Industria de Turbo Propulsores, S.A. (ITP) has formalised the acquisition of Avio’s maintenance business for PW100 engines and has signed a PW100 DOF licence with Pratt & Whitey Canada. The operation strengthens ITP In Service Support position in the small propulsion engines maintenance market and is estimated to create up to 70 new jobs at the Group’s Ajalvir (Madrid) work centre.
Within the first two years of operations, the acquired business will add assets with an estimated gross value of more than 24 million euros, including the acquisition price for Avio’s business, Pratt & Whitney Canada PW100 licence, Ajalvir’s capacity increase, PW100 pool of engines and working capital requirements. The business is expected to generate accumulated sales over the next ten years of over 400 million euros, with an annual estimated average of more than 65,000 direct working hours in the Ajalvir factory.
The acquisition of Avio’s PW100 business comes along with the signature of a licensing contract with the engine manufacturer, Pratt & Whitney Canada, under which ITP becomes a PW100 engine Designated Overhaul Facility (DOF).
This transaction also helps ITP In Service Support (“ITP ISS”) achieve two of its key objectives within its 2011-2015 Strategic Plan: i) reinforcement of ITP ISS position within the regional aviation market segment and ii) achievement of strong growth in ITP ISS commercial business. Expected induction in terms of number of engines processed will range from a total of 50-60 engines a year during the initial phase to over 90 engines per year in the mid-term.
The deal contributes to more than compensate reducing volumes experienced at the Ajalvir factory over the last few years, as a result of declining Defence budgets and the general economic crisis affecting the overall maintenance business. The transaction is expected to provide increased load stability in the future given the growing underlying maintenance market volumes for PW100 engines.
The acquisition also represents another major step in developing a strong relationship with Pratt & Whitney Canada . ITP is now a partner to Pratt & Whitney both in Original Equipment risk and revenue sharing programs and MRO engines.
The transaction becomes effective on 1st May, 2013. Initially and for a very short term, PW100 Avio’s activity in Pomigliano (Naples) will transition to ITP’s factory in Ajalvir which will gradually increase its capacity and ultimately assume all operations creating up to 70 new jobs in the near future.
A market with a bright outlook
The turboprop regional aviation market is positioned for a bright outlook in the next future. Over the next twenty years, between 2500 and 3000 turboprop aircraft are expected to be delivered, increasing its share when compared to regional jets from 10-15% in 2010 to 40% - 50% in 2030. This evolution will be highly linked to the expected evolution of rising oil prices, which is expected to both boost the sale of turboprops thanks to their lower fuel burn rates and increase the use of the current fleet especially in short-range routes. Both factors will likely contribute to a gradual increase in the number of maintenance shop visits required by the regional fleet.
Engine maintenance for regional aviation business is a highly demanding segment featuring intense competition where customer loyalty can only be achieved keeping costs at market level while offering enhanced customer service levels, consistently meeting agreed turnaround time deadlines and providing fast response at all times.
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