A period of transformation

Lufthansa Technik AG continued on its course for growth in 2018. With revenue at record levels, the company slightly surpassed its results from 2017 despite intensified price pressure and far-reaching investments in digitalization, its international network and personnel.

Sales revenues climbed by more than EUR 500 million, surging from EUR 5.404 billion to EUR 5.918 billion, an increase of 9.5 percent above the previous year's total. The company generated adjusted EBIT of EUR 425 million (previous year: EUR 415 million), an increase of 2 percent. These figures apply to Lufthansa Technik AG and its 21 fully consolidated companies.

Lufthansa Technik thus outperformed the market in 2018. The Americas region produced the highest level of growth with a 20 percent increase in revenue year on year, ahead of the region Europe, Middle East and Africa with a gain of nearly 9 percent. Asia generated modest revenue growth of 3.4 percent.

"Growth of 10 percent, a level that clearly outpaced the market, is a strong performance. We have every right to be satisfied, because we have demonstrated once again that we are the driving force in our industry," said Dr. Johannes Bussmann, the Chairman and CEO of Lufthansa Technik AG.

The important role played by Lufthansa Technik in international aviation is reflected in particular in the number of aircraft the company supports: For the first time, Lufthansa Technik now provides technical services for more than 5,000 aircraft. This figure grew in 2018 by about 600 to a total of 5,131 aircraft, an increase of nearly 13 percent, and amounts to about one-fifth of the commercial aircraft in operation around the world today.

"Every fifth aircraft that takes off and lands around the world is supported by Lufthansa Technik," Bussmann said. "This says more about our success than any key performance indicator, and it especially reflects the growing trust of our customers in the excellence of our workforce. Those are very solid prerequisites for further growth this year."

The company's strong performance was also mirrored by new contracts: During fiscal year 2018, Lufthansa Technik gained 29 additional aircraft operators as customers and signed 576 contracts for new business worth EUR 5 billion.

Investments in digitalization, network and personnel

The aircraft maintenance, repair and overhaul (MRO) industry is undergoing a very dynamic transformation process: Business conditions are changing even as the market is set to grow steadily at an expected rate of at least 5 percent annually. More and more new aircraft types with new technologies, materials, components and engines are entering flight operations as part of a process that is unlike anything seen in decades. At the same time, new actors – the manufacturers of aircraft and components – are joining the growing MRO market.

"The market is both extremely attractive and challenging. For us as the world market leader, this means continuing to develop and, of course, continuing to invest," Bussmann noted.

For this reason, Lufthansa Technik boosted its investments once again last year, from EUR 233 million to EUR 241 million. The focal points of these investments were the development of digital products and services, the expansion of the company's international production networks, partnerships with manufacturers, particularly in the area of engine overhaul, and the hiring of new employees.

The focus of the company's business development is the digitalization of the service range: AVIATAR, an independent and integrated platform for digital offers, has established itself in the marketplace. Many partners and customers from major airline alliances are already working with AVIATAR. Thus, the operators of a significant four-digit number of aircraft meanwhile supported on the platform profit from optimized operating times, reduced consequential costs and more reliable fleet operations. The services offered by AVIATAR include predictive maintenance with integrated technical implementation. Flight operations will be added in the next step as a way of providing airlines with an end-to-end, uniform solution for fleet management, from technical operations ("tech-ops") and ground operations ("ground-ops") to flight operations ("flight-ops"). To ensure competition and guarantee airlines' independence in regard to their data in the long-term, Lufthansa Technik has set up the AVIATION DataHub in March 2019. The stand-alone company offers an independent platform for all data generated by aviation.

"We are the only company in the world that offers an integrated and manufacturer-independent digital platform like AVIATAR, where we can pool our decades of experience in the maintenance of aircraft, components and engines," Bussmann explained. "The establishment of the AVIATION DataHub is another very important step to ensuring this independence and guaranteeing airlines' control of the data of their fleets and the use of this information."

In the area of engine maintenance, Lufthansa Technik moved ahead in 2018 with efforts to forge joint ventures with engine manufacturers. XEOS, a joint production platform with GE Aviation, celebrated its topping-out ceremony in 2018. Beginning in the spring of 2019, it will maintain, repair and overhaul the first large-sized engines from the latest generation of General Electric engines on behalf of their owners. EME Aero, a joint venture with MTU Aero Engines, laid the cornerstone last year for the construction of one of the largest and most modern MRO shops for state-of-the-art geared turbofan engines. This facility is scheduled to go into operation at the end of 2019.

