Ethiopian MRO Could Spin Off

Business & Operations

Dec 01 , 2010 , p. 33

The limited scope of MRO suppliers in Africa is changing, as African markets start to grow. By Neelam Mathews

ADDIS ABABA—While the African subcontinent represents only 4% of global MRO revenues, its markets are anticipated to witness greater demand for MRO services as a result of air traffic growth, new aircraft deliveries and airline consolidation, says Frost & Sullivan. These predictions are supported by Boeing’s September forecast, which pegs carriers in Africa to experience steady growth over the next 20 years, with a delivery of 710 airplanes in that time frame. Obvious growth is happening in Ethiopia, as Ethiopian Airlines gets set to join the Star Alliance in the next 12-18 months. Of the 58 destinations it services, 37 are in Africa. The carrier is amid preparations to receive the first of five Boeing 777-200LRs on order on Nov. 21, a second in mid-December and a third in the first week of January. These replace 767s, some of which likely will be converted to freighters. This is notable, as Ethiopian is the only African airline with cargo conversion capability. Further orders include eight Bombardier Q400s, 10 Boeing 787s, 12 Airbus A350XWB and 10 Boeing 737-800s. An Ethiopian Airlines 767 in for a maintenance check.Credit: Neelam Mathews Business is expected to further increase with sister carrier Asky Airlines, which launched last year from its base in Lome, Togo, to serve West Africa. Ethiopian also is looking to start an airline with Star Alliance partners South African Airways and Egypt Air to serve central Africa—a venture likely to be supported by Brussels Airlines. Ethiopian has the third-largest MRO in Africa, with major expansion and consolidation plans. According to the Ethiopian government’s Vision 2025, the carrier is in the process of restructuring and hiving off its main entities, one of which will be its technical division. Ethiopian MRO is slated to earn $520 million per annum by 2025, says CEO Girma Wake. As a separate entity, Ethiopian MRO will provide line maintenance, repairs and overhaul service to other carriers in the region and beyond. Ethiopian's present MRO center services 18 airlines—mostly African—and holds approvals from the Ethiopian Civil Aviation Authority, FAA, Boeing and Pratt & Whitney. It consists of three hangars—one for smaller aircraft, one for medium-sized aircraft and another for widebodies—at Ethiopian's hub at Addis Ababa Bole International Airport. The 7,200-sq.-meter widebody hangar was built at a cost of $6.4 million by Chinese construction company Catic. A fourth hangar is planned. An 8,000-sq.-meter engine overhaul workshop provides various levels of maintenance and repair work. With modular facilities for the Pratt & Whitney PW120, Ethiopian MRO is in the final stage of building capability for the PW4000 and the CFM56. “We tried outsourcing the PW4000, but it was expensive," says Tewodros Zegeye, director, aircraft maintenance. “Since we have the facility and skilled technicians, we revised the training syllabus to meet the demand.” Ethiopian MRO has a fully equipped jet engine test stand and a two-cell, modern engine test bed. The 100,000-lb.-thrust test cell provides a safe environment in which to test overhauled engines for widebodies, explains Zegeye. The MRO has additional backshop capabilities. A harness production plant owned by Ethiopian MRO manufactures wire harnesses for Boeing, and it is in discussions with Pakistan’s Shaheen Air for non-destructive testing and painting. “It is just a six-hour flight to Ethiopia, and our costs are low,” says Zegeye. Another focus is its training unit. Ethiopian MRO is expected to sign a $49.6-million soft loan agreement soon with Agence Française de Développement to expand its Aviation Training Academy. In addition to two Thales and CAE simulators for 757/767 and 737-700/800 on site, a 787 simulator has been ordered. “Other airlines can train on the 787 simulator here,” says Zegeye. “But, we cannot say when the simulator will be delivered unless we know when the date of delivery of the 787 is.” Meanwhile, a technician has been sent to Boeing for training on the 787 airframe and engine.