mro industry investments,joint ventures,merger and acquisitions analysis

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MRO Investments,

Joint Ventures,Merger & Acquisitions

January 2014

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Changing Relationships

Realtionships between airframe and component OEMs,airline MROs and independent MROs are evolving



MRO competitive landscape is evolving



Reasons for MRO Consolidation

Tough market environment

Decresing profit margin

Aircraft efficent life shortens

Engine & Component manufacturers tend to concentrate aftermarket capabilities

New AC generations requires new technical capabilities

Next –Gen Avionics Technology Costs

High investments needed in test,repair and inspection

OEM raises know how (IP) barrier



MRO related M&A Transactions are growing steadily



MRO related M&A activities to continue over the

next years



Type of MRO Transactions

Traditionally defense-oriented companies have entered

into the mix to pursue more non-defense MRO plays.

Lockheed Martin acquired the Montreal, Quebec based engine MRO

business out of bankrupt Aveos, a portfolio company of KKR.

The companies with unique capabilities in areas with

high barriers to entry.

Engine components and avionics are two

examples of such niches.

Source:KippsDeSanto & Co.



Type of MRO Transactions

Private equity firms have been extremely active in acquiring

MRO / logistics support companies.

Goldner Hawn Johnson & Morrison’s acquisition of Universal Turbine Parts, a

provider of aftermarket turboprop aircraft engine and engine parts.

PNC RiverArch Capital’s acquisition of Precision Aviation Group, a provider of

supply chain and Inventory Supported MRO services (ISMRO®) for instruments,

avionics, and accessories for a variety of fixed-wing and rotarywing

aircraft.

Source:KippsDeSanto & Co.



The table below summarizes some MRO occurred over the

past several months.

months.



M&Q and investment activities

AAR has entered into an

agreement with Liebherr-

Aerospace to provide landing

gear MRO services for the

Embraer E-jet family.

9 Sep 2013

Abu Dhabi Aviation

agrees MRO joint

venture with

Agusta Westland

19 November 2011

Air China to merge

Ameco with in-

house MRO

Division

26 Sep 2013

AAR to add third

maintenance line at

Duluth. The hangar

was formerly used by ,

which was acquired by

, to maintain its Airbus

A320 aircraft.

27 Sep 2013

Aeroflot – Russian Airlines

will establish a joint venture

intended for providing

services in the area of

aircraft maintenance, repair

and overhaul with ST

Technics.

February 5, 2013

Bombardier has signed a letter

of intent with Ethiopian Airlines

to make the airline's technical

division an

authorised service facility for

Bombardier Dash 8 Q400

turboprops.



M&Q and investment activitiesCFM International has ruled

out a technology joint

venture with AVIC

Commercial Aircraft Engines

(ACAE) and

plans for a China-based

assembly line for the

company's Leap-1C engine

have effectively been placed

on hold. 24 Jul 2013

Delta Air Lines is to invest

$65 million in Aeromexico,

as the two SkyTeam airlines

reached a tentative

agreement for

a long-term exclusive

commercial alliance and a

new maintenance, repair and

overhaul joint venture

10 Aug 2011

Russia's Oboronprom has

signed an agreement with

South Africa's Denel to extend

the capabilities of the recently

opened maintenance, repair,

and overhaul (MRO) facilities

in South Africa, the company

announced at the Paris Air

Show on 17 June.

Comac has started

research on a 300-seat

widebody aircraft,

which could be jointly

developed with

Russia. The sources

add that Comac has

also started talks with

engine makers GE

Aviation, and Rolls

Royce, and is hoping

that a new and

improved powerplant

will be developed for

its new widebody.

27 Sep 2013

China has set a target to

complete the development

of a commercial powerplant

within a 10-year period, says

the chairman of an advisory

committee on the Comac

C919 aircraft programme.

13 Aug 2013




Sagem and MTU Aero

Engines kicked off the air

show with the launch of a

50:50 joint venture, AES

Aerospace Embedded

Solutions, to provide safety-

critical software and

hardware such as full

authority digital

engine control (FADEC) and

systems to control landing

gear, braking, monitoring

and information systems.

7 Jul 2012

Execujet Aviation has Execujet Aviation has

entered into a joint

venture with Indonesia's

Dimitri Utama Abadi for

the management of

general aviation terminals

at 13 airports in Indonesia.

27 Sep 2012

US aftermarket support firm

GA Telesis has taken over

Finnair's engine overhaul

shop in Helsinki.

7 May 2013

GE Aviation and the HNA

Group today signed a

Memorandum of

Understanding (MOU) to

form a

joint venture to provide

maintenance, repair and

overhaul (MRO) services

for GE's CF34-10A and

CF34-10E engines.

16 November 2010

Guangzhou Aircraft

Maintenance and

Engineering Co ( ) is

developing plans to build a

third hangar at its

base near Airport, while

construction of its second

hangar continues.

GAMECO

Guangzhou Baiyun

International.

6 Sep 2012




Gulf Technics outlines

expansion plans. The

business is still negotiating a

joint venture agreement to

run the new hangar with

SIA Engineering (SIAEC)

after signing a

memorandum of

understanding at the 2010

Bahrain show.

19 Jan 2012

SriLankan Airlines,

Lufthansa Technik enter

MRO joint venture at an

airport in Mattala.

13 Aug 2013

SR Technics, part of the

Mubadala Aerospace MRO

network, and France’s Aigle

Azur Airline will establish a

joint venture (JV) to provide

line and light maintenance

activities for the carrier’s

Airbus A320s

12 June 2013

SIA Engineering Co (SIAEC)

15 Feb 2012

SIA Engineering Co (SIAEC)

and Panasonic Avionics

have opened a facility for

their joint venture

Panasonic

Avionics Services Singapore

(PACSS) for the

maintenance, repair and

overhaul (MRO) of

Panasonic Avionics

systems.

15 Feb 2012

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