JHAS in limbo as parent writes down value

Singapore
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The future of Australian MRO provider John Holland Aviation Services (JHAS) looks shaky after its parent company reported an A$10 million impairment from the unit in its half-year results.

Leighton Holdings revealed the impairment was “against the property, plant and equipment” in JHAS, and is the amount is the same that it paid to acquire Ansett Aviation Engineering Services in 2007.

The company does not report JHAS’s financial results, but it is understood that the unit has struggled to reach a profit since it was launched.

There has been speculation that Leighton is planning to sell the underperforming unit, or close it down and sell the assets if no buyer is found. Likely buyers could include SIA Engineering’s Aircraft Maintenance Services Australia unit, or Air New Zealand Engineering.

In recent years, the Melbourne based MRO lost major contracts with Virgin Australia, Jetstar and Tigerair Australia. It has also faced stiff competition from overseas MROs, thanks to the strong Australian dollar.

The loss of contracts forced JHAS to cut 40 technical positions at its Tullamarine base last year as it cut its heavy maintenance operations in favour of focusing on line maintenance.