Lufthansa, Air China joint venture seeks domestic and international expansion

BEIJING (XFNews) - Ameco Beijing, an aircraft maintenance joint venture between Lufthansa and Air China, is looking to further expand its customer network overseas and in the booming Chinese airline market, the company's sales and marketing director Jan Butzmann said.

"We would like to maintain our position as one of the main providers in China, but we would also like to attract other markets, particularly the US and Europe," Butzmann told XFN-Asia.

The joint venture, in which Air China holds a 60% stake and Lufthansa 40%, in August signed a multi-million dollar contract with United Airlines to provide heavy maintenance for the carrier's B777s over the next five years.

"We are happy to have won this very big customer and we are trying to extend this and surf our wave of success to acquire more customers from the US, where we have been quite successful," Butzmann said.

"We are in talks with several operators," he added, without giving details.

Ameco Beijing's key European customer is Lufthansa, but the company is looking to attract more operators in the region and is currently in talks with "one of the major airlines of Europe" for a five year contract, Butzmann said.

"There are a lot of opportunities (in Europe), some of which are quite far advanced," he said.

China's booming airline industry has turned it into the world's fastest growing market and much of Ameco Beijing's work will focus on Chinese operators, particularly its major customer, Air China.

"It is a huge task and challenge to provide the services Air China needs to operate its fleet," Butzmann said, adding that Ameco Beijing now provides complete maintenance services to Air China's entire fleet.

Butzmann said that Ameco Beijing is targeting annual growth in China of some 20-25%.

"The growth potential is there...the China market is growing at about 10-15%, and in some areas maybe even 20%. We have to stay ahead of that figure so we have to target growth of 20-25%, which is possible," he said.

Lufthansa and Air China last year agreed to continue their joint venture for a further 25 years, and pledged to inject USD100 million in the next four years to expand Ameco Beijing's operations.

Several new hangers are currently under construction, one of which will be inaugurated in the beginning of 2007, and another, which will be entirely dedicated to line maintenance, will open at the start of 2008, Butzmann said.

"We are looking to double our capacity in terms of airframe overhaul by 2008," Butzmann said.

Beijing Ameco will also have to increase its workforce over the next few years to operate the new hangers and facilities, Butzmann added.

A significant proportion of Ameco Beijing's 4,500 employees are temporary workers, but the company hopes that its aviation college, which was established in 1991, will provide a steady source of qualified personnel, Butzmann said.

"The employee situation really is an issue that requires a lot of consideration. Our aviation college currently has around 120 graduates a year, which is good, but if you are looking at the growth which we have to serve then maybe it could be more," he said.

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