Dornier Technology, which recently secured its US FAA certification as a foreign repair station for heavy maintenance on the Airbus A320 aircraft family, is in talks with local and foreign banks, as well as possible equity investors, to finance its expansion plans for its existing facilities at the Clark International Airport (CRK) in Pampanga.
In an exclusive interview, Dornier Technology CEO Nikos Gitsis revealed that he is already in talks with some local and international banks to secure as much as $42 million to finance the company’s plan to expand and build a new hangar in Clark to accommodate more MRO (maintenance, repair, overhaul) work on Airbus aircraft following the US FAA certification.
Securing the US FAA certification, he said, was “the catalyst for growing the business, or a reason to grow the business. “
Based on Gitsis’s timetable, he is negotiating to secure at least $16 million for the first tranche in the next six months to one year to build a second hangar, and an additional $26 million or more for the second tranche to fully develop and maximize the MRO facilities down the line.
According to Gitsis, Dornier Technology only has one hangar that is around 6,000 square meters that can accommodate one to two aircraft inside the hangar, and another one to two outside the hangar.
However, it has leased additional land from CRK, which is operated by the Luzon International Premiere Airport Development (LIPAD) Corp., a special purpose company established to manage the operations and maintenance of CRK.
The members of LIPAD Corp are Filinvest Development Corp., JG Summit Holdings Inc., Philippine Airport Ground Support Solutions Inc. and Changi Airports Philippines (I) Pte. Ltd., a wholly-owned subsidiary of Changi Airports International. The consortium members each have vast experience in airport operations, air transportation and property development.
Gitsis pointed out that “because you have very many specialized areas in an MRO, you have specialized teams, and these are very highly skilled, maintenance, engineers, planners and warehouse people, and they have very specialized skills, and you have to have all these components to work together.”
To make the MRO a profitable and a productive type of company, Gitsis elaborated, “It needs to have a certain scale to it, but to grow the scale, you need to have enough work.”
He added, “The business requires a certain economy of scale, and that would be like seven to eight lines or the capacity to manage six state planes at the same time.”
He continued, “If there’s only one or two planes, you cannot optimize the manpower. If you have more planes at the same time, they can be more productive most of the time, instead of only a short period, or only limited times when you have less projects.”
He acknowledged that as an independent MRO, “We need to source projects and jobs from many different customers, and to do that we need more space. To justify that and to be able to go out to find work.”
Additionally, he said, “We are going to employ more people, we expect to grow our manpower complement. We’re at about 250 now. We expect it to grow by at least 50 percent, if not more, over the next year because of this FAA certification, and then if we are able to realize the expansion, that could triple and quadruple our manpower as well.”
Dornier Technology has been a pioneer locator in the Clark ecozone initially under SEAIR. According to Gitsis, “Dornier Technology, you know, we’ve been here for 30 to 31 years now in the Philippines. It was born out of our (South East Asian Airlines) SEAIR project that we began.”
He continued, “We’ve been leasing in Clark since 1995. We were the first locator in Clark. The space we have is a 6,000 – square meter hangar, and we have some land around. So, we could triple that with the land that’s been allocated for us. So, we have enough room to grow further. The money you would need would be more just to construct the hangar, not to lease out more land. We have the land.”
He recalled further that, “We did a lot of pioneering work, and again, our MRO is a developmental and pioneering maintenance facility here in the Philippines, and we’re trying to grow it organically here. It’s a homegrown company.”
Gitsis stressed though that “One thing that’s important to highlight is that the Philippines is still playing catch up in the maintenance segment of aviation against other countries like Vietnam and Malaysia and Singapore, and Indonesia even, who have much greater investments and they get a much broader type of support, I think, from their governments that drive these investments.”
He also highlighted that “It’s important that the local understanding of what an MRO can do, and what MRO industry does for a country, is clear, it brings in high paying jobs, highly technical skilled employees, and it creates and adds to the ecosystem of aviation, which is important for a country like the Philippines which is a large archipelago.”
Gitsis was of the opinion that “We don’t want to be sending our planes from the Philippines outside to third party countries and building up their sectors alone… and while the Philippines is lagging behind.”
As such, he said, the “Philippines should actively support this type of industry, which is a service industry too, which is a B to B service to other airlines and to other MROs, because MROs also help other MROs. We’re also cooperating with all the MROs here in the Philippines. Many times, we share special tools, or we might share capabilities or things like that. So, all that helps in building up the ecosystem to service and maintain airplanes in the Philippines.”
(To be continued)