Lufthansa Technik Diversifies to Dominate MRO Sector

By Andrew Drwiega

Hamburg, Germany: At the annual press conference today, Dr Johannes Bussman, CEO and chairman of the executive board at Lufthansa Technik said that his company intended to continue its growth through its policy of internationalization witnessed by the increase in revenue from non-group companies. Bussman justified his claim that Lufthansa Technik was the global market leader in terms of market share stating: “we have around  eight percent in total:  13 percent in Europe, five percent in Asia, and four percent in the USA.

Sales revenues increased in 2016 to €5.14 billion from €5.09 billion despite a decline in revenue within the Lufthansa group from €1.8 billion in 2015 to €1.6 billion last year (a 12 percent drop), which Bussman said was the result of the completion of the Lufthansa wide-body fleet modernisation. However external revenues increased during the same period from €3.3 billion to €3.5 billion. “We consider this to be a very good result,” stated Bussman.

Revenue in the American market grew 14 percent to €900 million and in Asia revenue grew to €600 million, a 23 percent increase.

“A decline in sales with Lufthansa was compensated by growth with other customers,” said Bussman. Below average growth in Europe was also more than balanced by an increase in regional growth in Asia, where a new aircraft overhaul facility in Manila, Philippines, will serve many countries from around the region.  The expansion of the global logistics network with warehouses in London, Hong Kong, the USA, Dusseldorf and Munich were also complimented by new component companies in Asia and the Middle East.

Bussman said that the closure of the last remaining commercial overhaul line in Hamburg would result in the loss of 300 jobs, although most would find employment within the group or be offered early redundancy. “There are overcapacities in the European market and we could not find an economically viable solution,” said Bussman.

One of the challenges to internationalisation was the requirement to be close to customers to save them time and money, Bussman said.  He  pointed to recent strategic partnerships agreed with companies that include: CFM (Leap), GE XEOS, Pratt & Whitney (GTF), MTU Aero (GTF) and Rolls Royce (XWB). Regarding future planned takeovers or partnerships Bussman stated: “We have the economic clout to invest in new technologies.” When asked to explain more he said that there would always be  an opportunity for further development: “We already have a critical mass with 4,000 aircraft being supported. But as others move into new technologies, some cannot cope financially and technically.”

And what of the future? “Data will determine the future of our business to a large extent. Not just the task of its collection, but the need to sort and analyseit then translate it into workable MRO programmes. At the end it needs to translate into more flying hours.” To that end  Lufthansa Technik is founding a brand new division, Digital Fleet Solutions, to investigate and deliver solutions on the best use of digital data.



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