Investments in digitalization and the network were supported in 2018 by a substantial increase in the size of the company's workforce. The headcount of Lufthansa Technik AG and its 21 fully consolidated companies rose by an average of 6 percent during the year, from 21,194 (2017) to 22,537 (2018).

One critically important element of personnel development is the professional training of young people. Across Germany, 122 young employees began their training in 2018 in technical, industrial or commercial areas at the Lufthansa Technik Group. This number will rise to more than 200 on 1 August 2019, when the next training period begins.

Lufthansa Technik has set up AVIATION DataHub, an independent platform for all data generated by aviation. With this decision, Lufthansa Technik has taken an important step in the digitalization of the maintenance, repair and overhaul business (MRO) and the integration of flight and ground-handling operations. AVIATION DataHub was established as an independent company.

With this platform, airlines, manufacturers and the MRO industry as well as data providers and other market players will be able to collect, compile and process important technical or flight-operations data – from technical operations ("tech-ops") and ground operations ("ground-ops") to flight operations ("flight-ops").

AVIATION DataHub ensures data security, quality and integrity as well as efficient control by the owner of the data.

Airlines in particular will now be able to decide whether and with whom they want to share their data regarding the technical support of aircraft or the improvement of ground-handling and flight operations.

The Chairman of the Executive Board of Lufthansa Technik, Dr. Johannes Bussmann, said: "The establishment of the hub is a very important step, especially in guaranteeing airlines' control of the data of their fleets and the use of this information. Our aim is to ensure the independence of airlines and to maintain competition. After all, competition will make the aviation industry more dependable, efficient and environmentally conscious. Control, choice and competition for all market players – this is the guiding principle of AVIATION DataHub."

Lufthansa Technik currently holds a 100 percent stake in AVIATION DataHub. Over the next few months, it plans to add other shareholders and partners from the aviation industry, including the manufacturers of components and systems, and ultimately reduce its stake significantly.

AVIATAR; a digital product offered by Lufthansa Technik, will also work with the data from the AVIATION DataHub. AVIATAR is an independent and integrated platform for digital services such as predictive maintenance with integrated technical implementation. Flight operations will be included in the next step as a way of providing airlines with an integrated and uniform solution for holistic fleet management. Today, the operators of a significant four-digit number of aircraft use AVIATAR, benefiting from optimized operating times, reduced consequential costs and more reliable fleet operations.

Dr. Christian Langer, Head of Digital Fleet Solutions at Lufthansa Technik, said: "We welcome competition. It drives innovation and the search for the best solutions. For this reason, AVIATION DataHub is open to anyone who wants to improve our industry – and that naturally includes our competitors. We are already in a fairly advanced stage of discussions with some potential shareholders and partners. The interest in such a neutral data platform is huge."

AVIATION DataHub is designed for airlines, manufacturers of aircraft, components and systems, other MRO companies, data providers and providers of digital products and solutions such as Lufthansa Technik's AVIATAR.

Now that it has been founded, AVIATION DataHub will begin and expand its operative activities with AVIATAR as its first customer. Promising discussions are underway with potential partners and other shareholders, including the technical and operative integration of existing technologies and infrastructures under the umbrella of AVIATION DataHub.

Jan Stoevesand and Michael Britzke were named as managing directors of AVIATION DataHub GmbH.

Three major Russian passenger and cargo carriers have contracted Lufthansa Technik AG for comprehensive and long-term support.

Aeroflot – Russian Airlines has entrusted Lufthansa Technik with Airframe Related Components (ARC®) services for its A320 family aircraft. Ural Airlines has contracted Lufthansa Technik to provide Total Component Support (TCS®) for its new Boeing 737 MAX aircraft and extended an existing agreement to support the addition of Airbus A320neo aircraft to its fleet. AirBridgeCargo Airlines has signed a long-term Total Component Support contract for its Boeing 747-400F freighter fleet.

Various management changes have been made in the international network of Lufthansa Technik. On January 25, Torsten Raabe became the new CEO of Lufthansa Technik Sofia (LTSF). There was also a change in the management team at Lufthansa Technik Shenzhen (LTS) on March 1: Benjamin Scheidel took over the CEO position from Detlev Jeske.

At LTSF, Torsten Raabe succeeded Daniel Hoffmann, who was appointed Head of Lufthansa Technik Philippines after three years in Sofia. The former CEO of LTS, Detlev Jeske, joined Lumics GmbH & Co. KG in Hamburg, a joint venture between Lufthansa Technik and McKinsey & Company.

