TWO MAJOR North American maintenance and modification companies have been put up for sale in what could be the first signs of a consolidation in the aircraft-overhaul industry. At the same time Boeing is to taking a stake in the TAECO freighter conversion venture in China, as part of its increasingly aggressive expansion into service businesses.

US group Primark has started the disposals by putting its TIMCO maintenance operation on the market. Primark says that it is already talking to several potential buyers about the sale of the unit, which maintains a broad range of airliners from its base in Greensboro, North Carolina.

The group has been keen to sell TIMCO in order to focus on its information business, but had first to resolve "problems associated" with a major McDonnell Douglas DC-10 overhaul contract. "We are now able to move aggressively to find a suitable buyer," it says.

Canada's CAE has also announced plans to sell its CAE Aviation unit, which specialises in servicing and upgrading Lockheed Martin C-130 transports. Head-quartered in Edmonton, Alberta, CAE Aviation has operations across Canada and a joint venture in Islamabad, Pakistan.

CAE says it is selling the unit to focus on advanced-technology businesses, such as simulation. Although it is profitable, CAE says that the unit no longer fits the "longer term direction" of the group. The Canadian Forces remain the major customers, but the unit has expanded recently, into international and commercial-aircraft maintenance. Earlier this year, it purchased a hangar in Calgary to provide maintenance for airlines such as FedEx and Westjet.

Bombardier is expected to bid for CAE Aviation, to bolster both its defence and services businesses. Other likely Canadian candidates for the purchase are CHC Helicopter and Magellan Aerospace, which recently purchased Bristol Aerospace from Rolls-Royce Canada to add to its list of acquisitions. Lockheed Martin, which already operates a maintenance base in Greenville South Carolina, has also signalled its intent to expand its aircraft-maintenance business, to capture a larger share of the market to overhaul its own products, and could be interested in either or both companies.

Boeing, meanwhile, has moved to expand its presence in China, taking a 9.1% share in the Xiamen-based TAEC Oventure in exchange for a $11 million investment. The agreement is aimed largely at increasing capacity for 747 conversions. The unit has an annual capacity of converting up to three 747s from passenger configuration to special freighters.

Boeing's action to strengthen its presence in the heavy maintenance market has been widely anticipated as part of a wider drive to diversify into non-core areas. It follows the setting up of a pilot training operation with FlightSafety International and the establishment of Boeing Business Jets, masterminded by Boeing Enterprises.

General Electric has already attracted attention with its consolidation of the engine overhaul market with a string of international acquisitions and some impressive profit margins. It is due to complete the major acquisition of Greenwich Air Services later this year, which brings with it annual sales of nearly $1.8 billion, following Greenwich's acquisition of UNC, which won competition approval in mid-August. GE aims to have $3 billion of sales from engine overhaul alone by 2000.

Source: Flight International