TAT Group has come a long way from its days as one of France's biggest regional airlines to Europe's second-largest independent maintenance, repair and overhaul (MRO) business. Since abandoning the airline market in the mid-1990s when it sold out to British Airways, the former Touraine Air Transport has turned a small legacy engineering operation into a €315 million ($420 million)-turnover concern after the 2000 acquisition of French rival AOM and, five years later, the former MRO unit of defunct Belgian flag carrier Sabena.

Since rebranding its MRO operation as Sabena Technics earlier this year, the company has now taken on its biggest challenge: turning around the ailing former EADS Sogerma maintenance business at Bordeaux's Merignac airport, which the Franco-German group threatened to close earlier this year with the loss of around 850 jobs after years of failing to make any money. The decision provoked a political furore, with French prime minister Dominque de Villepin urging the company to reconsider. So it was with some relief that TAT emerged as a buyer in July, with a promise to retain around 500 jobs.

In a complicated deal, finalised last week, TAT and EADS will set up a joint venture at Merignac, 60% owned by EADS and 40% by TAT, called Sogerma Services. But from early 2007, TAT will become the sole shareholder and - "after being put back to competitiveness" - will be rebranded Sabena Technics, says Sabena Technics chief executive Christophe Bernardini. Merignac will become one of three main sites in the Sabena Technics network, the others being the original Sabena base in Brussels, which employs 1,100, and the former TAT operations in Dinard, northern France, where 650 work, and Nimes in the south of France, employing 400. There are smaller sites in Marseilles, Paris and French Polynesia. The acquisition also includes a US business, component maintenance specialist Barfield in Miami.

Bernardini expects the slimmed-down Merignac operation to add around €80 million to Sabena Technics' €315 million revenues in 2007, with Barfield generating a further €45 million. Making it profitable will be the difficult bit. According to Philippe Rochet, the new managing director of the Merignac plant, the turnaround strategy will include having a "small overhead management team" and "being very aggressive about our cost of production and bringing in new business". Key resources such as a design office employing 40 engineers, with the capability of "designing to STC [supplemental type certificate] and big modifications", will also be better used. He says "everyone at Bordeaux is very aware of the situation and is ready to make a big effort".

That effort will include increasing military revenues, which currently make up around 30% of Merignac's business - the loss of a six-year contract to maintain the French air force's Lockheed Martin C-130 transports to Portugal's Ogma in 2002 was a bodyblow for Sogerma. Bernadini says increasing outsourcing of MRO work on non-combat aircraft by European defence ministries is creating "very good opportunities", adding: "We have the know-how in this market and can offer a very good price." For the rest of Sabena Technics, the civil/defence mix is about 60/40. Bernadini says the company's expertise in the narrowbody and regional market, especially on Boeing types, provides a chance to bring in more airline business too. "It's a competitive market, but there are more of these aircraft coming on the market all the time," he says.

TAT also owns a leasing and asset management business, based in France and Shannon, Ireland and turning over around €60 million. Its fleet essentially comprises 60 Fokker 100s and ATR 42s and 72s formerly operated by the airline. But it has been the growth of the MRO business that has vaulted Sabena Technics to become the second biggest non-airline-aligned maintenance house in Europe after Switzerland's SR Technics.

The Merignac MRO operation represented about half of EADS Sogerma's business, and its sale could help the outfit battle its way back to profit after losing €237 million in 2005. EADS Sogerma is left with two units: an aerostructures business that assembles wings for ATR aircraft at Merignac and doors and panels for Airbus aircraft at Rochefort and a cabin interior division in Rochefort, which manufactures Airbus cockpit seats, as well as first- and business-class cabin seating. Around 700 are employed at Rochefort and 100 at Merignac.

TAT Group

Source: Flight International