Philippine Airlines and Lufthansa Technik Renew Contract for Total Component Maintenance

Philippine Airlines and Lufthansa Technik AG have signed a five-year Total Component Maintenance (TCM) contract for the Airline’s Airbus A320 and A340 Fleet. The services will be extended end of 2016 to support additional Airbus 320s operated by Philippine Airlines.

Lufthansa Technik will support Philippine Airlines at its main base in Manila, the Component Service offices in Manila and Shenzhen will coordinate the customer support. Maintenance, repair and overhaul services will be carried out at Lufthansa Technik’s component Centres in Hamburg, Germany and Shenzhen, China.

“We were pleased with Lufthansa Technik’s ability to customize its services to the individual needs of Philippine Airlines and ensuring 24/7 worldwide AOG services at locations such as JFK which are vital for our Flight operations,” said William Tan, Vice President of Purchasing, Philippine Airlines.

Jens Behrend, Sales Executive from Lufthansa Technik, said: “I want to thank Philippine Airlines for the trust they continuously place in the Lufthansa Technik Group. The signing of these contracts is a great success for us in this highly competitive market.”

Lufthansa Technik is committed to extend its partnership with Philippine Airlines and to support other Aircraft types in the future.

Hangar Expansion Construction Underway for Lufthansa Technik Philippines

Bauarbeiten der Lufthansa Technik Phillipines in Manila. - © © Lufthansa Technik -

Manila, Philippines, 23 July 2015 – Lufthansa Technik Philippines’ (LTP) hangar expansion is on track, six months after the Manila-based aircraft maintenance, repair, and overhaul (MRO) provider broke ground in January to extend its main hangar.

“With the rising opportunities presented by regional growth, we have been building up our capabilities. This hangar expansion project is the latest in our continued efforts to meet different aircraft requirements and stay competitive in the market,” says Dr. Burkhard Andrich, President and CEO of Lufthansa Technik Philippines.

The construction expands two existing bays equipped with versatile docking systems that can accommodate current widebodies and newer models for the Airbus A350, Boeing 777-9X, and 787. This will also be LTP’s second line for A380 base maintenance and its entry into Boeing 777 base maintenance. The development is expected to expand the company’s yearly capacity by 200,000 manhours.

Construction is on schedule at LTP’s facility by the Ninoy Aquino International Airport runway, with the foundation laid before the start of the rainy season. It is now in the process of erecting the extension’s refabricated steel structures, while construction and logistics for new and relocated offices, docking systems, linking bridges and mezzanines are concurrently taking shape. The facility’s MRO operations remain unhampered, owing to early preparation and smart planning. Furthermore, tooling and equipment have already started to be delivered for the facility’s new state of the art centralized toolroom.

In preparation for LTP’s new Boeing 777 base maintenance capability and increased A380 capacity, extensive training for its highly qualified production staff is ongoing, in partnership with Lufthansa Technical Training Philippines.

LTP’s hangar extension will be inaugurated this November, as it welcomes an Airbus A380 layover at the beginning of the month. The company’s Boeing 777 base maintenance capability will be available in the first half of 2016.


Philippine Aerospace Industry Expected To Earn US 1Billion

The Philippine aerospace industry expects to generate $1 billion in revenues this year, up by 25 percent from $800 million in 2014.

“All projections depend on the assemblers whether they assemble more planes. There are three million parts and we’re building some of them. If everything will grow as expected, then we’ll also grow,” Aerospace Industries Association of the Philippines president John Lee said in an interview.

He said the forecast revenue would be on top of the contribution of another group in the maintenance, repair and operations sector in the Philippines.

“But there is a newly formed MRO group. These companies are really big and we expect that their revenues will be big as well, bigger than tier 2 manufacturers like us,” he said.

The Philippines has three of the world’s largest MRO providers, including Lufthansa Technik Philippines, Singapore Engineering Philippines and Hong Kong’s Metrojet Engineering.

Lufthansa Technik is a joint venture between Philippine Airlines’s affiliate MacroAsia Corp. and Lufthansa group of Germany while Singapore Engineering in Clark International Airport caters to wide-bodied aircraft.