Raabe began his career at the Lufthansa Technik Group in 1998. After earning his degree in industrial engineering, Raabe served in a number of managerial positions in Frankfurt and Hamburg until 2012. During that same year, he set up the Sofia-based central material management for the entire Lufthansa Technik Base Maintenance Division. Working as Senior Director for Material Management, he oversaw purchasing and material supplies for facilities in Sofia, Hamburg, Budapest, Malta, Shannon and Puerto Rico.

Benjamin Scheidel joined the Lufthansa Group in 2003. During his career here, he held a number of management positions at Lufthansa Cargo in Madrid, Frankfurt and Singapore. Scheidel, who holds a business administration degree, joined Lufthansa Technik in 2013. He initially served as Senior Regional Sales Manager for South East Asia & Australia / Pacific and later became a Corporate Key Account Manager. In 2015, he was appointed Senior Director Sales North East Asia.

Images: Copyright Lufthansa Technik

Lufthansa Technik AG today initiated the establishment of a new site for the repair and overhaul of aircraft engine parts. Dubbed Lufthansa Technik Miskolc, a new fully-owned subsidiary of Lufthansa Technik AG will commence operations until 2022 and will utilize around 20,000 square meters of production space. Customers of Lufthansa Technik´s Engine Parts & Accessories Repair (EPAR) network will greatly benefit from this extended production capacity.

In the long term, Lufthansa Technik Miskolc will employ around 400 employees. Investments in the triple-digit million-euro range will hence not only encompass state-of-the-art machinery for procedures such as cleaning, thermal spraying and heat treatment of engine parts, but also an extensive training and qualification program.

"I am honored that a world-renowned company such as Lufthansa Technik is expanding its presence in Hungary," said Péter Szijjártó, Hungary´s Minister of Foreign Affairs and Trade. "On the one hand, this decision once more proves the attractiveness of our business location. On the other hand, it also recognizes the enormous commitment of the people in Miskolc."

"As the fourth-largest city in Hungary, Miskolc offers a great number of highly-qualified technical experts and moreover a good infrastructure", added Philip Mende, Head of Engine Parts and Mobile Engine Services at Lufthansa Technik.  "We look forward to building Lufthansa Technik Miskolc together and adding the new colleagues to our worldwide network."

"For technology companies, Miskolc has already proven to be a great place to invest in," said Dr. Ákos Kriza, Mayor of Miskolc. "We are honored to welcome Lufthansa Technik in our city and we are going to justify their trust with the same outstanding support that has already fostered many business success stories here before."

Construction at the new site is planned to begin in 2021. Training and qualification courses for its employees will already begin in 2019 and will partly take place at the existing sites of the EPAR network in Germany, Ireland, Malaysia, China and the USA. With more than 20,000 part numbers and over 1,500 employees, Lufthansa Technik´s EPAR network today is the largest OEM-independent provider for repairs and overhauls of aircraft engine parts. By investing in the new location, EPAR is further strengthening its market position and expanding its repair portfolio for entering the new engine generation.

SafeDrone by Lufthansa Technik and drone fleet operator Lufthansa Aerial Services will continue to trade under their current names and concentrate on their core competencies. SafeDrone's focus will be on providing technical fleet management and monitoring the condition of drones via SafeDrone Health. Lufthansa Aerial Services is responsible for drone deployments at industrial installations such as wind turbines or electrical power lines. The training opportunities previously offered by SafeDrone and  SafeDrone Academy will be continued and further developed by the affiliated company Lufthansa Aviation Training from March on.

By taking over the flight operations, Lufthansa Technik becomes the drone competence center for the entire Lufthansa Group. The MRO company is thus assuming responsibility for strategic matters, portfolio management and the correlation of all drone activities within the Group. Furthermore, Lufthansa Technik will also represent the Group's interests on national as well as international bodies and take part in the development of binding standards for the drone industry.

"The realignment of SafeDrone and the integration of Lufthansa Aerial Services' flight operations allow us to combine existing competencies and focus our drone activities on the growing industrial sector. Our skilled colleagues at Lufthansa Aviation Training will bring our training opportunities to the next level. Thanks to this strategic measure, the Lufthansa Group will be positioned successfully throughout the drone market's value chain," says Ulrich Hoffmann, project manager at SafeDrone.

