MRO’s prospects in doubt as major customer pulls out

The future of the United Arab Emirates’ leading maintenance, repair and overhaul (MRO) company Gulf Aircraft Maintenance (Gamco) was unclear last week following the decision of major customer Gulf Air to pull its business out and form an MRO joint venture with SR Technics.

The Bahrain-based airline has signed a memorandum of understanding with SR Technics for a contract worth $750 million over the next five years covering the airline’s entire fleet, and the establishment of a new $50 million heavy maintenance facility in Oman in which Gulf Air will hold a 10% stake. The deal will see Gulf Air transfer the MRO work for its 34-strong fleet from Gamco – in which it holds a 40% stake – to SR Technics.

Gulf Air JV SR Technics W445
© Airteam images

Gulf Air is setting up a joint venture with SR Technics

SR Technics says it will take over the technical management of Gulf Air’s maintenance in May, which will see the transfer of record-keeping from Abu Dhabi-based Gamco. The Oman maintenance centre is scheduled to open early next year with the three-bay facility providing “maintenance solutions, technical training, logistics, on-wing and light engine services for Gulf Air and third-party customers”. It will have heavy maintenance capability and employ 850 people by the end of its fifth year of operation.

The arrangements for heavy maintenance work are yet to be finalised and there is speculation that some work could be retained by Gamco in the short term under subcontract. Although the company, which employs 2,000 people, is gaining an increasing amount of business from the new Abu Dhabi flag carrier Etihad Airways and has some third-party work, Gulf Air is by far its largest customer.

Gulf Air, which operates 10 Airbus A320s, six A330s, nine A340s and nine Boeing 767-300s, was a founder member of Gamco, along with the airline’s then 25% shareholder, the Abu Dhabi government. However, the latter has recently divested its interest in the carrier as it focuses on developing Etihad Airways, which it set up in 2003. Talks between the two carriers over the sale of Gulf Air’s Gamco stake have been ongoing, and Gulf Air says the board has still to decide on its course of action.

Gulf Air chief executive James Hogan says that with the withdrawal of Abu Dhabi from its ownership and the resultant dropping of its hub in the emirate “it is no longer commercially or operationally viable to continue our maintenance services out of Abu Dhabi”.

SR Technics becomes the first European MRO to establish an airline maintenance tie-up in the region. Gulf Air says the MoU is expected to result in cost savings of about $190 million over the five-year period.


Source: Flight International