SR Technics of Switzerland is talking to Thai Airways International about creating an aircraft maintenance joint venture, and hopes to wrap up a deal by the end of the year.

This would be a major step towards globalising SAirGroup's overhaul business, following similar moves by its rivals, including Lufthansa Technik.

SR Technics chief executive Hans Ulrich Beyeler says the company is "very active" in discussions with potential partners worldwide. Sources close to the company confirm that Thai is its main target in Asia.

The pair are linked through the Swiss company's maintenance of Thai Pratt & Whitney PW4000 engines and Boeing MD-11s, although the deal could be complicated by the Asian carrier's impending partial privatisation and by issues surrounding management control of the joint venture.

Beyeler is keen to establish a presence in Asia before the next Western downturn because of the region's low labour rates. He says that in a recession, customers are prepared to accept longer downtimes if prices are competitive. Alliances are also being sought in North and South America.

• Cathay/Swire Pacific-owned maintenance company Hong Kong Aircraft Engineering has reported a 55% drop in net profits to HK$145.6 million ($18.8 million) for 1998. It blames higher operating costs and lower margins arising from its move to Hong Kong's new airport.

Source: Flight International