The first significant maintenance, repair and overhaul (MRO) contract win to emerge from the Air France-KLM merger was signed last week between the airline’s maintenance partners and Chile’s LAN Airlines.

The 10-year component support contract, initially for the Latin American carrier’s fleet of 24 Boeing 767-300ERs – with an additional 10 aircraft of the same type planned by 2008 – represents a combined strategic move into the Americas by the two MRO businesses, Air France Industries (AFI) and KLM Engineering & Maintenance (E&M).

KLM E&M’s parent airline already operates the 767-300ER, while the component pool of both AFI and its Dutch partner will be located in Miami, Florida at AFI’s affiliate component repair and service provider Aero Maintenance Group (AMG). AFI acquired a 40% stake last year in AMG as part of efforts to develop its US presence. Repairs will be performed by KLM E&M, AMG or AFI, with the LAN Airlines contract estimated to account for 25% of AMG’s repair shop activity in 2006. Peter Somers, executive vice-president of KLM E&M, says: “LAN Airlines will benefit from KLM E&M’s experience with KLM as an operator and its front-ranking position for Boeing 767 support.”

AFI senior vice-president industrial and business development Bruno Delille says the contract, which is valued at around $140 million, is significant both for its size and its collaborative approach. “All previous contracts have not been the result of such joint team work between KLM and AFI,” he says.

Delille says AFI/KLM’s combined third-party maintenance business is on track for a 6% increase in sales to around €900 million ($1.1 billion) for the fiscal year ending April 2006 against €852 million the previous year (AFI accounting for €508 million and KLM €344 million). Combined MRO sales of €2.6 billion for FY2004-5 are expected to increase to €2.8 billion for 2005-6.



Source: Flight International