Swissair's former maintenance arm has transformed itself from in-house business to the world's biggest independent MRO
In the six years since Swissair's demise, the airline's former technical arm SR Technics has been through a management buyout andconsolidation of the European maintenance, repair and overhaul sector, been bought by an Arabian consortium, and established itself as a global player, with partnerships and ventures in the Middle East and Asia.
While SR Technics' centre of gravity remains its 330,000m2, four-hangar facility at Zurich airport, the SFr1.7 billion ($1.66 billion)-turnover MRO house - acquired in 2006 by a consortium including Abu Dhabi investment arm Mubadala and Dubai Aerospace Enterprise - is today an internationally-based concern. It has facilities at Dublin in Ireland and Stansted in the UK, which came with its 2004 acquisition of FLS Aerospace, as well as satellite operations in Bahrain, Cork, London Luton, Palma de Mallorca and Shanghai. The FLS acquisition saw it claim the title of largest "independent" (non-airline owned) MRO in the world, with around 5,300 employees.
With new chief executive Bernd Kessler - formerly with Honeywell and MTU - not giving interviews during his first 100 days, it remains to be seen how a new "strategic alliance" with Mubadala, announced at November's Dubai air show, will increase SR Technics' presence in the Middle East. The company already runs a line maintenance operation for Gulf Air in Bahrain, and Mubadala has said SR Technics will subcontract component repair work to Mubadala's Abu Dhabi-based MRO house ADAT (the former GAMCO), in which Mubadala plans to invest $500 million over the next five years.
At the time of Swissair's collapse, SR Technics was a fairly typical in-house MRO. Although spun-off as an independent business in the late 1990s, half its revenues came from its parent airline. Nowadays, Swissair's successor Swiss - from which SR Technics split in a management buyout in 2002 - is still its largest customer, but with a 15% share. The FLS acquisition brought in EasyJet in the UK (9%) and Aer Lingus (6%). Gulf Air makes up another 6% and Austrian Airlines, Cathay Pacific and Thai Airways are all significant customers. However, 53% of SR Technics' business comes from around 500 other airlines, all of which individually represent less than 2% of turnover.
Customer base
Although the company's customer base is still skewed towards Europe - with 71% of revenues coming from the region - airlines from Asia-Pacific, the Middle East and Africa make up almost a quarter of its business. Only 6% of its turnover comes from the Americas, but any transatlantic foray to boost that share seems unlikely, given the mature and highly-competitive airline MRO market in North America and the small and locally-catered for industry in Latin America. However, recent major acquisitions by both DAE and SR Technics' compatriot Jet Aviation in the business aviation MRO sector shows the North American market has not been written off by ambitious overseas suitors.
SR Technics says the past two years have seen "the completion of our transition from a traditional MRO to a global total services provider", offering "integrated solutions" in three business units: aircraft maintenance and modifications, component repair and engine overhaul. Each represents about third of SR Technics' revenues. The company will expand further into "key growth regions" including Asia Pacific and the Middle East, while continuing to grow European market share.
That has not always been easy. SR Technics' Dublin operation was dealt a blow earlier last month when Aer Lingus said it will pull out all but its line maintenance work later this year. The Irish flag carrier makes up about 40% of Dublin's business and only about half that is expected to remain. As well as its standard line maintenance bays, the facility - which began life as Aer Lingus's in-house maintenance facility - specialises in auxillary power units and landing gear overhaul. SR Technics has yet to say how the decision will affect the 1,300-strong workforce, although media reports have said around 200 jobs could be at risk.
SR Technics' bosses may view Aer Lingus's move as a blip in an ongoing growth curve for a company which - like many Swiss companies - includes a version of the famous white cross in its company logo, but sees itself very much as a global player that happens to have its headquarters in Zurich.
Source: Flight International
