MAINTENANCE AND overhaul companies in North and South America are benefiting from the return to profitability of the region's airlines. While cost-cutting measures such as outsourcing main- tenance have slipped down the airlines' priority lists as profits have soared, overhaul companies say that business has improved since the recession's end.

One reason given is that the airlines' yields have not improved dramatically, despite the steeply rising profits, and so there is still pressure on costs. Another is that the airlines' own maintenance shops are reaching capacity as they expand their fleets with new aircraft while still holding on to their older aircraft. A result is that manpower rates for airliner maintenance are beginning to rise, having slumped in some cases during the recession to well below the cost of doing the work.

The May 1996 fatal crash of a ValuJet Airlines McDonnell Douglas DC-9 focused the world's attention on the outsourcing of maintenance - or, more correctly, on the supervision of outside contractors. US overhaul companies report that both they and their airline customers have become more vigilant since the crash, while the Federal Aviation Administration has increased its surveillance of maintenance contractors.

Consolidation of the US industry has removed some familiar names from this year's directory. Aviall has completed its restructuring into a parts-distribution specialist with the sale of its airliner and business-aircraft engine-overhaul operations to Greenwich Air Services and Dallas Airmotive, respectively. Chrysler Technologies Airborne Systems has become part of Raytheon E-Systems' maintenance and modification business. Israel Aircraft Industries' Commodore Aviation unit, meanwhile, is poised to take over Sabreliner's Sabretech Miami unit, implicated in the ValuJet accident.

In South America, the privatisation of state-run airlines is likely to lead to expansion and increased competition in air transport, which should mean improved business for the region's overhaul operations - if they can stem the flow of maintenance work to the USA. Local maintenance centres also face the task of upgrading their capabilities to handle the newer aircraft types starting to arrive in the region as South American airlines show signs of embarking on the long-anticipated fleet re-equipment.

Source: Flight International