Metrojet is the second MRO locator in Clark, occupying three hectares in the former US military base.

Lee said earlier the Philippine aerospace industry aimed to be the region’s hub for aircraft interior market.

He said the industry was counting on government support to help foreign aerospace companies to set up operations in the Philippines.

Lee said opportunities would be bigger, when going into the original equipment manufacturing and assembly as American and European assemblers had over ten years of backlog in aircraft production.

Asia is currently the biggest buyer of aircraft, accounting for 37 percent of the global market and the Philippines would like to capitalize on this, according to the group.

Source: Othel V. Campos,

Lufthansa Technik To Maintain Philippine Airlines Fleet

MANILA – The country’s flag carrier has tapped Lufthansa Technik Philippines Inc. (LTP) for the maintenance of its Airbus aircraft.

In a statement, Lucio Tan-led Philippine Airlines (PAL) awarded its two-year base maintenance service for its Airbus fleet to LTP.

LTP will handle all heavy maintenance visits for the A320s, A321s, A330s and A340s for calendar years 2015 and 2016. PAL didn’t disclose the value of the maintenance services contract. LTP is also the line maintenance service provider for PAL’s Boeing and Airbus aircraft.

At present, PAL has 73 aircraft, including six Airbus 330-300, six Boeing 777-300ER, 15 Airbus 321s, and several Airbus 320s.

Earlier, PAL president Jaime J. Bautista said it “agreed in principle” with Airbus to delay the delivery of aircraft orders up to 2024. PAL had sought delivery by 2020.

“This year, we should take delivery of 10 Airbus A321s, but we are working on a delivery of only five. So, the other 5 will be delivered sometime in 2020,” he said.

Of the five A321s, two would be delivered in March, another two in April and one in June.

The remaining 33 aircraft ordered from Airbus are scheduled for delivery until 2024.

From July to September last year, PAL Holdings Inc posted a comprehensive loss of P192.3 million, down by 82.5 percent from P1.09 billion in the same three months of the previous year. Revenue amounted to P25.03 billion, up by 38.9 percent from P18.02 billion previously.

Source: Darwin G. Amojelar,

LTP Hangar, Manila, Philippines

Lufthansa Technik Philippines
Image Source: Adrian Thompson,

“Does Philippine Airlines have too many planes with so many wide bodies sitting around the maintenance area at the one time? I’m certainly not complaining. I can count 4 A333, 3 A343, 2 B773, 1 B744 & 2 A320. I don’t think I noticed the Air France A380 at the time I took the photo. It’s actually a quiet time around midday; most of these wide bodies will be in the air again by evening time. Shot from Cebu Pacific A320 RP-C3243 flight 5J553 on a runway 13 climb out with destination Cebu.”

Asia-Pacific LCCs Prep For Bigger MRO Needs

Source:  Elyse Moody, Aviation Week & Space Technology


Skyrocketing numbers of narrowbody aircraft orders have turned attention to Southeast Asia—and its burgeoning low-cost carriers (LCC), in particular. Twenty-seven percent of the world’s narrowbody aircraft—half the global fleet—are operated in the Asia-Pacific region, estimated Lufthansa Technik Philippines in the first quarter of fiscal 2013. More than 37% of the total commercial fleet will soon be based there, many of them in service with low-cost carriers (LCC), it also projects.

Such statistics and the aircraft orders supporting them have brought these LCCs prominence on the global stage. The Wall Street Journal noted in late August that Indonesia’s Lion Air was “little known internationally until it surprised the industry last year with record-setting orders.” The airline signed commitments for 230 Boeing 737s in February 2012 and for 234 Airbus A320s in March 2013. But Lion Air is hardly the only carrier in the region making notable additions: AirAsia, the world’s largest operator of A320s, ordered 100 more in December 2012, on top of the 200 it secured in 2011. And Jetstar Airways, part of the Qantas Group, will have access to its parent company’s order for 110 A320s, including 78 A320neos, in addition to the 14 Boeing 787s it expects to receive soon.

Beyond these carriers, Cebu Pacific Air has more than 50 A320-family aircraft on order and TigerAir has signed for 20 A320s.

