Irish MRO provider Dublin Aerospace is evaluating various international locations for expansion after a plan to establish a UK facility was abandoned as a result of Brexit.
Chief executive Michael Tyrrell tells FlightGlobal that his team is looking at sites in Ireland, Europe and elsewhere to set up a base maintenance facility to add to its four-bay hangar in the Irish capital.
Dublin Aerospace specialises in Airbus A320-family and Boeing 737 airframe maintenance, and also provides A330 base checks. Component services span landing-gear and auxiliary power unit (APU) repairs and overhauls for the two narrowbody families. APU capabilities primarily cover Honeywell equipment.
Tyrrell foresees that plans for a new site could be enacted within 12-18 months.
He says Dublin Aerospace had already selected a UK site to establish a second base maintenance facility ahead of the Brexit referendum in 2016, and had gone as far as talking to local colleges about training schemes for technicians. But the plan was "put on hold" as a consequence of the Brexit vote.
A key reason for that decision is uncertainty regarding the free movement of labour when the country leaves the EU. Tyrrell says that being able to recruit staff from across the EU, and to ensure that customer airline representatives are able to move to the site, is central to the MRO provider's activity.
He says Brexit has already affected Dublin Aerospace's business, largely as a result of sterling's depreciation since the referendum. About a third of the company's turnover – total revenue was €46 million ($55 million) in 2016 – is UK-based. "We managed to keep most customers," Tyrrell says. But he admits that it has become "more difficult" to sell services to UK operators, and says the company is "looking further ahead" to broaden its customer base.
By 2020, Dublin Aerospace plans to have increased turnover to €70 million and in October it launched a recruitment initiative to add 150 positions to its 190-strong permanent full-time staff by 2019. About 60% of the additional staff will be technical apprentices, says Tyrrell.
He says more employees are required to increase productivity. Noting an increase in unexpected findings during 737NG checks – as the in-service fleet matures – he says more technicians are required in order to fulfil the company's objective of reducing turnaround time.
Tyrrell acknowledges that Ireland is not a low-cost location for airframe heavy maintenance. But he says the MRO provider has established an "interesting" performance-based pay model that "minimises" the impact of relatively high labour costs. He says a proportion of all salaries is based on performance and that this is related to team, rather than individual, effort.
This has led to low overheads and to "self-motivating [and] self-managing teams", he says. "We believe we are ahead of the market [in terms of] quality, turnaround time and productivity."
He notes that the MRO provider is receiving "great support" from development agency Enterprise Ireland.
The recruitment effort is additionally targeted at halving Dublin Aerospace's spending on contractors, who form about 40% of its workforce today.
He attributes that proportion to economic conditions during Dublin Aerospace's initial phase in the wake of the 2008 financial crisis – the company was established in a facility previously occupied by SR Technics, which had made its workforce redundant.
However, a subsequent period of growth across the MRO sector has enabled self-employed contractors to benefit financially while working across multiple locations.
Tyrrell notes a high degree of seasonality in the airframe maintenance business, with European carriers completing aircraft checks during winter in order to maximise summer capacity. New recruits are to bolster the winter workforce, he says.
In order to raise its activity during summer, Dublin Aerospace intends to attract business from "alternative sources". Tyrrell says this could include A330 operators from other regions that are willing to ferry aircraft to Europe, as well as freight carriers, which tend not to be subject to the same cycles as passenger airlines.
Regular checks on freighters would be an obvious path to follow. However, Tyrrell says Dublin Aerospace is considering a potential entry in the passenger-to-freighter conversion market, and has held talks with engineering companies that hold supplemental type certificates for freighter conversions.
Today, Dublin Aerospace's base maintenance activities account for 60% of its business, while APU and landing-gear services cover 25% and 15%, respectively. Over the next five years, Tyrrell foresees that the base maintenance share will fall to 40%, with APUs and landing gears at 35% and 25%, respectively.
Part of the expansion effort will involve addressing airlines further afield. Tyrrell says the MRO provider has attracted component repair contracts from airlines in Asia and Africa, and he suggests that an additional maintenance site could facilitate business elsewhere.
However, he is also looking closer to home. Noting that the UK represents a large market for MRO services, Tyrrell says Brexit could also provide business opportunities for maintenance providers in neighbouring countries.
The plan to lift revenue to €70 million can be accommodated within the existing footprint, Tyrrell says, adding: "You need to be agile."
Source: FlightGlobal.com
