Delta TechOps wins Top Shop award

[topDawg]

For the 3 or 4th year in a row Delta has won the "Best Total Solutions Provider" award 
 
http://www.deltatechops.com/news/view/best-total-solutions-provider-oneaero-mro-top-shop-awards
 
Also the 2 or 3rd year in being finalist for best engine overhaul award. 
 
Congrats to everyone at TechOps! 
 
Also the have added Sonny Stern to the management team for the MRO side. 
 
http://www.deltatechops.com/news/view/mro-services-sonny-stern-vice-president-of-sales
 

 

[WorldTraveler]

congrats to you and your coworkers.

Not the least bit of a surprise and a testament to the quality of work you guys do.

I have a feeling the best is yet to come.

 

[700UW]

congrats to you and your coworkers.

Not the least bit of a surprise and a testament to the quality of work you guys do.

I have a feeling the best is yet to come.

Wait, arent you the one who said awards dont matter, oh wait you did on the WN thread.

Great Job to DL's Current and Active Mechanics.

 

[WorldTraveler]

DL has no real competition among US carrier legacy carriers in the MRO space.

AA and UA have all but walked away from it - at least to an extent to be reportable separately on their financial statements.

DL's decision to bring Sonny Stern says that DL wants to have someone who knows all sectors of the business = and intends to win in all of them.

 

[FrugalFlyerv2.0]

For the 3 or 4th year in a row Delta has won the "Best Total Solutions Provider" award 
 
http://www.deltatechops.com/news/view/best-total-solutions-provider-oneaero-mro-top-shop-awards

 
Congrats to all DL TechOps employees!
 
(DL Tech Ops won the award 3 out of the last 5 years, I think LH Technik won in 2011 & 2013)

 

[FrugalFlyerv2.0]

DL's decision to bring Sonny Stern says that DL wants to have someone who knows all sectors of the business = and intends to win in all of them.

 

 
..... oops, wrong Stern
 

 

[WorldTraveler]

yep... wrong face.

Congrats to all DL TechOps employees!
 
(DL Tech Ops won the award 3 out of the last 5 years, I think LH Technik won in 2011 & 2013)

which should tell you the league DL is playing in.

 

[robbedagain]

a big congrats to all the front line folks at DL Tech Ops for achieving the award    great job

 

[topDawg]

DL has no real competition among US carrier legacy carriers in the MRO space.

AA and UA have all but walked away from it - at least to an extent to be reportable separately on their financial statements.

DL's decision to bring Sonny Stern says that DL wants to have someone who knows all sectors of the business = and intends to win in all of them.

I'm not sure I would go that far. 
 
United is fairly big. They don't put it out there like Delta does but if you look at a lot of the MRO shows and such United is generally a big time sponsor and will have a big booth set up. 
 
They are pretty much just engines and gear though. They are one of the very few PW4000-110 centers in the world. I have also heard from some sources they are looking into adding the CFM56-7 and the GEnX to the line of work they do. GEnX would be big if true. 
 
 
 
having said that, AA and TAESL has all but disappeared from the MRO world. You don't really see them much at the trade shows anymore and if you do its a very token presence. It doesn't seem like they are looking for work. (now TAESL will be covered by any RR services people) Also both web sites are very out of date. Again, not a huge deal but doesn't show they are paying attention to details at all.   

 

[WorldTraveler]

UA doesn't report its ancillary MRO revenues as a separate line so it isn't enough that they report it separately.

DL Tech Ops $500 million in MRO revenue is over 1% of total revenue. I'm not sure what accountants would say is the threshold for reporting a separate business but Tech Ops, the vacation business, and ground handling amount to over $750M in annual revenues.

all of the big 3 have significant maintenance capabilities that they could use to do insourcing work. If UA has the capabilities now or can add them without huge investments, then likely will play, esp. if GE will let them since there is enough demand in N. America for an airline MRO to handle new gen GE engines . As has been discussed, AA has to do what RR wants on engines or build its own facilities in TUL. Given that it appears that DL managed to tie doing its own overhauls on its new RR engines to the order, Airbus and RR were likely forced to let DL in or lose the order. Since the 350 order came from US, I doubt if they had any provision for doing engine overhauls on their own.

As you have noted, it appears that DL both corporately and in Tech Ops mgmt. is poised for a significant expansion of capabilities and the volume of MRO work.

 

[topDawg]

UA doesn't report its ancillary MRO revenues as a separate line so it isn't enough that they report it separately

Delta doesn't report TechOps numbers alone anymore.....

all of the big 3 have significant maintenance capabilities that they could use to do insourcing work. If UA has the capabilities now or can add them without huge investments, then likely will play, esp. if GE will let them since there is enough demand in N. America for an airline MRO to handle new gen GE engines .

As it is right now you are looking at almost 300 GEnX engines in the US. More than enough for two lines of work
Someone will end up adding a GEnX line in the US. Two isn't out of the question.

GE isn't like Rollers. They don't really work with many and its not nearly as hard to get a MRO set up for GE engines.