This run on the order books reflects projected growth in air travel. The Asia-Pacific region stands to see that demand grow 6.4% annually through 2031, according to Bloomberg News projections. Lion Air CEO Rusdi Kirana says in Indonesia specifically he expects a 20% growth in traffic this year.

Those increases in demand and aircraft numbers mean airlines and independent MRO providers alike must figure out how to absorb them. Where will all those aircraft go? As deliveries roll out, maintenance organizations must propose attractive solutions.

As a Singapore Airlines Engineering Co. (Siaec) spokesperson puts it, “The positive outlook for air-traffic demand, especially in the Asia-Pacific region, where the LCC market will continue to grow and fuel the traffic growth, and its buoyant fleet-renewal market, has the attention of most MROs in the region.” In other words, a big new fleet is ripe for the capturing.


In the past, total outsourcing was the default mode of doing business for Asia-Pacific’s LCCs, especially smaller airlines, but some say that model is being replaced.

“The market has shifted,” says Brian Hogan, a principal with XSQ Consulting who worked at Philippines-based Cebu Pacific when it established its first joint venture, Aviation Partnership (Philippines) Corp. for line maintenance, with Siaec. “All these organizations should do their own line maintenance themselves and then make a decision on the C checks or the heavy checks, depending on their critical mass, or whether or not they can make an MRO profitable.”

Sticking to the essential core-business approach, some carriers continue to send all of their maintenance to third-party providers. TigerAir, for example, outsources both its line and base maintenance, says Chief Operating Officer Ho Yuen Sang—and he does not anticipate adding in-house capabilities. “Our MRO provider has the capability and capacity to undertake the additional maintenance work for the growing fleet.”

But Ho notes that the increased numbers of aircraft operated by TigerAir and its peers certainly will have an impact on the region’s MROs. “[The] higher volume of work could translate to higher productivity and lower unit cost of maintenance,” he says. This would benefit airlines like his that depend on the total-outsourcing strategy.

Cebu Pacific continues the joint-venture approach that Hogan helped establish. The airline added a second joint venture with Siaec, a base maintenance facility at Clark International Airport in the Philippines, although Cebu Pacific also has partnered with Vaeco in Vietnam for its ATR aircraft; with Haeco in Hong Kong for its A330s; and with General Electric, Rolls-Royce and SR Technics for engine maintenance.

The joint-venture arrangement continues to make sense for the airline, says Chief Executive Adviser Gary Kingshott, because “the scale of Cebu Pacific’s maintenance profile requires a large proportion of an MRO’s total capacity, and so a joint-venture arrangement with an accredited organization willing to invest remains a viable strategy for Cebu Pacific.”

The region’s largest LCCs, AirAsia and Jetstar Asia, tackle line maintenance in-house or through shareholding partners. AirAsia has received 127 of the 211 A320s and 264 A320neos it has on order and it has grown accustomed to adding a minimum of 24 new aircraft annually. Performing its own line maintenance is a matter of reputation as well as economy of scale.

“Wherever we go, wherever our new [air operator’s certificates]—AirAsia India or AirAsia Malaysia, Thailand, Indonesia—we have our own team carry out all of the line maintenance requirements,” says group engineering head Anaz Ahmad Tajuddin. “We would rather have that in-house. Then we have full control, because the AirAsia brand is important to us. We need to have full control of the brand, especially in line maintenance, where daily activities more or less interface with the customers.”

AirAsia sends the bulk of its base maintenance work to a neighbor, Sepang Aircraft Engineering (SAE), a company part-owned by EADS, but it also patronizes Siaec, Garuda Indonesia and Thai Airways, Tajuddin says.

More than 85% of the carrier’s A320s go to SAE for base maintenance, and SAE plans to nearly double its workforce and add new hangars, including ones for A330 maintenance, this year in hopes of drawing more business from its biggest partner.

But Tajuddin emphasizes that flexibility remains vital; he looks for agreements of only 2-3 years. “When you have long-term [contracts], you do not have the ability to go out to the market, especially in the airframe business,” in which he says maintenance unit costs may be volatile when man-hours drop.

