Monday, April 02, 2012

Finding a buyer for Aveos will be difficult

MONTREAL - The search is on for a saviour for Aveos Fleet Performance Inc. - but the ranks of potential, eligible and willing white knights and the conditions attached make the quest a daunting task.

As the MRO (aircraft maintenance, repair and overhaul) industry accelerates its migration to low-wage countries, finding a solid corporate citizen willing to expand in North America is no simple task.

The first condition that investment funds, industry people and government bodies engaged in the search agree is a sine qua non for any rescue is the participation of Air Canada.

The airline provided Aveos with more than 90 per cent of its work - although only 65 per cent of its revenues - and any solution aimed at restarting the vast Aveos facility would be doomed from the start unless the Montreal carrier is firmly onboard first.

Testifying before a parliamentary transport committee in Ottawa last week, Air Canada president Calin Rovinescu expressed a general preference for working with a ``global MRO and manufacturer'' that would buy part or all of Aveos' facilities in Canada.

One such MRO, Lufthansa Technik, tried in 2007 to acquire Air Canada Technical Services, which later became Aveos.

Asked if his company, wholly-owned by Lufthansa, is still interested, Lufthansa Technik spokesperson Bernd Habbel said from Hamburg Monday that ``at this very moment, I'd have to say no.''

But he didn't shut the door definitively to expressions of interest by his firm.

``We haven't been approached with a detailed, concrete plan about this Aveos topic,'' said Habbel. ``Today, we don't have too many details, so, so far there are no serious or detailed activities in that direction.''

Lufthansa Technik is ``in growth mode'' and is ``always looking for good opportunities, that's for sure.''

``But I don't know about any such talks (regarding Aveos) today.''

Habbel said that on the one hand, the trend for MROs is to migrate to low-wage countries, in Asia and Latin America. His firm has a major centre in Manila that employs 8,000 people, and is partner of Air China in a Beijing MRO that employs several thousand people. Of Lufthansa Technik's 26,000 workers, 13,000 are in Germany and the rest in Eastern Europe and Asia. A few hundred are in Miami, New York and Tulsa, Okla.

Yet, he added, most U.S. airlines still do the bulk of their aircraft maintenance in North America, which still represents an opportunity for firms like his.

``So yes, we're looking for places and facilities (in North America) with feasible costs of labour, that's for sure.''

Serge Tremblay, executive director of the Center for aerospace manpower activities in Quebec (CAMAQ), noted that even if Lufthansa Technik were interested, they would be conducting due diligence on Aveos and would not comment on any possible interest.

Chantal Corbeil, spokesperson for Investissement Quebec, a partner in the search for investors, said that ``we're in discussion with several companies worldwide.''

She would not name them or give a time-frame for a resolution beyond saying it could be ``weeks or months.''

Patrick McQuilken, spokesperson for the Fonds de solidarite FTQ, said that his fund is willing to invest in Quebec jobs, but is not involved in the search for players.

Marcel St. Jean, president of local 1751 of the International Association of Machinists and Aerospace Workers, which represents the 1,800 Aveos employees, said that ``everyone thought it was all over (two weeks ago), but that's not how we think.''

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