As has been discussed, AA has to do what RR wants

It is not nearly that cut and dry. TAESL is dying because AA just doesn't have many RR engine on order. We are talking about 40 engines. When AA set up TASEL they had 250-350 RR engines in fleet or on order/optioned. TAESL lives and dies by what AA has in the fleet. When they went GE on the 787 and 77W over waiting for the A35J that was the end of TAESL.
RR isn't going to put a T1000 or a T7000 or a TXWB line at TAESL when AA doesn't have any of the engines on order. Makes about as much sense as Delta adding a Trent 700 line or a GEnX line.

Had AA gone Trent 1000 on the 787 you can bet they would be getting a T1000 line.


now AA does have XWBs on order via the merger but it sounds like they are simply a day late and a dollar short. Its not over though. The out look for the A350 in the US is good and if more volume comes into the market I could see RR wanting a 2nd line.

on engines or build its own facilities in TUL.

which sounds like they are getting a new test cell
I would be shocked if they don't end up doing CFM56-5Bs and GEnX in-house. I could see V2500s too.

Given that it appears that DL managed to tie doing its own overhauls on its new RR engines to the order,

something like that.

Airbus and RR were likely forced to let DL in or lose the order. Since the 350 order came from US, I doubt if they had any provision for doing engine overhauls on their own.

Again, not that cut and dry. RR like margins just like Delta does. They don't want to send those engines to Asia. The issue has been volume. Will the volume be in NA to justify next gen RR engines.
Also Delta is changing its relationships with the OEMS. What once was a very heavy GE airline will start to be come more and more Rollers based on the big jets. I would also bet on Delta ending up overhauling Trent 1000-TENs in house. (hell a Trent 7000 is basically a TEN with some XWB tossed in and pneumatics)

As you have noted, it appears that DL both corporately and in Tech Ops mgmt. is poised for a significant expansion of capabilities and the volume of MRO work.

5 new engine types in two years I think?

Hopefully the V2500 and CFM56-5As are next.

 

[WorldTraveler]

Agree with all you have said but remember that DL's primary reason for wanting to do its RR work inhouse is because they can do it cheaper. that is the only real reason why DL wants the RR contract. It is absolutely true that DL uses the volume that MRO work generates to reduce DL's costs - there are fixed costs that are spread over more units so DL's costs are lower - but DL's maintenance efficiency makes it very hard for anyone to undercut DL's costs on engines and components.

and, for whatever reason, AA doesn't see the same opportunities with new generation engines - at least so far - that DL does.

I thought GE had very tight controls of who could work on their engines so thanks for clarifying that.

 

[topDawg]

Agree with all you have said but remember that DL's primary reason for wanting to do its RR work inhouse is because they can do it cheaper. that is the only real reason why DL wants the RR contract.

no its not. It is a part of it sure, but the big part of it is the MRO. The CF6 and PW4000 are dying engines. They also are a big part of TechOp Revenue. Example, HA's CF6s that are sent to TechOps will be replaced with Trent 7000s. If Delta didn't do that engine line in house then they lose the revenue just like that.

And OEM can't tell a carrier it cant overhaul its own engines in house. What they can control is the licenses to allow for the 3rd party sales of those services.
 

It is absolutely true that DL uses the volume that MRO work generates to reduce DL's costs

and to generate revenue. Its really the opposite. TechOps uses the Delta fleet to get the economy of scale to offer MRO customers lower costs. That is why TechOps lives and breaths on what Delta does. Sometimes its quite foolish.
 

- there are fixed costs that are spread over more units so DL's costs are lower - but DL's maintenance efficiency makes it very hard for anyone to undercut DL's costs on engines and components.

it goes hand in hand. Delta is using the MRO to lower its costs, but the more important part is the revenue. Chances are with or without the MRO a lot of things done in-house would still be done in-house.
 

and, for whatever reason, AA doesn't see the same opportunities with new generation engines - at least so far - that DL does.

as I have tried to explain to you 100 times.
AA is now at around step 10, Delta is at step 500. They aren't worried about engines that won't need shop time for 6 years (and worst case it goes to GE for the first overhaul cycle)
AA is worried about merging an airline. They are where Delta was 5 years ago. You notice how long it has taken Delta to do things like gear MSP up for check work and bring in things like 330 c-checks? 
 
AA has to get its house in order, gets its labor forces merged, IT merged and then sit down and figure out what it wants to do. Delta is in the early stages of this, that is why you are seeing engine after engine, component after component come in house NOW and not a year after SOC.
 
As it is though, AA has tired to gets its test cell upgraded once already and the vote didn't pass in Tulsa. It is my understanding that AA and Tulsa as about to try again, but again, for now these things don't matter. AA doesn't have to be the first horse to the race, as long as they get there. We are early enough in the 787 and A350 game (let alone the 777X, 737MAX, 320NEO, 330NEO) that AA could wait 2-3-4 years get get anything moving along and it wont matter. (and of course for the GEnX there are only two carriers in North America that would add a shop anyways. AM and AC sure as hell aren't about to open one up.)
and with the AA volume alone they aren't(or don't need to be) in a huge hurry to run out and sign MRO contracts.  
 

