ANALYSIS: US MROs widen their horizons

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It is no secret that cost-conscious US airlines have sought to minimise expenses by contracting MRO abroad in recent years. But with labour rates rising overseas, fuel prices staying high, and shops in the Asia-Pacific region working on more aircraft to meet local operators’ needs, more of that work could come back to US shores.

Several US-based maintenance providers say that not only are their hangars growing, but they are growing big enough to fit aircraft the size of the Boeing 787 and the Airbus A380.

US-based MRO firms will have more opportunities to ramp up widebody modifications as labour rates in the Asia-Pacific region rise and slots become harder to come by as a result of that region taking care of its own maintenance needs, says consultancy TeamSAI.

North American operators are sending as much as 60% of widebody heavy maintenance to China and the Asia-Pacific region, TeamSAI estimates.

“The advantage is quickly going away – and I think there really is an opportunity for the North American MROs now to take advantage of that shift and to start repatriating some of the widebody checks,” says Chris Doan, TeamSAI’s chairman and chief executive.

While US airlines are spending about $2.4 billion per annum on airframe maintenance, about $568 million of this demand is satisfied by maintenance providers outside of North America, says TeamSAI. North American MROs produce about $66 million of MRO services for airlines outside of the region, making the region a net importer of airframe maintenance.

Labour rates for US maintenance firms will be close to those of legacy Asia-Pacific maintenance shops by the end of the decade, says ICF SH&E analyst Jonathan Berger. A shortage of skilled workers in that region, higher fuel prices and a decreasing number of hours needed to perform maintenance checks are factors that will contribute to more work for US airlines being done domestically, he says.

Asia-Pacific labour rates will start to approach parity with those in the USA in the 2020s, TeamSAI chief executive Chris Doan tells Flightglobal. However, North American MROs could see opportunities as soon as next year to win back MRO work performed abroad as airlines renegotiate maintenance contracts and fuel prices increase ferry costs, he says.

Several of these MROs say they are already gearing up to provide widebody work in addition to single-aisle aircraft by adding larger hangars.

A long-time specialist in narrowbody maintenance, Illinois-based AAR announced its first foray into the widebody airframe MRO sector last year with the addition of a 520,000ft2 (48,300m2) repair station in Lake Charles, Louisiana. This facility also feature a 111,000ft2 hangar scheduled to open in the third quarter that can hold up to seven widebody aircraft, with the largest the size of a Boeing 747-8 and Airbus A380.

“You’re finding more of this work coming back on shore – I think we’re prepared for that,” he says.

AAR recently performed two Airbus A330 checks for lessor ILFC and expects another two aircraft to follow, he says. The provider is actively courting customers for more work.

“We will seek numerous customers within the industry for widebody capacity at Lake Charles as well as narrowbody capacity,” says Arehart.

Everett, Washington-based Aviation Technical Services (ATS) is also focused on growing its Airbus and Boeing widebody and narrowbody capacity with a new 607,000ft2 (56,392m2) hangar, formerly occupied by American Airlines, scheduled to open 1 May at Kansas City International. The facility will join its two other hangars in Everett and Moses Lake, Washington, which also serve a mix of widebodies and narrowbodies.

The firm will soon be announcing an “international airline” as the launch customer for Boeing 767 work at the facility, says Rob Tilson, ATS’s vice-president of sales and marketing. ATS will be doing C-checks and interior modifications for the carrier.

ATS has also started building up maintenance capabilities for the Boeing 787 and will soon begin “pre-service” modifications for Air Canada’s Boeing 787s at its Everett facility. That light modification will include interior work before the carrier receives the aircraft, says Tilson. The carrier is expected to take the first of 37 of the aircraft type in May, it says.

Ohio-based Airborne Maintenance and Engineering Services (AMES) is also poised to open a new widebody hangar in May, says Joseph Hete, chief executive of the firm’s parent company Air Transport Services Group, during a 6 March earnings call.

The $15.5 million, 100,000ft2 (9,290m2) hangar can fit an aircraft as large as a Boeing 747-400 or 777-300ER in its two bays. AMES says it will see its maintenance capacity double with the new facility.

“By the time we get to the latter part of the third quarter and fourth quarter, I'd expect to have some pretty decent utilisation in that facility,” he says.

Greensboro, North Carolina-based Timco Aviation Services has also expanded its widebody capabilities in recent months through its acquisition by Hong Kong Aircraft Engineering Company (HAECO).

Timco and HAECO share capabilities on widebodies including the Boeing 777, 757, 767, MD-11 and Airbus A320 family for scheduled maintenance and will now be able to serve airlines that both carriers have in common from both sides of the world. In addition, Timco will now be able to offer airlines some new airline capabilities it did not have before through HAECO’s facility, such as the Boeing 747 or Airbus A340.

“If [airlines] see value in having the airplanes maintained in North America, we want to be able to provide that solution,” says Bill Norman, MRO president of Timco Aviation Services. “If they see value in Hong Kong or China or other parts of Asia, we want to be able to provide that solution as well. So we don’t think at the end of the day that we define the market, we think what we’re trying to do is provide a series of options to the customers.”

This could be an opportunity for some of the repatriated work in analysts’ forecasts.

“There may be some real opportunity there for widebodies that are currently going to HAECO to stay domestic and come to Timco," says TeamSAI’s Doan.