Delta to expand maintenance revenue stream

Delta Air Lines on Wednesday announced a 10-year, $1 billion contract with Chromalloy Gas Turbine Corp. that will broaden the types of aircraft engines Delta can service at its massive Atlanta maintenance center, bringing in new revenue.

Chromalloy is a major supplier of jet engine parts, and Delta officials characterized the deal as "the largest and most significant parts manufacturing approval agreement in airline history."

The partnership enables Delta to overhaul more types of jet engines, including one widely used on Airbus jets, which Delta itself doesn't fly.

Delta's Atlanta TechOps center employs about 4,500 workers, and Wednesday's announcement could mean additional jobs.

"We certainly hope that as we grow our engine work we will add jobs, but I don't have a specific figure at this time," spokesman Kent Landers said.

"This is a significant development for the future of our industry and one that signals the dynamic, out-of-the-box strategy for which Delta TechOps is known," said Tony Charaf, senior vice president of Delta TechOps.

"Delta TechOps will be well-positioned in the marketplace to better compete and, in turn, offer greater flexibility to our more than 100 customers worldwide."

The agreement was disclosed at an aviation industry conference in Milan, Italy.

Some airlines have outsourced major engine work, while others like Delta have attempted to take on additional maintenance work to generate revenue in a time of frenzied competition and razor-thin profits.

Delta emerged from bankruptcy earlier this year and has announced a number of strategic moves to boost profits, including an expansion of lucrative international routes from its hubs in Atlanta and New York.

As part of Wednesday's agreement, Delta's Atlanta TechOps facility will perform about 250 additional engine overhauls over the term of the deal, said Landers.

The unit will do about 220 overhauls for outside customers this year.

Delta's maintenance, repair and overhaul operations in 2006 generated about $310 million of Delta's more than $17 billion in revenue.