Bahrain appears to wind down MRO firm Gulf Technics

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Bahrain's MRO venture Gulf Technics appears to have been suspended after three turbulent years of ambitious expansion plans which only led to a single support contract with state carrier Gulf Air.

A source familiar with the government project has told Flightglobal that Gulf Technics has "collapsed". Enquiries to the parent corporation, Bahrain's holding company Mumtalakat, have not been answered while Gulf Technics' website has been "temporarily suspended".

Bahraini government funding programme Tamkeen, in a statement following its first board meeting of the year, says it is placing a priority on the aviation sector training programmes it offers in the light of graduates who have not found employment following the schemes "due to the liquidation of Gulf Technics".

The maintenance start-up was founded by Mumtalakat in 2010. The state investment firm had initially planned to establish the MRO company as a joint venture with Singapore Airlines' technical arm. SIA Engineering (SIAEC) and Mumtalakat signed a preliminary agreement in 2010 to support Gulf Air's fleet, develop a third-party MRO business and give the Asian maintenance provider a footprint in the Middle East. But SIAEC later pulled out of the negotiations, leaving Mumtalakat as the single shareholder.

Operations began in 2011 with a rotable component support contract for Gulf Air's Airbus fleet. But the anonymous source says the flight hour-based deal was "financially devestating" for both the MRO provider and carrier, as lacking its own parts it was forced to predominantly rely on exchange agreements with other MRO companies and airlines.

While Gulf Technics handed in new, highly valuable parts from Gulf Air's young fleet, the MRO company often received older equipment through the various exchanges. This hit both Gulf Technics and Gulf Air, as the latter's fleet depreciated further due to the installation of less valuable components.

The source says Gulf Air has now started negotiating a new component support deal directly with Singapore's ST Aerospace.

A central objective for Gulf Technics was to establish base maintenance capabilities in Bahrain. SIAEC had provided C-checks on Gulf Air's fleet in Singapore since 2009. But there was there was no hangar in Bahrain which could have been used for such work. Mumtalakat planned to build a three-bay widebody hangar by 2014.

Gulf Air's fleet would have occupied only around 13% of that capacity, with the remainder due to come from third-party customers, says the source.

According to Flightglobal's Ascend Online database, Gulf Air has an active fleet of 26 aircraft, comprising 16 Airbus A320s, four A321s and six A330s.

Gulf Technics planned to train 500 licensed engineers and technicians. Some 350 people started their training as part of the project's first phase at Gulf Aviation Academy, which is also owned by Mumtalakat.

But this number of trainees would have required a much larger operation than planned, says the source, because a one-bay heavy maintenance hangar - which typically employs 140-170 staff members - can only take some 30% of its workforce as graduates without significant experience.

More than half of the 350 trainees have left the programme.

The chairman of Bahrain government funding programme Tamkeen, Sheikh Mohammed bin Essa Al Khalifa, says: "The board acknowledges that there are certain challenges faced by the aviation industry which has unfortunately left some graduates without employment and trainees unable to complete their training.

"We are making every effort to stand by and assist the trainees and graduates and provide them with suitable alternative solutions. Negotiations are underway with various regional airline organisations to find placements."