In order to meet growing customer demands, Lufthansa Technik Middle East has doubled the size of its facilitiy and added new services to its portfolio. In the second half of 2018 the facility has already been successfully audited by the German Federal Aviation Office (LBA). 

The hangar and workshop space at the main facility in the Mohammed bin Rashid Aerospace Hub at Dubai South was enlarged from 2,500 to 5,000 square meters – only one year after the opening of the location.

The additional space enables Lufthansa Technik Middle East to increase its capabilities for Airframe Related Components (ARC®), for example composite repairs on components such as the inlet cowls of the Boeing 787. New nacelle and radome spares for Boeing 787, 777 and Airbus A320 aircraft were acquired. Additional local mobile support teams can now perform on-wing work for certain repairs at customer sites within the region, significantly reducing costs and turnaround times. Further possible services are currently in preparation.

Tahnoon Saif, CEO, Mohammed bin Rashid Aerospace Hub said "Lufthansa Technik is one of the leading aviation suppliers in the world and we are delighted to see that their facility has doubled in size within the first year of operation at the Mohammed bin Rashid Aerospace Hub. We look forward to developing their offering at the Aerospace Hub, and will continue to support their growth and development."

Besides its recently expanded facility at Mohammed bin Rashid Aerospace Hub, Lufthansa Technik Middle East also operates a warehouse at Dubai airport, where more and more parts are stored for local spares support. The company also offers AOG support, landing gear services, engine wash services and a local material support desk. Further evaluation of additional capabilities for the region is ongoing.

A group of significant players in the aviation industry are cooperating to form a new alliance in the field of aircraft modification. As leading companies in the retrofit industry, EAD Aerospace, Envoy Aerospace, Etihad Airways Engineering and  Lufthansa Technik have signed a Memorandum of Understanding (MoU) to form the Independent Aircraft Modifier Alliance (IAMA).

IAMA aims to encourage aircraft owners and operators to modify and modernise their fleets through high quality equipment and rigorous inspections, irrespective of which IAMA members provide the engineering services.

Aircraft modifications, such as the installation of new cabins, connectivity solutions or avionics systems can be approved and documented through a Supplemental Type Certificate (STC) offered by providers such as the IAMA members. The alliance addresses customer concerns with regard to documentation, data availability and a worldwide customer support network across different regulatory systems with various national authorities.

The main objectives of the Independent Aircraft Modifier Alliance are to agree to common standards for the documentation and quality of Supplemental Type Certificates, to establish an open, secure documentation platform for airline customers and aircraft owners using STCs, and to inform the relevant public and expert communities about the advantages of STC approved solutions.

Bernhard Randerath, Vice President Design, Engineering and Innovation of Etihad Airways Engineering said: "This alliance is a positive step towards addressing the challenges that customers face with STC solutions today. As the Middle East's largest MRO, we use OEM solutions, however, Etihad is renowned for innovation and applying our own STC modifications. We believe that OEMs will also benefit from becoming members of IAMA, which is open to all modification providers."

"Our customers need seamless solutions and efficient support during implementation and most importantly service afterwards. STCs are a fast, cost efficient way to provide modifications, and IAMA is a promising approach to address the critical points of documentation simplicity and continued after-sales support."

Thomas Rueckert, Head of Base Maintenance and Aircraft Modification at Lufthansa Technik, said: "We enable aircraft operators to decide objectively and independently on the best possible modification solution for their fleet – regardless of a specific provider. Safety, flexibility of solutions for implementation of customer requests, along with speed and efficiency are at the heart of our activities."

"In addition, value retention and reliable life cycle support are essential factors for aircraft operators and owners. IAMA jointly develop transparent standards that will help our customers make the right decisions," adds Andreas Gherman, Head of the Design Organisation at Lufthansa Technik.

Patrick Gindre, Sales Director of EAD Aerospace says: "The aftermarket modifier ecosystem needed a "home" to discuss our challenges, best practices and to improve our services by delivering a common message to the market. Together, we have the objective to shape the future of the STC in the aviation world".

Romain Mbwang Seppoh, Head of Airworthiness at EAD Aerospace adds: "The retro fit market has specific challenges to be handled with customers and operators in terms of organisation and mandatory exchange of data. IAMA will be a collaborative and knowledgeable reference and voice to regulators and standardisation committees regarding how STCs efficiently fulfil these obligations. Being in the heart of the activity, IAMA tackle those challenges daily. The alliance will foster proportionate and adapted regulations, and jointly develop and provide the optimal tools to its members."