When asked if AirAsia might consider adding capabilities beyond line maintenance via a partnership or an independent investment, Tajuddin says, “We are actively looking, because our base load with the number of aircraft sometimes justifies our having our own maintenance infrastructure.”

Given that AirAsia took delivery of its first aircraft in 2005, landing gear overhauls will soon start to come due in volume. “We have asked ourselves, ‘Should we invest in a landing gear shop?’” he says. “We do not have any firm idea yet, but we are actively looking.” He notes that he would rather pair up with an independent provider than an airline-affiliated MRO to ensure his fleet has priority.

Jetstar Airways applies a common approved maintenance program across its two main branches, in Australia and New Zealand, as well as its low-cost offshoots in Singapore, Vietnam and Japan. A new affiliate is anticipated to kick off operations soon in Hong Kong, subject to regulatory approval.

In launching Jetstar Japan, which started receiving A320s in April 2012, the group has stuck to that common maintenance philosophy. “Where appropriate, we develop amendments to satisfy local national airworthiness authority regulatory requirements,” says Chris Snook, Jetstar executive manager for group engineering. “This allows for common fleet technical management and configuration control across the fleet. It also maximizes our opportunities to apply insights gained from across the organization to improve safety, reliability and direct maintenance costs.”

But, like AirAsia, Jetstar considers line-maintenance control particularly important. Jetstar Japan performs its own line maintenance in partnership with Japan Airlines Engineering Co.; along with Mitsubishi Corp. and Century Tokyo Leasing Corp. JAL Engineering conducts A checks for Jetstar Japan at Narita International Airport.

The Hong Kong business will be a joint venture between China Eastern Airlines, Shun Tak Holdings and the Qantas Group. Snook says line maintenance for it will be conducted by its MRO partner in Hong Kong. “Heavy maintenance requirements will be combined with other group activity to leverage economies of scale,” he says.

For their part, the region’s independent MROs are making plays to accommodate the new work volume, too. The joint venture with Cebu Pacific is only one of 25 that Siaec operates in nine countries, with the aim of offering better cost efficiencies to low-cost carriers, says a Siaec spokesperson. And Lufthansa Technik Philippines recently underwent an organizational restructuring with the aim of capturing more of the Airbus base maintenance work in which it specializes.

Space Jam

Tons of new aircraft and no place to put them? MROs and airlines have been adding maintenance capacity to house new deliveries as work comes due. Perhaps the biggest news is Lion Air’s late-August announcement of its intention to build a $250 million maintenance hub on the Indonesian island of Batam, angled to rival the established MRO hotbed of Singapore. Lion Air CEO Rusdi Kirana has designs for his own airline’s Lion Technics MRO arm to handle internal needs as well as those of other carriers only a 45-min. ferry ride from Singapore’s busy Changi International Airport (see page MRO14).

The campus reportedly will consist of four hangars, each able to accommodate three narrowbody aircraft at once. Two hangars are set for completion by year-end and the remaining two will follow by next summer. The site would complement a smaller one it is building in Manado, Indonesia, as well as its existing facilities at Surabaya.

Partners Cebu Pacific and Siaec are completing a long-planned second hangar at their maintenance campus at the former Clark AFB in the Philippines, which will be able to house aircraft as large as the Boeing 777. And while maintenance activity in Australia tends to be cost-prohibitive, Jetstar is leasing a widebody hangar at Melbourne Airport to undertake Boeing 787 and A320/A321 line maintenance, including A checks and triage, Snook says. About 35 technical and support staff initially will be employed there, he adds.

But new investments seem likely. “It’s not going to be easy for the market to absorb a thousand planes in the next 10 years,” says XSQ Consulting’s Hogan. He points to the possibility of new hangars being built by either independent investors or joint ventures in underdeveloped regions such as Malaysia, the Philippines and Indonesia—or even Myanmar, Bangladesh and Vietnam. He notes that this growth will be extended once China opens up further.

Snook concurs that these countries are “all establishing credible MRO options.”

As Hogan puts it, “it’s a huge problem, but it’s a huge opportunity.”