I thought GE had very tight controls of who could work on their engines so thanks for clarifying that.

GE is very tight on who they work with. Rollers is too. 

 

[WorldTraveler]

With all due respect, I believe that DL's interest in MRO work is because of the efficiencies and lower cost that MRO work can do to lower DL's costs, not because DL is generous enough to use the efficiencies it gains from maintaining its own fleet to offer lower costs on the MRO side.

It's a chicken vs. egg thing and it isn't really worth arguing about, but DL's primary interest is its own fleet and the costs to maintain it. It is because DL is very good at what it does that it can do it for other customers and make money doing so.

As for AA, they clearly made some decisions with their own fleet plan that impact their ability to do MRO work. but remember even before the merger, AA's in-house maintenance costs were higher than DL's - DL has had the lowest maintenance CASM among US airlines for years -so it is possible that the same evaluation process for them would not necessarily result in bringing in MRO work like it has at DL.

The clarification is good about getting licenses to do other people's work vs. on one's own fleet but as you have noted, the volume for large engines requires doing MRO work in order to be cost effective.

While many have tried to say that DL's diverse fleet - widebody and narrowbody - adds costs, I have long believed that DL uses it to increase Tech Ops' capabilities so the increased costs are not only negated but acutally used as a basis for DL's gain.

Other carriers simply won't come to the same conclusion and thus need either more standardized fleets or don't have costs low enough to do MRO work so have to send work out.

the latest financials show once again that DL is the most efficient and lowest cost of the big 3 legacy carriers despite its more complex fleet so its not just about Tech Ops but Tech Ops mirrors the rest of DL in that regard

 

[topDawg]

With all due respect, I believe that DL's interest in MRO work is because of the efficiencies and lower cost that MRO work can do to lower DL's costs, not because DL is generous enough to use the efficiencies it gains from maintaining its own fleet to offer lower costs on the MRO side.

It's a chicken vs. egg thing and it isn't really worth arguing about, but DL's primary interest is its own fleet and the costs to maintain it. It is because DL is very good at what it does that it can do it for other customers and make money doing so.

if that were the case then Delta would do a lot more of its own work in-house.
management has told us what the deal is. Its about the money. If it wasn't for the money we would more than likely be gone.....

As for AA, they clearly made some decisions with their own fleet plan that impact their ability to do MRO work. but remember even before the merger, AA's in-house maintenance costs were higher than DL's - DL has had the lowest maintenance CASM among US airlines for years -so it is possible that the same evaluation process for them would not necessarily result in bringing in MRO work like it has at DL.

Delta does have lower costs, but AA was a much bigger MRO. Call it what you want to call it, Horton just wanted to be rid of maintenance. Its an easy target. Its not something that is part of the "core" and it something the wall street types love to see leave. You will remember however that Arpey defend doing as much in-house as possible. He said the same things i constantly say, the extra and **** work you get isn't worth the savings. And under him AA was a fairly large MRO.

The clarification is good about getting licenses to do other people's work vs. on one's own fleet but as you have noted, the volume for large engines requires doing MRO work in order to be cost effective.

not true at all. It is all about the volume. When you have 200 engines in the fleet it doesn't matter if its a BR715 or GE90. As it is right now, it looks very likely that UA and AA will both be well about the 100 engine number. That should be enough to do them in-house.

While many have tried to say that DL's diverse fleet - widebody and narrowbody - adds costs, I have long believed that DL uses it to increase Tech Ops' capabilities so the increased costs are not only negated but acutally used as a basis for DL's gain.

again this would be true if we did more work in-house.
Just on the engine side alone, Delta sends out 500ish engines and 6 types. The V2500 is a classic example. Well over 600-700 engines in the US alone but Delta sends them to Australia for overhaul. Delta does 5 engines types in-house (PW2000, JT8D-219, PW4000-94, CFM56-7B, GE CF6) American does (CFM56-7B, JT8D-219, RB211, T800, CF6) in house. Same amount of engines and AA has a much simpler fleet.

(note Delta also does the CF34 in-house but doesn't have any in the Delta fleet)

Other carriers simply won't come to the same conclusion and thus need either more standardized fleets or don't have costs low enough to do MRO work so have to send work out.

Simpler is not a bad thing. Look at AA coming up. Fairly simple fleet and will have all the in demand and growing engine bases. V2500, CFM56, GEnX, GE90 etc.
No US carrier is going to be so simple that they don't offer most, if not all, the in demand engines. When they don't it will be in the widebody marketplace where the volume isn't as large as the narrow body market.

the latest financials show once again that DL is the most efficient and lowest cost of the big 3 legacy carriers despite its more complex fleet so its not just about Tech Ops but Tech Ops mirrors the rest of DL in that regard

again, somewhat.
Delta shouldn't be outsourcing what it does. period.
Hopefully that keeps changing for the better but as i have said, they are pissing away good revenue chances.