"We are excited to be a part of IAMA," said Adrian Honer, partner and ODA Lead Administrator at Envoy Aerospace, LLC.  "The affiliation will provide our members with a significant voice to resolve issues that affect retrofit certification approvals.  Our involvement in IAMA reflects our commitment to our customers, present and future, to be a leader in retrofit aircraft certification quality."
 
Marilyn Feigl, partner and ODA Administrator at Envoy Aerospace adds: "Retrofit modifications on aircraft have unique challenges.  IAMA will offer its members mentorship and counselling to deal with these challenges, especially when dealing with regulatory agencies and the industry at large.  This will help raise the certification standards to ensure the highest quality STC products."

The launch meeting of the IAMA is scheduled for spring 2019. The Independent Aircraft Modifier Alliance is open to all market participants including aircraft manufacturers, airlines, suppliers and lessors. Founding members of the alliance believe that a strong and transparent retrofit market will benefit everyone. Members of the alliance work together to offer a transparent, distinct and independent market for aircraft retrofits, providing greater choice for operators and added value for the aviation industry.

FADEC Alliance, a joint venture between GE Aviation and FADEC International, has signed a 25-year agreement with Lufthansa Technik to provide Full Authority Digital Engine Controls (FADEC) availability services for LEAP engines globally. Lufthansa Technik and FADEC Alliance will use the engine controls for support agreements, loans and exchanges across their global airline customer bases to bring a full selection of asset management services to the commercial transport industry.
The agreement covers asset management, logistics and maintenance, repair, and overhaul (MRO) support. Lufthansa Technik will manage a global pool of line replaceable units (LRU) in order to provide availability to both Lufthansa Technik and FADEC Alliance airline customers. Lufthansa Technik will establish a certified repair station in Hamburg, Germany for the LEAP FADEC. FADEC Alliance will provide technical support from the FADEC Alliance MRO network located in Massy, France and Fort Wayne, Indiana.
"Lufthansa Technik is a world leader in asset logistics and MRO services to airlines," said Steven McCullough, chief executive officer of FADEC Alliance. "The company's global footprint provides superior customer support, while FADEC Alliance's strategic technical expertise in LEAP engine controls makes this contract a win-win for airlines across the world."
"The exceptional FADEC Alliance products are crucial for operators and timely availability of spare parts is of utmost importance," said Burkhard Pfefferle-Tolkiehn, vice president Asia Pacific & Fulfillment, Component Services at Lufthansa Technik. "We are proud to collaborate with FADEC Alliance on MRO and asset management. We will jointly keep our customers flying."
LEAP engines equipped with FADEC Systems are used on Boeing 737 MAX, Airbus A320neo and COMAC family 919 aircraft. The FADEC – consisting of digital computers, called engine control units, and a pressure sub-system – controls all aspects of aircraft engine performance, such as engine fuel flow and variable engine geometries. Both parties will use the pool to support their customers for loans and exchanges of LEAP FADECs, to provide high availability and high performance asset services, and to maximize efficiency for airlines.
The LEAP engine is a high-bypass turbofan produced by CFM International, a 50-50 joint venture company between GE and Safran Aircraft Engines.

Lufthansa Technik has developed the first robot for fully automated tests of cockpit controls in the world. The test procedure is called RoCCET, which stands for Robot Controlled Cockpit Electronics Testing. In the future, RoCCET will be used to check the functionality of LED lights and switches on the basis of concrete, standardized measurement data. The robot-based procedure is currently in the integration phase.

The robot has integrated sensors to measure the forces that occur when switches are activated. In addition, it is equipped with several industrial cameras with which it captures all display instruments and any outer damage. With another camera, it measures the brightness of all displays from various angles. The robot is thus able to check all switches and LEDs just as well as a human and perform defined functional tests.

"This fully automated procedure allows us to ease the burden on our colleagues in the workshops and reduce the testing effort by one to two hours per component. At the same time, the new procedure provides concrete measurement data in accordance with uniform standards. For example, we now have physical threshold values for the brightness of LEDs.  And with the help of data mining, we can determine exactly when an LED has to be replaced," explains Florian Sell, Senior Engineer Automated Test Equipment Systems at the Aircraft Component Services division and manager of the RoCCET project.

The robot-based test procedure will initially be used for cockpit controls on Airbus A320 and A350 as well as Boeing 787 aircraft. In the future, its use may also be extended to other cockpit and cabin controls on all aircraft types at various locations.