Lufthansa Technik Philippines (LTP), the country’s leading provider of aircraft maintenance, repair, and overhaul (MRO) services, is pursuing construction of its $40 million fourth hangar in the country, increasing its capacity by 25 percent and hiring 275 new workers, believing that aviation demand is coming back sustainably.
LTP President Elmar Lutter said Hangar1A and the auxiliary buildings started full construction in September after a year’s delay due to the pandemic. The new facility located inside the special economic zone within Manila’s Ninoy Aquino International Airport is expected to be completed in February next year and commercial operation in the first quarter. Hangar 1A was originally scheduled for completion in September 2020 but MRO was dampened by the travel restrictions that negatively impacted the aviation industry.
With the recent developments in air travel – where restrictions have significantly eased, LTP now finds that the demand is steadily picking up. “Given strong government support for our business recovery, and we find that this is the best time to fully complete Hangar 1A,” he said.
“We are pushing for the completion because we think that the demand will come back, sustainably,” added Lutter.
With a total area of 9,000 square meters, Hangar 1A will add 25 percent to LTP’s capacity and create 275 jobs. As a while, the LTP facility at the ecozone near the NAIA has total area of 209,000 square meters. LTP currently employs more than 2,600 Filipino employees nationwide. Hangar 1A is LTP’s 4th hangar which can provide base and line maintenance to various commercial aircraft including Airbus A320, A330, A350, A380, as well as B777.
Lutter also admitted the organization underwent right sizing last year. “After the right sizing, we still have 2700 employees. And I hope that by next year we will go back to our old strengths, 3400. We actually reduced by 700 in a mixture of early retirements, voluntary separation, and also a small portion of retention,” he said.
As countries started to reopen borders and more vaccination drives, Lutter said the airline industry believes it come out soon and spring back their aircraft from storage. As such, LTP has to prepare for the rebound.
Already, LTP is now servicing a British Airways, a 380, which was parked for a year. “Now, we are in preparation for the restart in a few months. So, suppose that's a wave of aircraft maintenance, which actually precedes the restart. And of course we all hope. That is a good leading indicator, and not a false start,” he said.
He said the business has been down by 40 percent depending on the specific business and the region, but added that some regions are already back to pre pandemic level. He cited the early birds US and China in the aviation sector recovery.
He expressed hope that next year “We will be in average at minus 20 percent
compared to pre pandemic level.”
“We think that the indication which we have from the industry and from the word show us that we will see recovery coming strong and even in the first phase, as many aircraft come out from parking,” he added. As such, he believes they can sustainably fill the hanger with international clients.
At present, LTP has narrow-body aircraft in base maintenance, alongside the white bodies that they hope to increase to six by next year.
“The rehiring will start soon,” he promised. With the additional production capacity, LTP will start rehiring those systems mechanics.
On the filing of the Chapter 11 by its partner Philippine Airlines, Lutter expressed confidence that it has been well managed. “We expect them to be out of process in a very short time,” he said.
According to Lutter, the Lufthansa Group was granted 9 billion euro credit line by the Germany government. None of that, however, would flow to the Philippines operation. While it did not ask for any financial assistance from the Philippines, its investment is registered with the Philippine Economic Zone Authority and is entitled to tax and fiscal incentives offered to PEZA investors. PEZA Director General Charito B. Plaza said that LTP can also migrate to the new CREATE Law.
Lutter explained the $40 million investment is being funded by local loans that it took before the pandemic and some internal funds.
The group added that Hangar 1A is a representation of LTPs renewed commitment. Depending on requirements, the bays of the new hangar can be configured to accommodate 4 bays serving 4 narrow-body aircraft, a set-up with 3 bays for one wide body and 2 narrow body aircraft, or in case required a single A380 aircraft.
It has maintained strong working relationships with its heritage customers which include the national carrier airline, Philippine Airlines, international airlines like British Airways, Korean Air, Asiana Airlines, Jetstar group, Lufthansa Group, and AirAsia X, among others. Further proof of its reputation and ability is the roster of new airlines that have recently signed Base Maintenance contracts with LTP. These include Cebu Pacific, Indigo Airlines, Kuwait Airways as well as Eurowings Discover.
Established in 2000, LTP is a joint venture of Hamburg-based Lufthansa Technik AG and the Philippines' biggest aviation support service provider MacroAsia Corporation.
With a strong presence in the country, LTP across the key cities nationwide, including Clark, Cebu, Davao, Kalibo, and Puerto Princesa. Its main hub in Manila houses 3 hangars, with its fourth being currently under construction.
As one of the 30 affiliates and subsidiaries of the Lufthansa Technik Network, LTP is committed to guaranteeing that all aircrafts that come out of its hangars reflect the world-renowned Lufthansa Technik quality standard. Strategic location Located within a 4-hour flight radius, LTP customers from around the globe take advantage of the proximity to international hubs such as Tokyo, Singapore and Hong Kong.
The main facility in the Ninoy Aquino International Airport allows for expedited arrival of aircraft parts and manageable duties and taxes. Expansive capability and capacity LTP specializes in base maintenance checks for the A320 family, A330/340 and A380 aircraft types.
Its base maintenance service spectrum includes cabin reconfiguration/retrofit programs and lease return checks which may be availed of as stand-alone products or incorporated into long-term campaigns. It has docking systems which can accommodate base maintenance for Airbus A320/321, A330/340, A380, Boeing B777, and other new generation aircraft types.
LTP has added to its capability the servicing of 777 freighters, and narrow body aircraft like the A320/321neo among others.
Its ongoing hangar expansion will allow LTP to flexibility accommodate more aircrafts of different types. LTP as a widely certified MRO services provider The European Union EASA , the United States FAA and other airworthiness authorities worldwide have certified LTP as a qualified provider of aircraft MRO services. The technical services group is certified to operate as a Design Department under Lufthansa Technik AG’s Design Organization Approval (EASA.21J.019).
World-class and highly skilled Filipino manpower LTP’s growth is supported by highly skilled English-speaking mechanics, engineers and support personnel. It has partnered with Lufthansa Technical Training Philippines, an EASA 147 approved Maintenance Training Organization, to assure that its people are equipped with world-class skills. Personnel transfers between subsidiaries within the Lufthansa Technik network and LTP are a regular occurrence, assuring optimum skills transfer to our local workforce. Compliant and Highly-Certified Committed to be compliant in Stakeholder Management and uphold International standards in Quality, Health & Safety, and Environment, LTP has received its A9110b Certification Quality Management System Standardization. LTP has also gained certification for its compliance to ISO 14001: 2015.