UK maintenance provider Monarch Aircraft Engineering (MAEL) will in September open a new component repair shop, less than a year after its parent airline ceased operations.
The new shop, part of a plan aimed at more than doubling MAEL's business, is located in Northampton – about halfway between headquarters, in Luton, and a hangar in Birmingham. A staff of around 20 will be employed at the shop – half of them new recruits, with the other half to come from the repair facility in Luton.
MAEL managing director Chris Dare told FlightGlobal in June that the location had been selected primarily to support hangar facilities in Luton and Birmingham. But he notes the good availability of manual technical skills in Northampton's labour pool, thanks to the area's engineering heritage, and says staff numbers are set to increase in the future.
He says Northampton is a suitable location to serve a range of additional airports within a 2h radius. The new shop represents a £2 million ($2.6 million) investment and includes composite-repair, sheet-metal, coating and component-painting facilities.
It is the first step of an expansion plan MAEL is enacting after its emergence as the only division to survive Monarch's administration process.
LAST YEAR'S BLEAK OUTLOOK
When, in October 2017, Monarch Airlines stopped flying, the immediate prospect for MAEL was "very bleak", Dare tells FlightGlobal. He says the former parent's 35-strong Airbus A320-family fleet had been scheduled to generate around 85% of MAEL's activity during winter 2017-8.
Just before Monarch's collapse, Virgin Atlantic had signed a deal to have its Boeing 787s serviced at MAEL's Birmingham hangar. But Dare admits that for a six-week period running until mid-November "we didn't do a lot" of maintenance activity.
A voluntary redundancy plan was implemented for back-office staff as a means of cutting overhead, but thanks to "some magic" from the MRO providers commercial team, base maintenance activity picked up, with customers including Air Astana, Air Malta, Icelandair and Swedish freight specialist West Atlantic. And eventually MAEL registered around 15% more man-hours during the 2017-8 winter than in the same period a year earlier.
Staff numbers have increased to around 780, from 730 in 2017. This includes employees transferred a part of a line-maintenance deal with Thomas Cook Airlines – disclosed in May – under which nearly 70 UK technicians moved from the leisure carrier to MAEL at stations at East Midlands, Glasgow, London Gatwick and Newcastle airports. Dare acknowledges, however, that line-maintenance activity has not returned to its level before Monarch's administration.
In Luton, where MAEL conducts heavy checks, the maintenance provider is almost fully booked until April 2019, Dare says. The site comprises two hangars, each of which can accommodate aircraft up to the size of a Boeing 767. Newer widebodies with longer wingspans, like the 787 or A330, are too big for the building, however.
The company's purpose-built Birmingham hangar – opened in 2013 – can accommodate two 777s or up to 10 single-aisle aircraft, and tends to be used for lighter checks. Virgin's 787s are being serviced there, and Flybe has for several years been a long-term customer for overnight checks on Bombardier Q400 turboprops and Embraer E-Jets.
Additionally, MAEL uses its Birmingham facility to support, on Boeing's behalf, operators of Rolls-Royce Trent 1000-powered 787s, which are affected by the engine's durability issues.
The uptick in airframe maintenance has been helped by sterling's depreciation since the UK's Brexit vote in 2016, says Dare. While he concedes that the MRO's services are "never going to be as cheap as eastern Europe", he does not see the company's location as a disadvantage in attracting contracts for labour-intensive checks.
"We are not short, at the moment, of opportunities for base maintenance," he says. "Not just one or two inputs, but big inputs on multi-year deals."
Dare declined to provide FlightGlobal with revenue figures, as MAEL's financial and ownership circumstances changed with the reorganisation as a standalone company. However, he says the MRO intends to double turnover through organic growth until 2023, and to grow its business a further 35% through acquisitions.
MAEL will use takeovers to broaden its capabilities with "complementary services", Dare indicates. He says the MRO provider is "not constrained by UK borders" and could target acquisitions "further afield".
While doubling MAEL's business will initially involve efficiency efforts to create "a bit more capacity" at Luton and Birmingham, the growth plan foresees the establishment of additional base-maintenance facilities. Dare says the company is evaluating "a couple of options" for expansion at existing or new locations.
Although MAEL has received partnership proposals to establish base-maintenance facilities abroad, Dare says the MRO provider's strategy "at the moment" is to exploit base-maintenance opportunities in its home market.
However, Dare rules out a return to Manchester as a base-maintenance location, following MAEL's closure of a hangar there in 2016. That site was subsequently acquired by UK leisure carrier Jet2.
Central to MAEL's growth plan is a co-operation agreement with Boeing. A year ago, the US airframer and Monarch disclosed the establishment of a joint venture to support third-party maintenance customers under Boeing's newly formed Global Fleet Care aftermarket programme.
MAEL was a maintenance partner in Boeing's previous GoldCare aftermarket scheme, and used its capabilities – particularly for the 787 – to serve operators both on the manufacturer's behalf and as an independent MRO provider. But the establishment of a joint venture deepens the partnership with the airframer.
Meanwhile, Boeing is in the process of constructing a maintenance hangar at Gatwick airport to support Global Fleet Care customers. The facility is scheduled to open in 2019. Norwegian's 787s will be serviced at the new facility, under a Global Fleet Care contract. The Scandinavian carrier has stationed Dreamliners and 737s at Gatwick, with both types receiving line maintenance support from MAEL at the airport.
Boeing previously told FlightGlobal that it will operate the new hangar at Gatwick.
Elsewhere, preparations are under way to reorganise MAEL's shareholding structure. Monarch Group – including the MRO provider – was owned by private equity firm Greybull Capital. While other assets of the group were subject to insolvency proceedings, MAEL's shares are currently held by an entity named Monarch 2011. Dare says Greybull remains MAEL's "economic owner", and he expects that the shareholding will return to direct ownership by the financial firm "soon".
Around two-third of MAEL's business come from airlines based in mainland Europe, but during the June interview Dare showed no concern about the UK's scheduled departure from the EU in March 2019.
He recalled that after the 2016 referendum there had been uncertainty about potential loss of European customers and of EU staff members, but insisted that there had been no decline in demand. No customer, he said, had raised questions with the service provider regarding MAEL's post-Brexit regulatory situation. Additionally, there had been "no drop" in applications for technical roles by EU nationals.
Dare acknowledged a possibility of using a EU subsidiary to maintain certification under the European Aviation Safety Agency were the UK were to leave the bloc without a deal covering aviation. MAEL already has EU subsidiaries and has considered such an option, Dare said. But he added: "We have not gone too far down the line on that at the moment."
He remained confident of regulatory alignment with EASA. Besides, he said, any Plan B involving a European subsidiary does not represent a "burning risk at the moment, given what we went through nine months ago".