When the Airbus Military A400M takes to the skies at this month's Paris air show, much attention will be focused on the transporter's long list of development travails - and its presumably bright future, with commencement of deliveries, initially one of the Paris show aircraft, to France.

A similar trajectory of fortunes could be tracked for one of its suppliers. UK firm Thermal Engineering, of Royston, Hertfordshire, makes case cooling ducts and vanes for A400M's Europrop International TP400 engines. The company, which as the name suggests specialises in fabrication of parts subject to heat, could hardly have been expected to be in profit on a programme that has been as delayed as the TP400/A400M, but Thermal is also a supplier to Rolls-Royce (BR725/710, Trent 700, 800 and 900, and the newer Trent 1000 and Trent XWB), Engine Alliance (GP7200), International Aero Engines (V2500) and CFM International (CFM56).

Thermal components also appear on the Eurofighter's Eurojet EJ200 and Panavia Tornado's Turbo-Union RB199. But the company, founded in 1988, suffered in the downturn and by the late-2000s was in loss, with 2010 turnover approaching £10 million ($15 million).

Second French A400M - Airbus Military

Airbus Military

Good - now just keep it coming

Enter Privet Capital, a turnaround specialist which bought Thermal in mid-2010 for an undisclosed sum. Privet says it looks to invest between £1 million and £10 million in UK-centric companies with between £10 million and £200 million turnover, in financial distress and/or in need of operational restructuring.

A typical Privet company may need "dramatic change management" to exploit strong underlying products that are being held back by poor systems, strategy or implementation. And, it adds, when "incumbent funders or owners" such as banks, mezzanine funds, hedge funds, asset-based lenders or private equity houses are unable or unwilling to tackle such issues, Privet looks to step in.

All of those factors appear to apply to Thermal. Chairman ­Vardhan Rajkumar, an engineer and entrepreneur installed by Privet, says the company was suffering from "quality issues - it wasn't shipping enough [product]".

Operationally, he says, the focus of Privet's oversight has been to boost quality control to "get it right first time" and improve delivery performance. Operating losses carried on into 2011, but tapered down to £400,000. In the year to 31 December 2012, Thermal made money - £1.6 million - and grew turnover to £16 million. Headcount has also risen, by 10% to 234 people.


During what Rajkumar calls the "milestone year" of 2012, Thermal also hired a new managing director in Max Humber, whose aerospace, automotive and metal processing industries experience includes senior positions at titanium parts fabricator Timet, Doncasters, Senior, and Tata Steel.

Rajkumar is targeting "steady growth", with another 10% revenue gain likely in 2013. About two-thirds of the business is in fabrication of non-rotating engine parts for the hot end - vanes, baffles, silencers, cooling ducts - based on Thermal's core competence in difficult-to-form alloys including titanium, Inconel and other nickel-based metals. Thermal also manufactures nacelle and airframe parts such as skins, hinges and APU exhaust details.The other third of revenue comes from insulating blankets and shields.


Thermal, he adds, is principally a build-to-print supplier and, as such, its critical challenges for the coming years are to keep up with rising demand for aero engines - including the TP400 and XWB, which are entering ramp-up. Winning new work, clearly, is another priority; the Airbus A320neo is on Rajkumar's radar.

Doing all that, he says, will demand great attention to detail in the manufacturing process to maintain delivery schedules, while strengthening relationships with tier one suppliers and OEMs. It also demands investment in future growth - Rajkumar says he is "enthusiastic" about taking on an increasing number of apprentices - and building expertise in new technologies.

But, mostly, Rajkumar has his sights fixed on the business to hand, and stresses that it is far too early for Privet to have identified its plan for exiting the investment in Thermal. But if the company continues on its upward swing, that time will certainly come. Privet's purpose, he says, "is to fix troubled businesses".

Source: Flight International