Neil Russell, chief operating officer at Aero Norway, discusses the engine MRO acquiring more engine models and seeing opportunities in the cargo segment during the novel coronavirus pandemic.
How has Aero Norway adjusted its day-to-day operations in the face of the novel coronavirus?
We follow all Norwegian regulations with regards to the COVID-19 virus. In mid-March it was very challenging as the government was introducing new regulations daily, however this eventually became more stable. We do much more video conferencing than we used to do and recently did our first remote table inspection with a customer—which was successful. We have reduced the number of engine slots we have every month, which means that we have time to make improvements to our operations. At the same time, we have kept all of our people and can flex back to full capacity when required.
Earlier this month, Aero Norway announced it had invested in five CFM56-3 engines. Why did it decide to buy these additional engines?
As airlines were parking their aircraft in March, we could see it would have an effect on the CFM56-5/-7 market; at the same time, we could see cargo customers were increasing the utilization of their aircraft and using up cycles quicker. We bought the engines to fill gaps in production that we couldn’t fill with a customer engine, and we would expect customers with Boeing 737 classic freighter aircraft to purchase the engines. We run the Aero Norway refurbish and sell program to support customer pre-ordering of engines, so these are mainly built to order. The extra five that were recently acquired mean that we will now have engines available as required.
How has the engine repair segment for cargo aircraft surged in the past few months?
Quite dramatically. Most of our freighter customers for -3s have required a shop visit in March-May and more are planned. We still hope to get some of our committed -5/-7 engines on top of these and have capacity to do so when they arrive. We have -7 engines planned to come in soon and hopefully some more through June to the rest of the year.
Which cargo customers are sending their engines to your shops?
We have operators and lessors from all over the world sending engines to us; from the U.S., Europe and China. The Aero Norway facility in Stavanger has a long history of -3 overhauls. It is known worldwide for the quality of engine MRO we deliver and we provide best in class EGT margin. We have very good people who are well educated and trained, who take great pride in their work with a customer focus. That’s one of the reasons we kept the capability for -3 overhauls and right now we are very glad we did.
Are you seeing fluctuations in material and parts pricing for engines?
A lot of used parts have better availability, some parts are still challenging to find. This is probably because there are not many engines being torn down right now, but I’m sure this will change. Most used material suppliers are being aggressive to get sales now and the ones that are getting the business are being very creative with their solutions to help us; showing a willingness to go a little bit extra which benefits our customers. Those that are not doing this will more than likely lose out.