Parts and repair company Chromalloy is poised to boost its presence in the growing parts manufacturer approval (PMA) and designated engineering repair sector for commercial aircraft engines.
The move is being aided by the souring economy, which has airlines scrambling to save money while maintaining or increasing quality and safety by using PMA replacement parts and repairs rather than original equipment manufacturer items.
"It wouldn't be unusual to look at saving for a complete overhaul in the 15-20% region," says Peter Howard, vice-president of technology and quality assurance for New York-based Chromalloy, which has US Federal Aviation Administration approval for 396 unique PMA parts to date, 95% of which are for aerospace applications.
For the engine hot section, Chromalloy's niche, high-pressure turbine (HPT) blades are typically 30% lower than the OEM list price, says Howard. "With the unprecedented economics, airlines are constantly looking for leverage when dealing with OEMs in terms of reducing costs," he says. "We provide an accredited solution for them."
In addition to building HPT blades, the privately held company owned by the Carlyle Group performs repairs including overlays and thermal barriers for turbine components and overhauls engines and auxiliary power units. Chromalloy is also involved in a joint venture, Belac, with three airline partners - Alitalia, Lufthansa and United Airlines - for which it supplies parts.
As a whole, the PMA industry has gained market share in the six years since the first Chromalloy HPT part was approved, a first-stage turbine blade purchased by United Airlines for its CFM56-3-powered Boeing 737s. United now owns 100 sets of the parts, each set comprised of 80 PMA blades.
Armand Lauzon, Chromalloy president, likens the change in mindset to that of the pharmaceutical industry. "If you look at the drug industry, 15 years ago there were no generics. Now, 85% of medications are generic."
For PMA, the change is likely to take much longer, however. Modification and Replacement Parts Association president Jason Dickstein says the industry had expected a doubling in PMA sales over the five-year period from 2007 to 2012, starting at 2.3% market share. Today's economic conditions are likely to accelerate the pace.
"PMA offers carriers a way to take a bite out of the bottom line," says Dickstein, adding that airlines aggressively pursuing increased PMA are being held back by a lack of engineering resources to review the certification of the parts, a practice not required by the FAA, but one that reflects airlines' conservative safety practices.
Chromalloy, which employs about 4,000 people and generates more than $1 billion in revenue a year, is positioning itself for the growth that is sure to arrive. In addition to opening a new airworthiness office in Burlington, Massachusetts for quality audits, the company is putting two-thirds of its investment dollars into upgrading its casting facility in Tampa Bay, Florida and streamlining operations at its 24 other locations. With the help of Carlyle, Chromalloy has increased throughput of one facility by 30% since October.
Research and development efforts are focused on advanced PMA approvals, including parts for the GE90, and extended repairs, while marketing efforts are targeted at gaining entry at leasing companies, which have traditionally shunned PMA because of a perceived reduction in resale value.
Howard says the company has 75-100 parts in active development, some for mature engines like the CFM56-7 and others for newer engines like the Pratt & Whitney PW4000 and GE90. Improvements in Tampa are aimed at building parts and materials that can withstand the higher exit temperatures of new-generation engines, hence the need for more sophisticated alloys.
The engineering behind the development efforts is getting more complicated as OEMs often patent designs and techniques associated with making their parts. "This puts us into a little different arena of substantiating our designs as equivalent," says Howard, adding that the company is to hire more experts to supplement its engineering base. "Historically, we have been able to contract that," he says. "But when we look at our five-year plan, it makes more sense to bring the capability in-house."
As for leasing companies, Howard says Chromalloy has had "meaningful" dialogue with leasing giant ILFC, which like its counterparts had been "reluctant to incorporate" the parts and repairs.
"There's a recognition that the performance of PMA and designated engineering repair is equivalent or better than OEM," he says, "but we have to show some success to break into the market." Chromalloy intends to demonstrate the value of its offering by working with partners who will use its PMA and designated engineering repairs to lower costs.
Obstacles are linked to intellectual property. "When you look at who our competition is, accusations will be made," says Lauzon. "We're very careful. We have a deep technological bent that is going to get deeper."