900s - is BAE Systems' target. The shift would provide "modest growth" if respective contracts materialise, says McGovern. Whether that strategy is achievable should become clear by year-end, he adds.