Industry Insight Special Report
China’s winning ways boost HAECO group
Swire Pacific’s Hong Kong Aircraft Engineering Company (HAECO) has hit a purple patch in profits. Its operations in Mainland China are paying dividends and the MRO Group is expanding globally, including developing its business jet completions company.
September 1st 2016
HAECO’s shareholders could not be happier. They are receiving a special interim dividend after the Hong Kong headquartered company posted a 337.4% spike in interim net profit, to $143.2 million. Read More » The result was boosted by the $103.8 million made from the sale of Hong Kong Aero Engine Services Ltd’s interest in Singapore Aero Engine Services Pte Ltd. But even with that factor excluded, group profit increased by 29.1%, to $42.3 million.
On closer examination however, the results were mixed across the group. HAECO’s operations in Mainland China are winners - there has been a surge in the cash contribution from its units there - but net profit from the MRO’s Hong Kong operations fell by 17.2%, to $10.6 million.
 |
| HAECO Group CEO, Augustus Tang: HAECO plans to add 350 staff to its 16,900 member work force by year end |
HAECO’s Xiamen facilities include specialist shops for cabinetry, veneer finishes, upholstery and other cabin décor work. In addition to its authorization from the Civil Aviation Administration of China to operate as a Mainland MRO, the company holds Part 21 approval from the Hong Kong Civil aviation authority.
Part 21 approval means the European Aviation Safety Agency validates HAECO’s supplemental type certificates. And through the HAECO Americas division, the MRO has access to the certification process of the U.S. Federal Aviation Administration.
In July, HAECO Xiamen redelivered its 2,500th aircraft in the thirty-year history of the MRO and modifications company. It has completed more than 1,000 B747 redeliveries, 250 B767s, 200 B777s, 170 A330s and 650 narrow-body inputs, including the world’s first B747-800BCF passenger-to-freighter conversion.
To date, it also has delivered 60 freighter conversions on B737s, B747s and B757s. HAECO Xiamen’s offerings include a line services network on the Mainland, technical training, parts manufacturing and private jet services.
HAECO chief executive, Augustus Tang, said demand for airframe services in Hong Kong in the first half of the year was lower than 12 months earlier and that the business for airframe and component maintenance services in the second half of 2016 would be stable.
Its line services capacity is on the rise and HAECO plans to hire more staff. In the first half of the year, it increased its employees by 1.1% (189), to 16,892. The company has committed to hiring 350 aircraft maintenance personnel by year end. Seasonal factors will affect business in the current six months, he said, as there is usually less demand for aircraft maintenance during the northern summer.
HAECO is continuing its overseas expansion. Last month, its Americas division broke ground on a fifth hangar at its facility in Greensboro, North Carolina. “It offers jobs for a proposed 500 more employees, which is really important to us,” said Jim Sokol at HAECO Americas maintenance operations. “Those aircraft maintenance employees will work inside the $60 million hangar on planes from around the world.
“Beyond our evident focus on U.S. registered aircraft, we have expanded our approvals to cover those from regulators in China and the Middle East,” said Richard Kendall, HAECO Americas chief executive.
“We can build demand for the services we provide with aircraft operators in the fastest growing segments in the world.” Once completed, the 250,000 square feet hangar, the size of 40 basketball courts combined, will be the largest hangar the company has ever built.
“This hangar will accommodate up to eight narrow-body aircraft or two wide-bodied aircraft and two narrow- bodied aircraft simultaneously,” Kendall said. The hangar will be finished late next year with the first customer scheduled to come through the door in January of 2018.
Another HAECO subsidiary, Private Jet Solutions (PJS), was a prominent exhibitor at July’s European Business Aviation Convention & Exhibition (EBACE) in Geneva. HAECO PJS has an engineering house in San Antonio, Texas and operates the first Asia-Pacific Airbus approved and Boeing licensed cabin completion centre in China at the HAECO’s Xiamen campus. In June, at an ABACE business jet exhibition in Shanghai, PJS announced it had become one of the five worldwide authorized service centers for Airbus Corporate Jets (ACJ).
At Geneva’s ABACE, PJS unveiled an agreement with Rockwell Collins to distribute its in-flight entertainment (IFE) systems and products. The pact gives the maintenance and completions company access to the sales and support network of the U.S. electronics and communications company, an important factor sustaining business jet operations in the Asia-Pacific.
“Establishment of the dealership by HAECO PJS allows both companies to provide the region’s private end business jet customers and operators with a broader range of products and services, which are more cost-effective and reliable,” said Henry Chan, PJS’s commercial vice president.
