FLUG REVUE October 2005: Lufthansa Technik is a global player

October 2005

VIP interview

AUGUST WILHELM HENNINGSEN

Chairman of Lufthansa Technik AG

Reliability is not something that comes by chance. The workforce of the aircraft maintenance organisation with the long-established name knows this. But the customer's trust has to be earned anew on a daily basis.

FLUG REVUE: 50 years of Lufthansa also means 50 years of Lufthansa Technik and, furthermore, ten years since it was launched on the market as an independent company. How would you assess the present position of your company in the world market?

August W. Henningsen: We are one of the biggest providers of aircraft-related technical services in the world. On top of that, we are one of the few companies that are in a position to provide support services for all the Boeing and Airbus models and all the associated engines and systems, along with their components. In the past ten years the market has become bigger and more volatile. The industry is undergoing heavy reorganisation because many new airlines are being established that do not have their own maintenance operations and are outsourcing to MRO providers like Lufthansa Technik. Other airlines are separating themselves in part or in total from their engineering operations because they do not want to or are not in a position to invest in the technology of the new aircraft.

FLUG REVUE: So does this mean a big opportunity for Lufthansa Technik?

Henningsen: Of course, and we are successfully taking advantage of this opportunity, which has enabled us to grow strongly over the last ten years. Of course we are not alone in what is now a global business subject to tough competition. New competitors on the market, especially from Asia, can in some cases be a lot more aggressive with their prices because their costs are lower. Maintenance organisations are undergoing a transformation away from being relatively small workshops towards being industrial conglomerates. At the same time, the aircraft and their components have been getting more and more complex over the years, yet also more and more reliable, so that the maintenance intervals are extending. This means that one has to win support contracts for a much larger number of aircraft to maintain adequate utilisation of the shops. Here, the fact that the global fleet is growing naturally helps.

FLUG REVUE: Isn't a lot of this reliability down to the maintenance organisations?

Henningsen: Every manufacturer knows the strengths of its products, whereas we who maintain them know their weaknesses. Lufthansa has often enough been the launch customer for new civil aircraft types, and so our decades of experience at maintaining predecessor models have flown into the specifications of the successors. As a result of this close interaction, air transport has become ever safer and more reliable.

FLUG REVUE: As a global MRO provider that covers every aircraft type, you have to be in a position to provide spare parts at any airport in the world 24 hours a day. How do you manage this?

Henningsen: One of the major factors here is that we run a highly efficient logistics operation of our own which employs about 700 staff around the world. It may be worthwhile maintaining a certain stock of components on site, but we do not have dead capital tied up in every airport of the world. Through our global network we can respond immediately online and, if necessary, transport spare parts to any airport in the world within 24 hours. Naturally Lufthansa's huge route network and our Frankfurt base, from where the parts needed are sent all over the world in the aircraft cargo bays, are a great help.

FLUG REVUE: You have also been trying for some time to establish a foothold in the hitherto isolated US market. How do you assess the present situation in this area?

Henningsen: In fact, the US market was occupied in the past by the big airlines and their associated engineering operations. But the situation has changed enormously in recent years. The foundation of numerous low-cost carriers, the aftermath of 9/11 and, more recently, the hike in fuel prices have led to greater competitive pressure between the airlines, which are outsourcing more as a result than in the past. We are very active there and we have already concluded our first contracts for the supply of components for entire fleets. On this basis, we are optimistic that we can grow strongly in this market.

FLUG REVUE: The cost pressure in the industry is frequently cited. Where does the pain threshold actually lie, since after all you want to make money?

Henningsen: The first and foremost consideration is aircraft safety, there's no doubt about that. For this reason, nearly all the work is carried out in Lufthansa Technik workshops. In the 10-year growth history of our company, we have set up operations elsewhere in Europe and also in the USA and Asia. These operations that we maintain, for example, at Lufthansa Technik Malta, Budapest or Philippines naturally help us to produce at lower cost. At the same time we have been working incessantly for 50 years on achieving the highest possible reliability and quality. With high-tech repair methods and complete engineering packages we are able to save our customers several millions a year, even if at first glance many costs appear to be high. For airlines with a long-term orientation this “made in Germany” quality is a competitive advantage that we will continue to emphasise with our partners and subsidiaries in the future. Even if price were to become the most important criterion, we do not make any compromises over quality.

FLUG REVUE: How are you preparing for the advent of the A380?

Henningsen: We are partnering with Rolls-Royce on the engine support side, while we are also joining forces with Air France to offer a global component supply service. Together with Airbus we have begun training our mechanics. When the A380 lands in Germany for the first time, initially it will be looked after by our line maintenance staff. By that time, our colleagues will be super fit.

Matthias Gründer was asking the questions

From page 19 of FLUG REVUE 10/2005

Last updated 14 September 2005

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