24.6.08

Lufthansa Technik to fly into Hyderabad

Lufthansa Technik, the world' s largest maintenance, repair and overhaul (MRO) company, will set up a facility in the country, in a joint venture with the Hyderabad based GMR group. This will be the country's first foreign-owned, airport maintenance facility.
In the joint venture, Lufthansa Technik will have a 75%, stake, while the rest will be held by its Indian partner. Both the companies are expected to invest Rs 100 crore in the venture in the initial phase. The 20,000 square meter facility will be located at the New Hyderabad International Airport in Shamshabad, Andhra Pradesh. The facility will provide base maintenance services (including C- and D checks) for Airbus A320 family and Boeing 737 aircraft-including 737 Classic and 737 NG (next generation) and is expected to commence operations by the end of 2008. At present, Lufthansa Technik serves the Indian carriers through its facilities outside the country. The Indian MRO market is projected at around $100 million a year at present, and is expected to grow by at least 15% over the next three years.
An MRO ideally needs around 200 aircraft to be viable A report by Ernst & Young has stated that the aviation sector in India, is slated to draw an investment of more than $120 billion by 2020. With the government allowing 100% foreign direct investment in the MRO sector, analysts expect large investments to flow in. According to aviation analysts, India is expected to see at l east 9 new MRO facilities, including those by Airbus and the Boeing Company and a host of Indian carriers.
The Indian civil aviation sector has around 400 aircraft on order, making it one of the world's fastest growing aviation markets and this is expected to double over the next couple of years. Most of these aircraft are serviced outside the country.
According to the company spokesperson, the new venture will be a member of Lufthansa Technik's existing worldwide MRO network of 28 ventures. The company has Jet Airways,Kingfisher Airlines,Air Deccan and Go Air as clients.

German carrier Lufthansa's $5 billion technical support arm, Lufthansa Technik, has pulled out of a tie-up with GMR Group, inked in April 2007, to set up a $20 million maintenance, repair and overhaul (MRO) facility at the new airport in Hyderabad. The GMR Group is now talking to some leading Asian carriers for the proposed MRO.The deal aimed to ready the MRO facility by this year-end, with Lufthansa arm contributing 75% of the investment and Indian carrier the rest. Sources close to the deal said Lufthansa Technik was in talks with a leading Indian carrier to maintain their fleet of Boeing 737s and Airbus A 320s at the proposed site so that it has an assured fleet to service. But in this cost-hostile environment, this did not happen and the MRO deal fell through.
Speaking from Hamburg, Lufthansa Technik spokesperson Wolfgang said: "The JV with GMR for the MRO is now having problems because of the current market situation and oil prices. Every business model developed last year is blast. However, India remains a fantastic market for us and we look forward to expanding our component and engine service facility in Ban
galore. We may relook at an MRO later."
A GMR official said they had to do land leveling and prepare parking bays at the airport. "Once that was done, we got in touch with Lufthansa Technik and were told that they would not go ahead with the MRO. We are in talks with leading Asian aircraft maintenance companies like those of Singapore and Malaysian Airlines apart from Israel-based Bedek Aviation. We hope to finalise the new partner in the next three months," he said.
"With more than 400 airplanes on order, the Indian aviation market is one of the fastest growing in the world. The new facility will complement the existing MRO support being provided to new as well as existing fleets in India and ensures an optimal MRO support within the country," Lufthansa Technik had said.

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