American Airlines Maintenance Services Sets Goal Of Obtaining $175 Million In Customer Revenue By End Of 2007

Lowering Costs, Improving Productivity Helps American Reach its Goal of Turning Its Maintenance Organization into One-Stop Shop for Customers

American Airlines Maintenance Services, the marketing arm of American’s maintenance organization, and the Transport Workers Union (TWU), representing the airline’s maintenance workers, have set an aggressive goal of obtaining $175 million in customer revenue in 2007.

For the past three years, American and the TWU have been working together as business partners to transform the airline’s maintenance organization from a cost center to a profit center. Using the principles of Continuous Improvement, the maintenance team has increased productivity and efficiencies, reduced costs, and significantly optimized operations. Thus, American has been able to successfully compete for customers’ maintenance requirements.

The maintenance organization’s transition to becoming "Best in Class" in all maintenance, repair and overhaul processes at its line and base maintenance facilities has created opportunities for American to competitively bid for a wide variety of maintenance and engineering services for other airlines, aircraft leasing companies, and individual aircraft owners. By doing so, American is using its maintenance operation to generate substantial customer revenue. In 2006, American generated almost $95 million in customer revenue and expects that to grow in 2007 to $175 million, not including the $225 million of engine overhaul work for customer airlines by Texas Aero Engine Services Limited (TAESL), a joint venture between American and Rolls-Royce.

"American’s long-term vision is to transform its maintenance organization into a world-class Maintenance, Overhaul and Repair (MRO) business that offers our customers a one-stop shop for most of their maintenance requirements, be it airframe, component, engine overhaul, engineering services or line maintenance," said Bob Reding, American's Senior Vice President - Technical Operations. "We will continue this momentum by investing in technology, process improvements, and increasing our productivity while continuing to reduce overall costs for our customers. The Continuous Improvement processes embraced by our entire M&E organization will allow us to offer a comprehensive array of competitive technical services to continue growing our customer contracts."

Obtaining $175 million in customer revenue in 2007 will be achieved by more overhaul work at American’s three maintenance bases in Fort Worth, Texas; Kansas City, Mo.; and Tulsa, Okla., along with additional routine and "on-call" maintenance work performed by the airline’s line maintenance organization.

Each of these organizations created Breakthrough Goals that were designed to reduce costs and generate revenue, while at the same time encouraging employees to find innovative ways to streamline operations.

"We offer what other vendors can’t – comprehensive on-site service and an extremely talented and driven workforce. We can repair most parts on-site," said John Conley, AA System Coordinator and International Representative, TWU. "Given the immense knowledge of our team, American can reduce out-of-service times, returning the aircraft, engine or component to the customer quicker, allowing them to either start producing revenue earlier with the aircraft or reducing the cost of inventory for engines or components. In any case, doing business with American Airlines Maintenance Services means competitive prices at the highest quality with the best turn times in the industry."

Tulsa Breakthrough Goal

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